Despite the frustration they have had with Sun's sales performance--Sun's sales have slipped almost $7 billion in two years, an opportunity almost the entire size of Arrow Electronics--partners are remarkably upbeat. That includes Mike Long, president and COO of the North American Computer Products group of Arrow Electronics in Englewood, Colo. "Arrow sees its Sun business as healthy, growing and improving. We have six consecutive quarters of top-line growth in our Sun business," he says. Others who think Sun may rise again include top stock-picker Laszlo Birinyi, president of Birinyi Associates.
But fans of Sun these days are in the minority. While even detractors praise McNealy for reaching out for help, such as he did recently when he cut a deal with AMD to put its Opteron processor in Sun servers, they believe Sun is pursuing too many endeavors that won't produce profits. Merrill Lynch's Milunovich, for one, faults Sun for believing it can shift its reliance on hardware to software and services. That's especially true as Sun tries a new and unproven gambit to take on IBM and Microsoft--offering enterprise versions of its software suite of products to corporate customers for just $100 per year per user.
But McNealy says his detractors don't get what he's doing, namely reinventing the software marketplace. "Things like the Java Enterprise System and Java Desktop System translate immediately to value in the ears of our customers and partners," he says. "We talk nonstop to our partners and customers, and they love this stuff. We simplified software for them to the point that they literally can carry around the software price list and delivery cycle on a business card. That's huge."
Novell is also taking huge steps to change the software marketplace. More than any other company, it's betting the farm on Linux, which Messman squarely believes will be embraced by corporate users as an alternative to Microsoft software despite its technical shortcomings and legal uncertainties. In addition to porting core NetWare services to Linux, the company has bought Ximian and SuSE Linux to round out its Linux portfolio. But pulling everything together has been a chore. Executives, for example, were forced to wage a quiet but fierce civil war internally with engineers over technical priorities. Then Novell struggled with how best to embrace Linux. At one point, the company considered establishing a consortia of companies to jointly build a Linux distribution. Ultimately, it concluded that the effort would take too long and possibly pit Novell against the very hardware companies it hopes will commit to using its Linux software. After struggling mightily to craft its Linux strategy, Messman says he now has something that even Microsoft cannot boast: a software stack based on open standards that includes both a desktop and server-based operating system that share the same code base.
That alone could very well be the enduring purpose Novell has searched for all these years, making at least one of the toughest jobs in technology easier to handle.
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