Analysts: Sun Sales Boost a Windfall, Not a Trend

Just a month after Hewlett-Packard completed its merger with Compaq, SunMicrosystemshas reported improved competitive positions over both HP andIBM.

Outgoing Sun president Ed Zander told attendees at Bear Stearns’ annual technologyconference this week that several HP customers have requested sales presentations inthe past 30 days.

Could the largest merger in history be backfiring on the new HP? That is not likely,Forrester analyst Joshua Walker toldthe E-Commerce Times.

Short-Term Windfall

According to Walker, it is more likely that Sun has a false sense of security based onthe temporary distraction of two industry giants trying to integrate their operations.

“There are a lot of major decisions going on right now within the new HP that have putthe company’s executive team in planning and strategy mode,” Walker said.

“If Sun believes that it’s gaining a near-term advantage, it probably is,” he added. “Butany advantage that the company senses over the last few months is something that is moreof a windfall than a long-term repositioning of the market.”

Industry Assault

Forrester analyst Galen Schreck told the E-Commerce Times that the merger isprobably “very scary” for Sun, which already faces a heavy stream ofarchitecture-bashing from most of its rivals.

Indeed, Sun is fighting against an industry tide — including IBM,Compaq, HP and Dell — that has turnedagainst the company’s product architecture largely because of its differencefrom the competition.

“In some sense, the companies have declared a truce between them in terms offighting about whose architecture is better,” Schreck said. “But it’s stillvery much Sun against everybody right now, at least from a marketingstandpoint.”

True Blue

The ongoing battle for market share between Big Blue and Sun is as bloody asever. Last month, Sun launched its Blue Away program to lure mainframecustomers from IBM.

But while Sun did snatch Galileo International from IBM’s clutches,Big Blue one-upped Sun by stealingColgate-Palmolive.

IBM also reported earlier this week that it has sold 200 of its new lower-endz800 mainframes since the product launched two months ago. This sales performance,pokes holes in the Blue Away strategy, according to IBM.

Back and Forth

Analysts expressed doubt that there will be a mass exodus from Sun to IBM as a result ofthe Blue Away program. Schreck said the majority of companies are not goingto switch platforms for a temporary performance gain.

“It is pretty much a hair-pulling fight between Sun and IBM,” he noted. “This week, onecompany has a faster processor. Next week, the other has better transactionprices.

“It’s back and forth between IBM and Sun on a monthly basis,” he added.

Executives at Sun, IBM and HP could not be reached for comment.

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