Sun Microsystems is a leading manufacturer of workstation computers. It has traditionally pursued a unique, vertically integrated business model. Unlike most computer hardware vendors, Sun makes its own chips (SPARC) and operating system (Solaris). Sun rose to fame during the early 1990s with its huge bet on the server market paying off. Riding the exploding growth in that market, Sun grew faster than any other computer company to reach a turnover of $1 bn. But things have not been going well for Sun in recent times. Sun's stock price, which hit $60 mn by the end of 2000, has fallen to about $3 mn by August 2004. In mid-2004, Sun seems to be beset by various problems. Low-cost computers based on Intel chips and Linux software are posing a major threat. The company's cost structure appears to be bloated. There has also been a major management turmoil. It remains to be seen whether Sun can overcome these problems and reinvent itself.
Sun Microsystems (Sun), a leading manufacturer of workstation computers, has traditionally pursued a unique, vertically integrated business model. Unlike most computer hardware vendors, Sun makes its own chips (SPARC)1 and operating system (Solaris). Its software portfolio includes application server, office productivity, and network management applications. Sun has also developed Java, a programming language, for creating software that runs unchanged on any kind of computer.
Once a shining star amongst the tech companies, Sun has slowly but steadily lost its sheen. Its stock price, which hit $60 mn by the end of 2000, has fallen to about $3 mn by August 2004 (See Exhibit VII). For the fiscal year ended June 2004, revenues declined by 2% from the previous year to $11.19 bn. |
