The Opacity in Transparency

I just got back from a week out talking to investors and customers, and hosting a few customer events in New York City. New York is a cultural center for a number of communities – notably for Sun, those who see technology as a source of value, as a competitive weapon, not just a cost center. Home turf for us. You can watch one of the videos here, and another interview at BusinessWeek, here – sentiment toward Sun is definitely improving.

We had overflow attendance throughout our customer events, thanks both to rising interest in our products, and to Dell cancelling their analyst conference – timing is everything. Speaking of perfect timing, the Wall Street Journal awarded two of our core technologies, dTrace in Solaris 10, and our new ultra-efficient Niagara systems, their highest honors, just in time for me to announce the award on stage. Just in time.

Now, as interest from investors and customers continues to grow, one question I consistently run into is “how much of your revenue comes from software? Or product x, y, z, etc.” As I’ve said repeatedly (and it’s at least one reason I write this blog), I’m committed to providing more transparency about our business – as much as I can, within realistic (and fiduciary) limits.

But this is a harder problem than it might first appear. Here’s an example.

As you might be aware, we recently introduced a new product, code named “Thumper” – you can read about it here (and enter this contest for free kit). It’s a 2-way, general purpose server, with 24 terabytes (yes, Tb) of storage, running Solaris and ZFS. It has very interesting performance (2 Gigabytes per second sustained i/o, for the geeks in the crowd), and pricing (well under $50,000 – less than $2 per Gig). Its service profile is what makes it most interesting, however: because it runs Solaris/ZFS, as the drives fail (and all disk drives eventually do), the system requires no maintenance. Instead, it either slows down, or shrinks (customers can choose) – but the integrity of customer data is never at risk. It’s a reliable system built from inherently unreliable parts, a fundamental design principle of the internet.

The other rather remarkable benefit of running Solaris on a storage device is that customers can actually run applications (like Oracle, SAS, or any analytical/trading algorithms) directly on their storage. Performance and efficiency are tremendous, in part because there’s no network latency – because there’s no network. (Just ask Joyent about their experiences.)

Now here’s the challenging part.

As I mentioned, Thumper (sorry, the x4500) is built atop a 2 socket Galaxy server, it leverages Solaris/ZFS (but doesn’t require it – Thumper runs Microsoft SQL Server quite well, too), and has 24 terabytes of serial ATA disk inside. So it’s part server, part application platform, and part storage product. Customers pay only one price, but in the pursuit of transparency, how should we categorize the revenue? – as server, storage or software product? It obviously contains all three. For now, we’re calling it storage – which underrepresents our server and software business.

Going forward, if you believe, as I, that the era of custom hardware and software is coming to an end, this challenge – of characterizing a specialized system in terms of its ingredient components, is only the beginning of such a challenge for Sun – and the rest of the industry. The more we open up, the more you’ll see we’re built from common components and infrastructure – which complicates answering the question, “how much revenue do you generate from x, y, z.”

As interest continues to grow in Sun, we want to respond with more information about who we are as well as what we are – financially, technically, and culturally. Transparency’s a competitive advantage, after all.

Which is also why, as of this posting, this blog is now being translated into 11 languages – extending our reach, and invitation to participate, beyond only those who speak English.

So hello, world (again).


Filed under General

17 responses to “The Opacity in Transparency

  1. Vasu

    great article, looking forward to doing a test demo of the “Thumper” always a big fan of sun systems

  2. Jorge L. Maldonado

    It’s nice to see a CEO who is will to communicate openly. To many hide behind armies of executives and attorneys making next to impossible to understand them or gage how well or effective they are as a leader.
    You, Jonathan are what a true and good leader of any organization should be, a man of the people.

  3. Bill Preachuk

    Thanks Jonathan.
    Hey everyone at Sun – could yo uplease post links to any good information or White Papers about running SQL Server on Thumper? I’d love to see it – and so would a lot of other people…

  4. What is even more interesting: sometimes the customer will think he is paying for X (because he values it the most) while the company will think it is charging for Y (because it its core competencies gravitate around Y). Note that X and Y can be pre or post sales services, integration, software, hardware, integration capabilities and so on.

  5. Thank you Jonathan. We need more of the higher level management of the Fortune 100 companies to do what you are doing. Your messages bring a personal touch as how you see your companies products and services. Sometimes the views at the top do not coincide with the views at the bottom. Your insight also can help smaller IT companies, such as our company, get a better perspective of your thoughts and ideas at the top.

  6. Gary

    How thoughtful to provide your blog in many different languages so they can see and perhaps understand our thoughts! I doubt they know how the great American corporation, such as yours, is disadvantaging most Americans for the sake of corporate executive paychecks and stock holders profits as you shift poverty from foreign countries to the American people. You certainly need to attract all those “new employees in Europe, China and elsewhere” so you can rid yourself of all those expensive USA employees! Is this the “escoteric expertise” you are taking to the “marketplace holistically”?

  7. Chris Rijk

    An interesting challenge. Perhaps lower level statistics reporting would be better in some ways? Eg something like “In the quarter we sold … SPARC processors, … Opteron processors, … hard drives, … main memory DIMMs and … container units for them for an average price of … per container unit. We currently have service contracts on … units.”

  8. Maxwell M. Mwaura

    This is for you, Gary. There are three components to a commercial enterprise: The Customer, the Shareholder and the Employee. America created the network so that foreign Customers could purchase from its economy while on location. Then foreign shareholders began to invest, using that same network, while on location. Now your economy is using this network to source foreign labour on location as well. This is as it should be, Gary: it is capitalism in its purest form? Jonathan must have had this scenario in mind when he said that this is the Participation Age. Adapt, Gary…

  9. Chris, interesting idea but I don’ think it would fly. That breakdown is not what analysts and investors want. They want data in a form that is easy for them to digest and categorize so they can compare with our competition and compare with ourselves from quarter to quarter. Even if we could do it, the results wouldn’t answer the questions being asked.

  10. Public companies: for Sarbanes Oxley Compliance.
    Hospitals: for storing patient data.
    Schools: student records
    YouTube likes (MSN Video): a lot of them…
    Video surveillance: a lot of them….
    Napster: one is enough to hold all the mp3s on earth
    If SUN can sell 30,000 Thumpers, that’s $1 billion…easy money.
    Hope your sales people are good enough. SUN should work with other solution providers to bundle the x4500.
    One question: does Thumper support Microsoft Windows? If not, it should have something like Samba installed so Windows users can take advantage of it.

  11. Dan

    Hmm, this comment seems like one big advert for Sun…?

  12. Jon Strabala

    Thumper is an intriguing system box but it is a bit to large for evaluations and product development both the 200-220 VAC power requirement and the required full 48 drives on all three Sun Store models kind of rules out affordable easy evaluations for many potential customers.

    As it appears you need at least 5-7 drives to really appreciate ZFS performance and capabilities (based on reading not actual experience) and no other x86 Sun Microsystems offering seems to support the needed SATA connections (typically it is just 2-4 in Sun’s various products).

    IMHO Sun would benefit by having an intro system, call it “thumper light”, running on110 VAC and having just 12 drives. Okay so maybe this doesn’t do 2GB/sec but rather 500MB/sec. – if Sun was selling units like this under $10K I would buy several this year.

  13. Austin

    Jonathan its always nice to read your blog and the crystal clear thought process and opinion on number of subjects covered in your Blog , Its really nice to see the CEO communicate its opinion through Blog , clearly a trend setter here.
    Been a great admirer of SUN Inovations and that value it brings along with it , Not to mention its persistent quest and effort to improve, adapt and inovate.

  14. P. Fiser

    On the job since April, haven’t turned a profit and you give yourself a 19 million dollar raise. Nice work if you can get it! It would be nice to see you guys actually reward long time shareholders instead of yourselves.

  15. Jonathan,
    Its good to see you blogging for a while now, but one thing which is still missing from yr blog is that there are no replies from you on yr comments section. I can understand that if you start replying than you will have thousands of commmnents and you can reply to all of them. But what you can do is altelast reply to some of them or get someone on yr behalf. By not doing this you are not using this medium of blogging in its full sense and the newtork effect is not happening in term of communication and message.
    You will be surprised if you start doing this you will get more success in this initiative.

  16. Prince

    Hello Jonathan,
    SUN is on a roll with Solaris ?! I saw this headline “Google testing Sun’s OpenSolaris, sources say” . Very good , if that happens. Let Solaris thrive.
    Let Linux thrive. Let there be peace on earth.

  17. [Trackback] Sun Microsystems CEO Jonathan Schwarz was in the news recently with his widely praised CEO blog. In the future, his blog posts will be translated into 11 languages to spread the news ideas even further. Jonathan takes blogging seriously: “The…

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