Fog Creek Software
Discussion Board




Strategy V, Sun and Apple

Good arguments all round, esp. about Sun.  I've been predicting for some time that Sun will eventually become NeXT.  They'll realize that hardware is already a commodity, and their hardware isn't even a very competitive commodity.  What makes people buy Sun hardware is Solaris, not the other way around.  Solaris scales better, and the OS and hardware are easy to set up relative to buying a commodity PC and getting Linux to run acceptably.  The SPARC hardware should go away, and Solaris/x86 should become a significant focus of the company.  Forget the desktop and stick to servers. 
Spin off the Java operations.

I doubt they'll do this until it's too late, however.  Much like NeXT. 

One reasonably successful company *not* following the commodity hardware line is Apple.  But I think this is because they realize they're not a computer company, they're a lifestyle company.  The Mac is a fashion accessory.  This wouldn't work for the boring server market, but it's perfect for maintaining a niche in the desktop market.  One day, Apple *could* simply replace all of thier proprietary hardware with cheaper commodity hardware inside the pretty box (porting the OS, of course).  Few of their customers would even notice.

James Montebello
Monday, June 17, 2002

Thanks for the basic economic lecture, Joel. While I hardly consider your big two intro economics classes impressive, your thinking is clear. It should be, the concepts you dwell on are simple enough.

It's presumptious of you, however, to tell us why IBM, RMS, and everyone and their dog is doing what they do. The spin is a little nausiating. Let's examine some of the nasty ones:

At this point, it's pretty common for people to try to confuse things by saying, "aha! But Linux is FREE!" OK. First of all, when an economist considers price, they consider the total price, including some intangible things like the time it takes to set up, reeducate everyone, and convert existing processes. All the things that we like to call "total cost of ownership."

What confusion? You forget that studies consistently prove the lower cost of ownership of free software? Not that it's what I tell people. I generally point out freedom, control, security and then cost. Now I see the confusion, it's a straw man. What else does this silly Sallmanist say?

Secondly, by using the free-as-in-beer argument, these advocates try to believe that they are not subject to the rules of economics...

Wrong again! If you keep economic priciples in mind while reading free software organization pages, you will note and remember many economic reasons offered support software freedom. It's the makers of propriatory software that would like to make themselves beyond the reach of economic laws. They attempt to do this by abusing copyright and patent law, and engaging in other anti-competitive behavior. RMS rightly noted that the results of such behavior is economic waste in the form of double work and the inability to use software as you would.

The rest of the article is inconsequential after the false frame work has been applied. Free software advocates are not ignorant of economic laws and one of the main advatages to free software is lower total cost of ownership. Only propriatory software concerns have a financial intrest to deliberatly waste the efforts of users.

slashdot quote
Monday, June 17, 2002

I think you are right. People always talk about how Sun and Apple are "hardware companies", but who ever bought a Sun because of SPARC or a Mac because of its PowerPC CPU? People buy Suns to run Solaris (usually to run Oracle) and people buy Macs to run Mac OS.

Banana Fred
Monday, June 17, 2002

So, I notice, after an entire article on how people don't contribute to Open Source because of a desire to contribute to the common good, but rather because there's money to be made off of it, he's begging for people to contribute to him by translating his articles into other languages for him.

Hey, Joel, would that be lowering the price of your compliments, or what?

Always nice to see people maintaining internally consistent viewpoints. Pheh!

slashdot quote
Monday, June 17, 2002

You're right that people buy the hardware because of the software. But the reason we can say Apple, for instance, is a hardware company is because it makes its money off selling the hardware. Apple tried licensing the MacOS back in the mid-ninties, and eventually gave it up because they realized they could make more money off marking up hardware.

Matt Christensen
Monday, June 17, 2002

> So, I notice, after an entire article on how people don't
> contribute to Open Source because of a desire to contribute > to the common good, but rather because there's money to
> be made off of it

Joel doesn't claim that people don't contribute "for the common good." He claims that companies don't. Big difference.

Matt Christensen
Monday, June 17, 2002

Wait.  Apple "realized" they were a lifestyle company?  Didn't they want to sell a computer to everyone? "A computer for the rest of us." ??  Wasn't that one of their mottos? 

Seems they wanted to be a mass market computer company, but they gave up and tried to sustain a niche market because the Microsoft/Intel platform allowed more companies to enter and spend R&D money to catch up to Apple and surpass them eventually.

Even now, it is tough for them to survive as a niche market.  Microsoft controls them whenever they want to just be "implying" that  "If you do not do this, we will stop selling Office for the Mac."  Would enough people buy Macs if they could not use Office documents?  Just simply for their cool look?  They even have been called a subsidary for Microsoft at times.  That does not seem that successful unless it is ok to be Number 2 as long as you agree with Number 1 and not challenge their platform dominance in any strong way and  help Number 1 in their strategies.  http://news.bbc.co.uk/hi/english/special_report/1998/04/98/microsoft/newsid_210000/210650.stm 
http://seattletimes.nwsource.com/news/technology/html98/micr_110598.html

Nevertheless, you are right.  They are doing pretty good as a  lifestyle company.  Microsoft even gets plenty of healthy profit margins from the Mac community for their willingness to pay extra for Mac software.

Diego
Monday, June 17, 2002

Apple makes money off hardware the same way Fendi makes money off leather.  You can go buy a no-name beige Wintel box to go with your Walmart handbag while driving your Toyota, or you can buy an iMac to go with your Italian handbag while you drive your BMW.  Fashion costs money, and exploiting fashion is what has saved Apple, and why Apple will never have to play the commodity game again.

Microsoft plays both sides of the street, but they have little to do with Apple's success as a fashionable brand.  If there were document compatible versions of Office for the Mac that came from somewhere other than Microsoft (as in, if Apple ported StarOffice or OpenOffice or whatever, and improved them enough to be really useful), you'd find Microsoft's position in the Mac market depend entirely on price.  The very definition of a commodity. 

Someone else also pointed out that most people buy Sun to run Oracle.  True.  One possible scenario is that Oracle and Sun merge as a software company, or perhaps an Oracle appliance company, with SPARC hardware hidden away inside (at least at first).

And this whole thing should make it obvious why Oracle SQL isn't ANSI SQL...

James Montebello
Monday, June 17, 2002

> Someone else also pointed out that most people buy Sun
> to run Oracle. True. One possible scenario is that Oracle
> and Sun merge as a software company, or perhaps an
> Oracle appliance company, with SPARC hardware hidden
> away inside (at least at first).

I think this is a great point. In fact, Oracle has tried a few times to create server applicances (their "Raw Iron" servers). The Raw Iron servers did use Solaris, but why would Oracle want to tie their product to an expensive complement (Solaris)?

Oracle announced last year that Linux would become a "Tier 1" platform, ie just as important as Solaris. For Oracle to increase their profit margins, they could use Linux as an inexpensive complement. Improving Linux's scalability problems (which Oracle is actively doing) is probably cheaper than relying on Sun's expensive hardware.

Banana Fred
Monday, June 17, 2002

<snip>
For Oracle to increase their profit margins, they could use Linux as an inexpensive complement. Improving Linux's scalability problems (which Oracle is actively doing) is probably cheaper than relying on Sun's expensive hardware</snip>

I think this is what Oracle is considering. But what if they took it one step further, creating their own distribution specifically for Oracle? They certainly have the programming muscle and the reputation to pull off a full scale Oracle-Linux distro. I'm sure there are other factors for Oracle to determine such as decision, besides it just being a great idea, but it's something to ponder.

Ian Stallings
Monday, June 17, 2002

We buy Sun because of the architecture, software and hardware combined.

Sun sells equipment scales up almost vertically as you add hardware, cpu's and the like. Their "enterprise" hardware is hotswapable, redundant, <any other buzzword here>. In short, all the things mainframes were 10 years ago. Mainframe vendors have felt the pinch of this, because compared to them, Sun's are cheap.

PC hardware doesn't scale in the same way, a 4 CPU machine is not 4x faster than a 1 CPU machine, because of resource contention - shared buses and the like. And I can't swap a CPU from a Dell server while the system is on... etc etc.

As for Solaris, it's real benefit is that it is designed to run on hardware that scales, and so it has been forced to be scalable too - look at a SunOS 4.x kernel, versus 5.8! As soon as PC's have scalable hardware, the PC OS's will scale too.

Sun's real problem is that they have been copying Mainframe functionality, and because of that, outclassed PCs. When PC's have copied all of Sun's functionality, what does Sun do? PCs have already started the climb up, I can buy Intel servers with multiple PCI buses, redundant power etc. The rest will come. After that, there is much less incentive to by Sun.

They really need to be adding hardware functionality that the commodity equipment doesn't have, and frankly, they're not, they're just making their existing kit faster.

As for Java, that was an obvious attempt to break lock-in. If your Software runs anywhere, then the choice of hardware is made based on a hardware vs hardware decision. If you assume TCO benefits of thin clients, highly scalable central servers, then they were on to a good thing. Trouble is, everyone had to go and re-write every piece of serious office software in Java, and have it UI compatible - Joel's points on this are good.

Funny how MS never released MS Office for Java.

Tristan Ball
Tuesday, June 18, 2002

"I think you are right. People always talk about how Sun and Apple are "hardware companies", but who ever bought a Sun because of SPARC or a Mac because of its PowerPC CPU? People buy Suns to run Solaris (usually to run Oracle) and people buy Macs to run Mac OS. "

I bought a Mac for MacOS.  But I wanted MacOS because "it just works".  And "it just works" because Apple control the hardware (not the PowerPC but the whole widget, as they say). 

Rahoul Baruah
Tuesday, June 18, 2002

I bought my Mac because of the hardware _and_ the software. If I could have saved $1000 and bought a cheaper box to run the Mac OS, I would not have done so. Apple's machines are built better than Gateway's, Dell's, etc. Besides, neither of those companies offer the 23" LCD I'm looking at right now <wink>.*

* Yes, this is an opinion. But one recent thing to note that's not an opinion is the Gartner study on total cost of ownership: Macs came out $400/year better than PCs.

Erik J. Barzeski
Tuesday, June 18, 2002

*  Recent Topics

*  Fog Creek Home