Sun Microsystems' Corporate Strategy Officer Warns of Market Shift in Australia

Strategic Insights -

Bill Raduchel, Sun Microsystems' Corporate Strategy Officer, believes that the growth of full-service computer bureaux could lead to only a few dozen hardware and software companies remaining in Australia. He attributes this shift to the increased demand for technical support and services from computer and software vendors. According to Raduchel, the trend to outsourcing will result in a marked change in requirements for technical support and services.

Raduchel noted that Sun Microsystems will focus on its core business, designing, engineering, and building computer products, rather than entering the computer services market like IBM. He also emphasized that Sun's professional services division is mainly focused on advising IT users on the integration of software or functions into the Solaris platform.

During his visit to Australia, Raduchel discussed the acquisition of Netscape Communications by America Online, in which Sun Microsystems is a key stakeholder. He stated that the details of the deal, including Sun's plans for the AOL alliance and portions of Netscape business, would be outlined in filings to securities regulators in the United States.

Raduchel also highlighted the need for countries to participate in the new communications economy, citing Germany and Japan as examples of economies that have refashioned themselves to access low-cost bandwidth.

Key Takeaways:

  • The growth of full-service computer bureaux could leave only a few dozen hardware and software companies in Australia, according to Bill Raduchel.
  • The trend to outsourcing will result in a marked change in requirements for technical support and services from computer and software vendors.
  • Sun Microsystems will focus on its core business, designing, engineering, and building computer products, rather than entering the computer services market.
  • Sun's professional services division is mainly focused on advising IT users on the integration of software or functions into the Solaris platform.
  • Sun Microsystems is a key stakeholder in the acquisition of Netscape Communications by America Online.
  • Germany and Japan have refashioned their economies to access low-cost bandwidth, a critical factor for participating in the new communications economy.
  • Bill Raduchel acknowledges the need for countries to participate in the new communications economy without imposing price restrictions that could halt innovation.

Statistics:

  • 1000 unsolicited inquiries about invitations to invest in smaller companies are fielded by Sun's corporate headquarters in Palo Alto every year.
  • 5000 to 10,000 other pitches are filtered out at subsidiary and local office level.
  • 150 companies out of 1000 that get through to head office are seriously investigated by Sun.
  • 10 companies out of 1000 may be considered for investment or acquisition by Sun.
  • Approximately 20 or 30 big customers may remain in a market like Australia if the trend to outsourcing continues.

Sources:

  • Bill Raduchel, Sun Microsystems' Corporate Strategy Officer
  • America Online's acquisition of Netscape Communications
  • IBM Global Services Australia (IGSA)
  • Salomon Smith Barney
  • Ovum