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Semiconductor industry

Sun Microsystems Faces Challenges in Turning Around Its Business

Strategic Insights

— 2 min read

Sun Microsystems, a company known for its technical innovations such as Java software language, is facing significant challenges in turning around its business. Despite being a major player in the server market, the company has been losing money for the past two years, and its revenues are nowhere near the highs of the past. To address its financial struggles, Sun dropped its antitrust lawsuit against Microsoft in return for a $1.6 billion settlement payment.

However, experts believe that this settlement is only a temporary victory for Sun, and the company needs to focus on increasing its sales revenue from its key innovations. Market researcher Laura DiDio of The Yankee Group notes that Sun has its work cut out for it in effecting a turnaround, as it is under fire in multiple markets. The company's dominance in the server market has been eroded by the advent of cheaper servers based on Intel chips.

Key Takeaways:

  • Sun Microsystems is facing significant challenges in turning around its business, with the company losing money for the past two years.
  • The company has been trying to increase sales revenue from its key innovations, such as Java software language, but so far has been unsuccessful.
  • Sun dropped its antitrust lawsuit against Microsoft in return for a $1.6 billion settlement payment, but this settlement is only a temporary victory.
  • The company's dominance in the server market has been eroded by the advent of cheaper servers based on Intel chips.
  • Market researcher Laura DiDio notes that Sun has its work cut out for it in effecting a turnaround, as it is under fire in multiple markets.
  • Sun's new president and chief operating officer, Jonathan Schwartz, emphasizes the importance of the company's core opportunity in network computing infrastructure.
  • Industry experts believe that Sun needs to do a better job of marketing its products and services in order to increase sales revenue.

Statistics:

  • Sun Microsystems has lost money for the past two years.
  • The company's revenues are currently nowhere near the highs of the past.
  • Sun received a $1.6 billion settlement payment from Microsoft in exchange for dropping its antitrust lawsuit.
  • The company invests nearly $2 billion a year in research and development.
  • Intel chips account for a significant portion of the server market, with cheaper servers based on Intel chips eroding Sun's dominance.

Sources:

  • NPR News broadcast, featuring Jason Lopez reporting on Sun Microsystems, without a specific date mentioned.
  • Remarks from Laura DiDio, market researcher from The Yankee Group.
  • Remarks from Frank Gillett, analyst from Forrester Research.
  • Remarks from Jonathan Schwartz, president and chief operating officer of Sun Microsystems.

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