business model innovation design we're on a road to nowhere // on a quest to analyze and explore the design of business model innovations, i.e. 'hideous and hidden things' like organizational structures and capabilities, corporate strategies and all things related // on a yellow brick road with a girl, a lion and a straw-man wasting our time // …

Sun Rolls Out New Hardware, Software, Services

SAN FRANCISCO (Reuters) – Computer systems company Sun Microsystems Inc. (SUNW.O: Quote, Profile, Research) on Monday unveiled new services, software and hardware offerings as part of its plan to move to selling its wares on a bundled subscription basis rather than as discrete components.

Already, Sun offers a mid-range server for free to software developers provided they subscribe to bundled software and services offerings. Now, President and Chief Operating Officer Jonathan Schwartz said, the company will be expanding that, seeking to position the company with a new business model.

“In our world, you will subscribe to the software and the hardware is free,” Schwartz said, who was named to his post almost six weeks ago. “Directionally, our expectation is that in fiscal 2005 you’re going to see a rapid departure from selling hardware, software and services apart.”

Schwartz isn’t alone in saying that hardware will someday be “free,” so long as customers sign up for multiyear software subscriptions and services contracts. Microsoft Corp. (MSFT.O: Quote, Profile, Research) Chairman Bill Gates has said he believes that, within a few years, hardware will be free and that software will be bought on a subscription basis, rather than as a one-time purchase that must be upgraded routinely.

“Bill Gates and I agree that within four to five years hardware will be free,” Schwartz told Reuters, who will outline Sun’s belief at a Sun conference in Shanghai this week that the network – the hardware, software, storage and its interlinks – is fast becoming a commodity.

As part of its services offerings announced on Monday, Santa Clara, California-based Sun rolled out a pay-for-use storage service, with prices starting at 2 cents per megabyte per month. The service includes installation services, Sun support and software licenses, Sun said.

What Schwartz calls Sun’s vision of “network services” is akin to what rivals International Business Machines Corp. (IBM.N: Quote, Profile, Research) and Hewlett-Packard Co. (HPQ.N: Quote, Profile, Research) call “on-demand” computing and “adaptive enterprise,” respectively.

The notion is one of bundling hardware, software and services that are integrated, efficient and, ultimately, less expensive than assembling the components independently.

Since the dot-com and telecommunications bubbles burst, Sun has posted a string of quarterly losses and declining revenue as its core customer industries – telecommunications and financial services – suffered. Also, the rising use of servers using Intel Corp.-compatible chips and running on Microsoft Windows software of the freely available Linux operating system has hurt demand for Sun’s servers.

Most of Sun’s business still comes from selling servers using its Ultrasparc microprocessor and running its version of the Unix operating system, called Solaris.

Sun also announced a new Netra 440 server, which is a more rugged version of an existing server that is aimed at military telecommunications network applications. It uses four Ultrasparc chips and runs Solaris.

The company also announced the next version of its Java Enterprise System with a per-citizen pricing model for federal state and local governments, which Schwartz said could be as little as 33 cents per citizen. The collection of software incorporates permissioning, messaging and other network support functions.

Sun also unveiled the second release of its Java Desktop System, which Sun positions as an alternative to Microsoft’s Windows desktop. The newest version comes with management tools giving customers more control over the desktop, applications and access rights, Sun said.