Abstract

Sun Microsystems (Sun) is a leading manufacturer of workstation computers. It has traditionally pursued a unique, vertically integrated business model. Unlike most computer hardware vendors, Sun makes its own chips (SPARC) and operating system (Solaris). Sun rose to fame during the early 1990s with its huge bet on the server market paying-off. Riding the exploding growth in that market, Sun grew faster than any other computer company to reach revenues of $1 billion. But things have not been going well for Sun in recent times. Sun's stock price, which hit $60 by the end of 2000, has fallen to about $3 by August 2004. In mid-2004, Sun seems to be beset by various problems. Low cost computers based on Intel chips and Linux software are posing a major threat. The company's cost structure appears to be bloated. There has also been major management turmoil. It remains to be seen whether Sun can overcome these problems and reinvent itself.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

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Keywords

Sun Microsystems, Microsoft, Dell, IBM (International Business Machines Corporation), Linux, Business model, Solaris, SPARC (scalable processor architecture), Hardware, Servers, Innovation, Business process, Application server, Sun's decline