Sun Microsystems has posted excellent Q3 figures.
Sun’s recent performance has astonished all onlookers and once again it outshines its competitors. This quarter’s results are made all the more dazzling because its main competitors, IBM and Hewlett Packard, have become more aggressive in the higher end server market.
Although its margins are lower, this is due to component costs rather than pricing pressure. IBM’s and HP’s rebranding is likely to increase pricing pressure in future, but Sun’s huge order backlog shows that demand is not a problem. HP and IBM have yet to build up momentum while Sun enjoys widespread brand recognition and a tremendous installed base. The situation won’t change until HP and IBM start to win business off Sun.
Sun’s recent growth is made all the more impressive because it has been largely organic rather than through mergers and acquisition. And this same level of performance could continue. While the fall of the dotcom sector could hurt the company, its revenues are well balanced between traditional and dotcom companies. Last quarter only 10% of its revenues came from dotcoms.
The key challenge for Sun now will be to extend its US success to other markets. Mainland Europe has already seen the dawn. It looks like Sun could stay up for some time.
