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April 15, 2004

Volume and enterprise systems shake-up for Sun

More executives are exiting Sun Microsystems Inc following a volume systems reorganization expected to open the door on a "recurring" revenue model for hardware and systems sales.

By CBR Staff Writer

Volume systems vice president Neil Knox, who helped design and bring to market Sun’s Sparc and x86 systems, is leaving the firm. Sparc, enterprise systems and microprocessors are being placed under executive vice president David Yen’s newly created Throughput Systems organization.

Intel and x86 systems move into the Network Systems organization under Sun software’s current chief technology officer (CTO) John Fowler, now serving as acting vice president and lead technology officer. Yen and Fowler report to new president and chief operating officer Jonathan Schwartz, former software executive vice president.

Hardware is likely to see further management change, as enterprise systems executive vice president Clark Masters is considering a number of internal options, according to Schwartz.

Also leaving Sun is chief marketing and strategy officer Mark Tolliver, former iPlanet president, who was also a lead executive on Sun’s $1.6bn legal settlement and 10-year technology cooperation agreement with Microsoft Corp. Software business management and marketing vice president Anil Gadre becomes interim chief marketing officer and Brian Sutphin vice president of corporate development.

The shake-up comes after vice president for developer tools and Java software Rich Green became the first executive to quit Sun in the wake of the company’s Microsoft deal. Green has joined Cassatt Corp.

Coming after Schwartz’s appointment as president and chief operating officer, these changes can be seen as Sun purging older box-focused executives and placing individuals to lead a hardware-based sales strategy based on annuity

In February, Sun launched a three-year subscription to the x86-based VM20z Server for $1,499 a year with Solaris 9.0 for x86, Java Studio Enterprise and Sun Studio, compared to the VM20z’s regular $2,795 price.

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I encourage you to look at Sun.com for an early foreshadowing of what we think is an interesting model, where we give the hardware away for free, Schwartz said.

Announced slightly ahead of Sun’s scheduled third-quarter financial conference call yesterday, the shake-up caused concern on Wall Street, where brokers are already troubled by the company’s repeated poor quarterly performance and unconvinced by the revenue potential for its software strategies of charging customers on an annual basis for Java Desktop System (JDS) and Java Enterprise System (JES).

On analyst asked Schwartz and chief executive Scott McNealy whether we could expect radical transition in the midst of this management change. Schwartz said Sun had the breadth and depth of experience to move quickly through the transition.

For the period to March 28, Sun recorded a $760m net loss, down from a $4m profit, on $2.65bn total revenue, down 5%. Loss per share was $0.23. For the nine-month period, Sun closed its loss by $1.21bn to $1.17bn on revenue that fell 4% to $8.07bn. Sun’s loss per share was $0.36 compared to $0.75.

This article is based on material originally published by ComputerWire

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