By Timothy Prickett Morgan Sun Microsystems Inc, wanting to shift everyone’s attention away from its problems at eBay, has put out a barrage of positively spinning press releases touting how companies in the financial services sector are lining up to buy droves of its Ultra Enterprise servers. E*Trade has just opened a new Starfire data […]
By Timothy Prickett Morgan
Sun Microsystems Inc, wanting to shift everyone’s attention away from its problems at eBay, has put out a barrage of positively spinning press releases touting how companies in the financial services sector are lining up to buy droves of its Ultra Enterprise servers.
E*Trade has just opened a new Starfire data center outside of Atlanta that will be one of the company’s primary redundant sites to support its one million investor accounts; the center has over a hundred 250, 450 and 6500 servers (why E*Trade didn’t go with a dozen Starfires seems a fair question to which there is no answer). Ameritrade has just bought several Starfires and associated StorEdge disk arrays to support its order entry, back office and application development. Bloomberg LP, the financial information rival to Reuters and Dow Jones, has just bought an arsenal of Starfires to deliver stock and financial data to its 115,000 trading desk customers. Salomon Smith Barney has just upgraded its aging trading workstations to Ultra 10s, and the company’s data center in the Tribeca section of Manhattan is purported to house one of the largest Unix installations in the financial services industry.
With these kinds of big deals, it is no wonder that International Data Corp reckons that Sun was able to garner a 42% revenue share of the $895m in worldwide high-end Unix server shipments in 1998. (In IDC lingo, high-end means a server that costs more that $1m.) That high-end Unix server business more than doubled from $437m in 1997, and IDC says that Sun’s revenues in this space also more than doubled. Sun’s nearest competitor, says IDC, grew revenues by only 12% between 1997 and 1998. IDC didn’t name the number two high-end Unix server vendor, but it is almost certainly Hewlett- Packard. (IBM may have a lot of high-end RS/6000 Northstar and SP installations, but it didn’t, unlike this year, have that many million dollar deals in 1998.)
The Gomez Advisor, located in Concord, Massachusetts, also announced that based on a survey of top online brokerages that it recently performed that Sun Microsystems is the undisputed leader in Web trading, a very tall claim and one that is arguably not true. Gomez Advisor (www.gomez.com) is a subsidiary of Philadelphia-based Ashton Technology Group, which bills itself as an Internet technology company that is designing proprietary financial transaction systems that it will deploy over private networks and across the Internet but which has been involved in trading systems since it was founded in 1994. Gomez, which rates online sites for a living, surveyed 17 of the brokerage firms on its summer top 20 brokerage list. Among those firms, which include the usual suspects – E*Trade, National Discount Brokers, Schwab, DLJDirect and Discover round out the top five – Gomez says that Sun iron accounted for 71% of Web servers and 59% of application servers in use at these companies. Windows NT accounted for 71% percent of Web servers and 35% of application servers. IBM mainframes edged out Sun servers 35% to 29% on back office systems (meaning the data bases behind all those stock transactions as well as other kinds of applications like billing, personnel and so forth. Twelve of the 17 brokerage firms surveyed had IBM mainframes as their main back office systems, with only four having Solaris platforms and another firm having another Unix flavor for the core back office systems.
The implications of Sun’s recent PR and the Gomez study are clear: Sun has dominated the ISP market, and it will extend that domination to the e-business market, with the recent successes in the financial services sector being some kind of microcosm of how the rest of the world – which represents a much larger customer base that is entrenched in myriad operating environments and untold billions of dollars in customized applications – will eventually adopt Sun as their primary vendor. There are very good reasons why ISPs in the early and mid 1990s chose Sun servers to build the internet backbone – they were reliable, relatively cheap and Solaris was solid for that kind of work – but that in no way means that ISPs, ASPs and e-business sites in the world at large will somehow become addicted to Sun like the Fortune 500 is to IBM mainframes.
The brokerage industry, it turns out, is not a very good barometer for measuring how various server and workstation vendors are going to fare in the commercial market at large, even though the financial services industry certainly was a good indicator of how computers would eventually be used throughout the corporate world when they were first installed decades ago. In the early years of computing, banks and brokerages by and large bought IBM mainframes and are still using them today. That IBM could get 35 solid years of mainframe sales in the banking and financial services industry says more about the corporate addiction to MVS, CICS, IMS and DB2 than it does about anything else. And while Sun certainly has a lead at financial institutions and can perhaps get preferential treatment over the next five to ten years from these firms if its techies and support staff work hard, the very open nature of Internet technologies means that Sun can get booted out of any of these firms at just about any time it falters – just like companies who don’t like crashes on the Schwab site can rip their money out an move it to E*Trade in a heartbeat. For many companies, unless they are convinced they are using a dead-end platform, what they will do as they modernize their applications for e-business is go with what they already know, and that, more than any other factor, is what will limit Sun’s growth.