The Opacity in Transparency

I just got back from a week out talking to investors and customers, and hosting a few customer events in New York City. New York is a cultural center for a number of communities - notably for Sun, those who see technology as a source of value, as a competitive weapon, not just a cost center. Home turf for us. You can watch one of the videos here, and another interview at BusinessWeek, here - sentiment toward Sun is definitely improving. We had overflow attendance throughout our customer events, thanks both to rising interest in our products, and to Dell cancelling their analyst conference - timing is everything. Speaking of perfect timing, the Wall Street Journal awarded two of our core technologies, dTrace in Solaris 10, and our new ultra-efficient Niagara systems, their highest honors, just in time for me to announce the award on stage. Just in time. Now, as interest from investors and customers continues to grow, one question I consistently run into is "how much of your revenue comes from software? Or product x, y, z, etc." As I've said repeatedly (and it's at least one reason I write this blog), I'm committed to providing more transparency about our business - as much as I can, within realistic (and fiduciary) limits. But this is a harder problem than it might first appear. Here's an example. As you might be aware, we recently introduced a new product, code named "Thumper" - you can read about it here (and enter this contest for free kit). It's a 2-way, general purpose server, with 24 terabytes (yes, Tb) of storage, running Solaris and ZFS. It has very interesting performance (2 Gigabytes per second sustained i/o, for the geeks in the crowd), and pricing (well under $50,000 - less than $2 per Gig). Its service profile is what makes it most interesting, however: because it runs Solaris/ZFS, as the drives fail (and all disk drives eventually do), the system requires no maintenance. Instead, it either slows down, or shrinks (customers can choose) - but the integrity of customer data is never at risk. It's a reliable system built from inherently unreliable parts, a fundamental design principle of the internet. The other rather remarkable benefit of running Solaris on a storage device is that customers can actually run applications (like Oracle, SAS, or any analytical/trading algorithms) directly on their storage. Performance and efficiency are tremendous, in part because there's no network latency - because there's no network. (Just ask Joyent about their experiences.) Now here's the challenging part. As I mentioned, Thumper (sorry, the x4500) is built atop a 2 socket Galaxy server, it leverages Solaris/ZFS (but doesn't require it - Thumper runs Microsoft SQL Server quite well, too), and has 24 terabytes of serial ATA disk inside. So it's part server, part application platform, and part storage product. Customers pay only one price, but in the pursuit of transparency, how should we categorize the revenue? - as server, storage or software product? It obviously contains all three. For now, we're calling it storage - which underrepresents our server and software business. Going forward, if you believe, as I, that the era of custom hardware and software is coming to an end, this challenge - of characterizing a specialized system in terms of its ingredient components, is only the beginning of such a challenge for Sun - and the rest of the industry. The more we open up, the more you'll see we're built from common components and infrastructure - which complicates answering the question, "how much revenue do you generate from x, y, z." As interest continues to grow in Sun, we want to respond with more information about who we are as well as what we are - financially, technically, and culturally. Transparency's a competitive advantage, after all. Which is also why, as of this posting, this blog is now being translated into 11 languages - extending our reach, and invitation to participate, beyond only those who speak English. So hello, world (again).

Date: September 18, 2006
Category: Main

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