Sun to face tough questions

Sun Microsystems must hit the acquisition trail and overhaul its management structure if it is to remain a serious competitor to IBM and Microsoft, according to analysts.

Sun CEO Scott McNealy is due to open the company's European SunNetwork 2003 conference in Berlin tomorrow, with a keynote reinforcing his vision of the 'network computer' as the answer for simplifying IT and cutting costs.

McNealy will be talking about recent low-cost Java-based server and desktop software bundles, while emphasising Sun's commitment to interoperability, innovation and future technologies such as grid computing.

Good technology is something that analysts tend not to dispute when it comes to Sun but, despite McNealy's proclamations about cash in the bank, industry watchers remain concerned about the company's financial position and its ability to execute its vision and win customers.

Mike Thompson, principal research analyst at Butler Group, said Sun needs to ditch its obsessions – with Microsoft and SPARC – and concentrate on filling the gaps in its offerings and getting some high-profile customer wins around its new technologies.

"Sun has got some good technologies but I still think it has a problem in execution in terms of getting that message across since it tried to move from a box provider to a solutions provider," he said. "If it had a better management structure and was not quite so autocratic then it would be a better company."

Thompson said that with over $5bn cash in the bank, Sun should be looking at acquisitions.

"Sun needs to buy someone to give it visibility in the marketplace," he said.

Despite those concerns, Thompson said Sun's thin-client strategy and the latest version of StarOffice are "impressive" and that the company is ahead of all its rivals in terms of businesses actually using its products for grid computing.

Follow silicon.com this week for all the latest news from SunNetwork 2003 in Berlin, including interviews with McNealy and chief researcher and co-founder John Gage.