Once is happenstance, twice is a trend. So when both Sun and IBM announce disappointing results, it's all too easy to diagnose a fading market and more trouble ahead. But both companies are changing: what look like setbacks are better described as growing pains.
For Sun's part, the company has embarked on plans to open-source Solaris and deliver commodity servers based on AMD's Opteron processors, but the efforts so far have failed to trigger a consistent recovery of either stock or revenue growth.
It's a strategy that Sun should have begun much earlier. Any platform depends on application developers as its lifeblood; if they seep away — to Linux for example — the platform will die. Oracle learned this years ago when it made its database platform available to developers for practically no cost; and IBM realised it at about the same time when it hitched AIX to the Linux bandwagon instead of UnixWare.
Sun only got there last year with its project Janus initiative, which lets Linux applications run on top of Solaris; making Solaris open source is the next step. It's been a visibly difficult step for the company to take, and furthermore one that won't help the company finances in the short term. But it lays down foundations for long-term growth in a world where governments are increasingly demanding open source credentials of their suppliers.
At IBM meanwhile, chief executive Sam Palmisano blamed disappointing results on the fact that the company had not been able to close a number of transactions before the end of the quarter in its Global Services division — the organisation's most egg-laden basket. He blamed countries with "soft economic conditions"; in particular France, Germany, Italy and Japan, which in total represent a quarter of its revenue. As with Sun, this is a sign of the rest of the world refusing to dance to IBM's tune as quickly and precisely as the band would like.
IBM chief financial officer Michael Loughridge said he didn't think IBM's first-quarter performance indicated a general downturn in technology spending, and we'd agree. Today's figures show companies moving in the right way, just not with quite the right timing.