Sun catches Net startup fever

Under pressure from Hewlett-Packard, Sun is stepping up its recruitment of Internet startups -- but won't put money down.
Written by Deborah Gage, Contributor

Sun Microsystems is stepping up its recruitment of Internet startups that agree to run their businesses or develop software on the Sun platform.

But unlike Hewlett-Packard and some other major system vendors, Sun will stop short of investing in startups, instead providing inexpensive hardware, software, and bandwidth that Sun accrues through its own deals with service providers. "We think we're not smart enough to figure out who among you is going to be successful, and we're certainly not arrogant enough," said Sun VP Doug Kaewert in a keynote speech Wednesday morning at the Internet ASP Forum in San Francisco.

"I don't talk to many people who want to give a slice of their company to the venture capitalist, a slice to the service provider, and a slice to a computer company. How much revenue is left?"

But in a question-and-answer period following the keynote, Kaewert acknowledged feeling pressure from Hewlett-Packard, which is recruiting aggressively partners for its e-services initiative.

A representative from one unidentified startup pleaded for help from Sun, which it called "the industry leader". "We need to know how to plug our applications into your architecture and get more scaling and redundancy," the startup representative said. "HP's delivery, services and financing were more robust."

Kaewart promised Sun will be more responsive and said Sun now has an entire organisation dedicated to helping Internet startups both at the corporate level and in the field. Kaewert was assigned to his position in a reorganisation that took effect 1 July. Meanwhile, in an interview Tuesday, HP Chief Marketing Officer Nick Earle claimed HP is winning deals from Sun.

"(Sun CEO) Scott McNealy shows up and says, 'How many StarFire (servers) do you want to buy?' And HP says, 'How can we build a business together?'" said Earle, who has been offering free hardware to select companies in exchange for ongoing revenue from e-business transactions. HP also takes equity stakes in companies.

One possible loser in the reorganisation is Sun's resellers, who were supposed to be targeting "dotcom" companies.

Kaewert acknowledged that while some of Sun's resellers were "dialed in" to the opportunities, others were not. "The fax was running from people wanting to buy stuff and they were not getting called back," he said.

Sun continues to shift its strategy toward resellers. At Sun's annual reseller summit in April, McNealy urged resellers to get a Sun Starfire and become service providers themselves. Kaewert said Sun now offers partnering opportunities for resellers and that those who add value will continue to be successful. He said the explosion of new startups has made it impossible for Sun to keep up.

Kaewart also said some of Sun's traditional software partners, including ERP companies, have complained to Sun that McNealy's constant urging to "do what you do best and outsource the rest" has slowed their sales.

But Kaewart said Sun will continue to preach McNealy's message and will focus on providing a secure, highly available infrastructure for service providers so that developers can plug in their applications, even though Sun doesn't yet have all the answers.

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