Sun execs tell of major industry changes

Jan 11, (Bangkok Post) -- Enterprise computing is rapidly becoming a service that will be delivered over the Internet and computing will come to resemble more closely the telecommunications model than the existing client-server model of computing.

In short, it will be a very different computing environment that we will find ourselves in soon. This was the underlying message delivered at a Sun Microsystems Press Symposium in New Delhi, India recently, where Sun's chief research officer, John Gage, spoke of how Sun would "not be selling hardware" in the near future. Instead, the maker of high-end Unix servers would be enabling others to rent applications over the web, he said.

Dr Gage recalled how Microsoft's Internet division vice president Rick Belluzzo had said recently that "renting applications over the Internet is a new business model we plan to enter this market, and provide web-based applications." Dr Gage argued that the fact that Microsoft, the leading supplier of client-server software, was already signaling this shift was a clear sign that this trend was well under way, supporting his bold contention that "you won't buy any more computers from Sun." He said that Sun Microsystems would instead be selling its computers to the people who provided the applications over the Internet, with a few big service providers coming to dominate this new market, he predicted.

Already, many companies were outsourcing applications, such as their internal electronic mail, to providers such as Yahoo or Hotmail, while many new services were now being offered over the Internet. Dr Gage gave the example of how General Motors was deploying a service called On-Star to its Cadillac customers. The service uses a GPS location system to enable it to offer a wide range of services to motorists, including the ability to provide directions to restaurants and even banking services. And he predicted that this service had the potential to enable GM to give away the car and sell the service with it.

He added that the trend complied with a proven economic model, using the concept of a free or inexpensive razor that paid for itself through repeat orders for razor blades. Other speakers at the two-day symposium echoed the idea with other examples of this new model of service business, some IT-related and some not.

Darryl Carlton, CEO of Biztone.com, a Singapore-based web ERP software provider, gave some other real-world examples of outsourcing of services. These included how air-conditioning in some US buildings was being paid for on an "as-used" basis, as was the carpeting in some hotels and buildings, which is provided, cleaned and maintained independently as part of this service.

Mr Carlton also noted how ANZ Bank now outsourced its purchasing and procurement services to PricewaterhouseCoopers, while the oil giant BP/Amoco had recently invited PricewaterhouseCoopers to manage its accounting and book-keeping, giving two other examples where non-core competencies were being outsourced.

Sun Microsystems Asia South managing director Lionel Lim pointed out that large Internet co-location providers such as Exodus Communications, Digex and Uunet would become the service providers of the next decade.

He also said that portals would be the killer application of the network age, and that this would apply to businesses, consumers and industry at large. Mr Lim also said that dot.com architecture would more closely resemble that of the telecommunications model, and several speakers suggested that another killer application in this new, "computing-as-a-service" era would be the ability to bill for such services.

Indeed the telecommunications companies of today would be very well-placed to take advantage of their immense experience in this field, according both Dr Gage and Mr Carlton, who described the IT business as now being in the middle of a revolution-a "fundamental change." Mr Carlton referred to Harvard Professor Clayton Christiansen, and author who highlights the risks of ignoring dramatic breakthroughs in technology.

Christansen's research in such industries as hard disk drives, steam shovels, motorcycles and sailing ships convinced him of the power of disruptive technology and he makes a compelling case that when a new and disruptive technology emerges, it is newcomers going after new markets, rather than the industry leaders satisfying their existing customers, who are usually best able to strategically harness technology and, eventually, to best their traditional competitors.

Mr Carlton believed that such a fundamental, complete change was occurring today-a time when Mr Christansen predicted that existing players would lose and go out of business. He added that among the factors in change would be a massive increase in the sheer size of the computer user base in an era of Internet computing.

Dr Gage also pointed to another significant transition now taking place, which was from the single-board computer to the single-chip computer, where all the components on a working computer can be integrated onto a single chip. This promises to bring a change to the computer industry that is comparable with that which occurred with the introduction of the single-board computer-when the personal computer came in and rapidly displaced multi-board minicomputers. He pointed out that, with the exception of IBM, none of the hardware and software companies of that era continue to exist today.