Execution On Innovation (Video with slides)

Peter Ryan, Executive Vice President, Global Sales & Services, delivered a talked called "Execution On Innovation" at Sun's recent "Sun Analyst Series (SAS) 2008" event.

Peter opened his talk by saying that his goal was to give the audience of analysts a perspective of what Sun is seeing in the field, with partners and with customers and why, "frankly we are optimistic and positive about the future." He continued, "I'll try to give you proof points about why we're confident and what we are seeing out there. The one thing that's missing in lots of the discussion that takes place in the chat rooms and blogs is factual details. I'll try to give you some context there."

In difficult economic times, companies have three choices. One choice is to acquire firms who are undervalued. Without knowing how quickly the economic environment will change, that's really a gamble.

Peter says, "the second thing you can do is sit there and do nothing. When you are in the situation that we are with three billion dollars plus on the balance sheet - which means that every Friday when we close and go home for the weekend, we know that we are going to open on Monday. From our customers perspective, that's what they want to know. They are making bets for the long term future of their business and they want to know that they're dealing with a vendor who is going to be there with them. Doing nothing would be a strange strategy in a time when you can see difficult trading conditions out there."

He continued, "For me, the reductions that we've announced, which will be broadly across the company, are really to allow us to use the strength of the balance sheet we have today, make sure that we trade positively and effectively forward and that our customers don't need to doubt about our future relevance and existence for them. For me, in a sales environment, that's what they want to know."

Peter also talked about the "Sales & Marketing Alignment" and how it will strengthen his ability to go execute in the market place. He also said that, "the way we make sure that we are a best in class sales and services organization in the field is during this time to make changes and build a foundation that will allow us, as the markets come back, to invest confidently, therefore we are taking the time to do that. This isn't just about 15% of the employees in the company get reduced and I just apply that to all areas within GSS. What we are doing is focusing on the growth areas, how we best help our customers, how we best help out partners, and then we will make the reductions in that light. ... What we do know, without doubt, is that at some point we will come out the other end of the cycle "

Technology Bets Are Paying Off

Peter next addressed a slide with these points:

Solaris-based CMT systems grew 83% y/y
Open Storage systems were up triple digits y/y
Majority of the SW business grew
Market is increasingly looking to open source
Sun remains in a strong financial position to weather market conditions
Continued focus on our growth plan

"The sky is not actually falling", said Peter, "there's lots of bad things going on; there's lots of difficult things happening. For us, particularly, it happened in some of the markets that traditionally been our strongest performing markets. It also happened in some of those product areas that have been our strongest over the years. And there's noting we can do about that." He continued, "We have built up a very strong business and customer base over the last 26 years and some parts of that are in more difficulty than others."

In the last earning report, Sun broke out, for the first time, their billings by category. This helps to show that there are parts of the business that are, "growing quite dramatically."

CMT

Peter pointed to the CMT business as an example of that. The 83% year over year growth is on top of excellent sales and Sun is breaking out into new markets and new customers with the CMT products.

Peter observed, "The 'batoka' [T5440] announcement was last month. I've had a long sales career. It's very rare in that career that you bring something out that's four times as fast for 20% of the price. As a sales person, you take a deep breath, because you want to make sure that it's not just a marketing slide, to be frank. And then you move on and say, what are we really going to do with this? What we are finding in the marketplace is an incredible amount of interest because that's a technology that's ripe for the moment. When customers are facing issues about cost, what they try to do is consolidate. In the modern world, they try to virtualize, and we've got incredible consolidation platforms there."

Open Storage

On "Amberroad", the Sun Storage 7000 Unified Storage System, Peter said, "I've never seen such excitement about a technology, both internally and externally. I started my career as a systems programmer and a systems engineer and I know storage quite. This almost gets to the end where you are thinking someone has written a film (movie) and it's all kind of choreographic some way - the ease of use, the ease of deployment, and management and also the performance - being able to get down to a level where you can actually see which file for which user is performing in which way - is stuff that storage management people have been dreaming of for years. "

Systems Software

Peter commented that, "the software business has been a standout for us. I think that the changes that we've made will just help us drive even faster. If you look at the things that have been moved into the systems part of the business, these are things that go with the systems; they tend to be attached or they manage the systems environment. The sales force is very pleased with that because it aligns the technologies very well. Normally, they are in the same conversation."

Open Source

Sun's open source strategy is under constant scrutiny in the chat rooms and across the blogosphere. When asked about the amount of free software that Sun gives away, Peter says that asks his sales force to open up their price list and asks, "show me what you have to sell and tell me if you think that you have enough to sell. We have an incredible range of technology."

He continues, "The second thing about open source is that it is about creating the future. It's about making sure that the next generation of developers, of entrepreneurs, of ISVs design Sun in from the start. We are seeing tremendous progress. I was in Shanghai, China a couple of weeks ago. It's interesting to sit down with government officials who explain to you their ten year plan and step one in their ten year plan is make sure that we adopt open-source technology in the right way. This is happening. You don't see it in the quarter revenues, except in things like MySQL where we are seeing good lift on the revenues, but in general what's happening is we are being designed in now. "

Cash Balance

Peter reminded the audience of analysts that Sun has a cash balance of slightly more that three billion dollars. "That gives us incredible flexibility and incredible confidence in knowing quarter after quarter that we are in place to execute on the strategy that we still believe is right."

Growth

"We are focused on growth. The changes we are making, the focus we have is all to drive us down the growth path."

Rest of Presentation

This article represents about the first 1/4 of Peter's talk.

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Video (46:02)

Peter Ryan - Executive Perspectives [...read more...]

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