Schwartz: Sun Will Put More Resources In Channel

Sun Microsystems CEO Jonathan Schwartz wants to step up Sun’s partnering efforts, but don't expect traditional VARs to be the prime beneficiaries.

Other IT vendors and hosted service providers are becoming an increasingly important channel for Sun product sales, Schwartz said Wednesday during a meeting with reporters at the Gartner Symposium/ITxpo in San Francisco.

"We look at companies like Yahoo and Salesforce.com as channel partners," Schwartz said. "Salesforce goes off and connects the world of CRM to small businesses. Salesforce runs Sun. As Verizon sells more handsets, we do more infrastructure business with Verizon. We view them as extensions of demand."

Three weeks into his new job as Sun's chief executive, Schwartz said he’s reviewing and reconsidering every aspect of Sun's operations. Channel partners will be key to Sun's growth plans, he noted.

"We're putting more money and more resources into the channel on the assumption that they're going to help us scale. All sales are local,’ Schwartz said. ’We are going to look to the channel to give us the eyes and the ears and, frankly, the arms and legs to reach out,’ he added.

But that channel growth may come from unusual avenues. Since releasing its Solaris operating system under an open-source license last year, Sun said it has licensed the code more than 5 million times. Nearly 70 percent of those using Solaris deploy it on non-Sun hardware, Schwartz said.

"HP, Dell, IBM--what were historically competitors may now instead be channel partners," he said.

Gartner analysts hounded Schwartz with questions about Wall Street’s big concern: How does he plan to slow Sun's flood of red ink? In its most recent quarter, Sun reported revenue growth of 21 percent but posted a $217 million loss.

Sun's critics say the company hasn't taken advantage of its technical imnovations to generate a product-sales lead. In response, Schwartz stuck to his mantra that if Sun innovates and expands the community of developers working with its technology, sales will follow.

"It's obvious to us that there is a linkage between developer interest and infrastructure opportunity," Schwartz said. "The issue isn't how much will a consumer pays us for Java. It's how much will an enterprise pay us for support of the infrastructure that runs their business."

Sun's innovation won't be limited to its technology R&D, Schwartz noted. He also wants the company to experiment with new sales models, including for its channel.

NEXT: More changes coming

As an example, he cited Sun's "try before you buy" program, which offers potential customers 60-day free trials on Sun servers. Schwartz said the program will benefit Sun and its VAR partners, if partners can use it to help them close deals.

"We'll ship the systems so that the channel doesn't have to store and ship them, and if the customer doesn't buy, we'll cover the postage and come pick it up," Schwartz said. "In the event that the channel can fulfill the sale, there's a lot of upside."

Schwartz addressed questions about this week's server and storage group shakeup, which saw Sun storage head Mark Canepa ousted and replaced by David Yen, formerly vice president of Sun's Scalable Systems Group. John Fowler, who previously ran Sun's Network Systems Group, took charge of all Sun systems products.

The change was made to reinvigorate Sun's storage business by infusing it with cutting-edge technology from the systems business Yen helped build, Schwartz said.

"What we saw when we acquired StorageTek was a company that certainly had a loyal following, but it was a customer base that was saying, 'What next?' " Schwartz said. He pointed to products like Sun's stored data encryption technology and upcoming Thumper high-performance file server as unique offerings that leverage Sun's broad technology portfolio.

Schwartz said he's pleased with the executive lineup he now has, but he also warned that more repositioning may be on the horizon.

"Change is a constant. Don't look at the changes made in the first three weeks as being the final changes," he said. "We're running a comprehensive review of every aspect of our business. Everything."