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by James Robertson.
Original Post: Scwartz discovers why Sun loses money
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Well, he hasn't really discovered anything. However, Whistle Boy has accidentally stumbled on one of the primary reasons that IBM is profitable and Sun isn't:
If you think about it, industry participants are incented to enable substitution " if they impede it, they can't fly the "J2EE" flag. In this instance, the measurement of "open" is ultimately made by a customer swapping out one app server for another.
Where's proof? Imagine you come to your senses next quarter when IBM asks for a big license fee (did I mention Sun's app server is free on all platforms?); you run the AVK again to see if you're gotten hung up on any IBM "enhancements" that go beyond J2EE; and if the answer is no, you move back. Substitution is enabled.
Never mind the fact that migrating between J2EE servers is not the piece of cake Schwartz makes it out to be - that's not the important thing here. It's where he points out that Sun's app server is free. As in, no revenue to Sun. WebSphere, on the other hand, costs big money. Big money that shovels into IBM's maw every say. What Schwartz and Co. have managed to do with J2EE is create a printing press for BEA and IBM, while conveniently taking none of the money themselves. And Schwartz thinks that this is a good thing!
One of the fascinating things about the early history of ParcPlace was pricing. Way back when, PPS priced ObjectWorks at well under $1000 USD. Sales were very slow. They moved prices up over $1000 - without really improving the product. Sales went up. With some classes of complex software, there's pretty much a "minimum price" - if you are below that, you are seen as either a toy or a marketing demo. That's where PPS was back in the early days. When they moved the prices up, they were seen as a "serious" tool. To some extent, this is where Sun is vis-a-vis IBM and BEA - they were late to the party, and their tools aren't priced the same way. If their app server were open source, they could probably get away with the free (support is sold) model - but on a proprietary product, free is mostly seen as "demo" or "not serious".
So the shovel keeps piling money from Sun to IBM, and Schwartz keeps smiling like a happy idiot. Sun's business model just baffles me...
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