25: Sun Microsystems, First Who...
25: Sun Microsystems, First Who...
Tuesday's 24: MIPS L5 Spoiled Startup and today's class provide an opportunity to summarize many of the key concepts we have learned throughout the semester. We will study two companies, MIPS and Sun Microsystems, that started at roughly the same time, in the same industry, yet had very different approaches and outcomes. Consider how the different approaches led to their success (or not).
Review the MIPS Computer Systems case, originally assigned for Tuesday. Then, Read “First Who … Then What” (or the 2-up version), which is from Jim Collins’ book, Good to Great (HarperCollins 2001: ISBN 0-06-662099-6), and is available on the course web site (Files/Readings). Do you think Collins’ conclusions are supported by the cases we have studied this term?
Read the “Vinod Khosla and Sun Microsystems (A)” case. This is a very interesting case about the startup days of Sun Microsystems which was acquired by Oracle in 2010 (https://www.oracle.com/it-infrastructure/ and https://www.java.com). Think about how you would answer the following study questions during your analysis of the case:
- Does Vinod Khosla have a real chance of changing Computervision’s decision? Does Sun have a better product? Can Sun be regarded as a reliable long-term vendor?
- How should Vinod Khosla respond to Computervision’s president? What should his long-term and short-term objective be? Specifically, what should he offer Computervision?
- For Sun, what are the consequences of not doing this deal?
- If you are in CEO James Berrett’s shoes at the time of the case, from Computervision’s perspective what are your concerns, both pro and con, of doing the deal with Sun Microsystems instead of Apollo?
- Would you make a different decision than Computervision? Explain.
- Sun Microsytems and MIPS (the company we studied in our last class) were started at about the same time (1982 and 1984, respectively). How did Sun’s approach to starting its business differ from that of MIPS (which we studied last week), and why does this lend itself better to a successful outcome?
DUE:
There will be a short 12-minute closed-book, closed-notes quiz on one or more of today’s readings at the beginning of class. The quiz will be available via Canvas, so be sure to bring a laptop or tablet to class to take the quiz. Make sure your laptop/iPad is configured for Respondus Lockdown Browser.
Quiz questions are typically derived from the study questions provided above as part of the day’s assignment. While the quiz question may not exactly duplicate a study question, it usually will relate to the substance of one or more of the study questions. To prepare for a closed-book quiz, be sure you are prepared to address each of the posted study questions.
NOTE: Days on which we have quizzes, no essays will be due.
1. Does Vinod Khosla have a real chance of changing Computervision’s decision? Does Sun have a better product? Can Sun be regarded as a reliable long-term vendor?
Khosla has little chance to change the decision—Computervision was already finalizing its deal with Apollo. Technologically, Sun offers a superior product: open standards (UNIX, Ethernet), modular design, and strong engineering talent. However, as a young startup with only 40 employees and limited OEM track record, Sun lacks the credibility to be seen as a reliable long-term vendor.
2. How should Vinod Khosla respond to Computervision’s president? What should his long-term and short-term objective be? Specifically, what should he offer Computervision?
Khosla should emphasize Sun’s technical strengths and flexibility, and propose a pilot deployment to mitigate risk.
- Short-term goal: Keep Sun in the conversation and delay final commitment to Apollo.
- Long-term goal: Secure Computervision as a flagship OEM customer to establish market credibility.
- Offer: Deep discounts, strong support guarantees, and engineering collaboration for customization.
3. For Sun, what are the consequences of not doing this deal?
Failure to win Computervision significantly weakens Sun's OEM entry strategy. Apollo would further solidify its dominance, making it harder for Sun to attract other OEMs. It would also slow Sun’s transition from academia to commercial markets, limiting growth and reducing its appeal to investors.
4. If you are in CEO James Berrett’s shoes, what are the concerns—both pro and con—of doing the deal with Sun instead of Apollo?
- Pros: Superior technology, open architecture, better long-term flexibility, and strong university adoption.
- Cons: Sun is young, undercapitalized, and unproven at scale; Apollo is stable, well-funded, and already supporting similar OEMs. Risking a core product line on Sun could endanger Computervision’s market position.
5. Would you make a different decision than Computervision? Explain.
Given the risk profile in 1983, I would likely stick with Apollo. It was the safer, proven option. However, if Computervision had a high appetite for innovation and could structure a low-risk pilot with Sun, I would consider it as a forward-looking strategic move.
6. How did Sun’s approach differ from MIPS, and why did it lend itself better to success?
Sun focused on assembling a world-class founding team (“First Who”), using off-the-shelf components, targeting the university market, and building scalable, open systems. In contrast, MIPS was highly tech-centric, focused on proprietary RISC chips, and overly reliant on OEMs. Sun’s pragmatic, customer-driven strategy allowed faster market entry, revenue generation, and credibility building—aligning well with Collins’ “First Who, Then What” principle.