Sun shines light on commitment to change

"You've seen it before in a lot of companies. You get successful, you get confident, you think you can't lose any deal - and then you get whacked in the head."

When Sun Microsystems' chief operating officer Ed Zander starts talking in his distinctive New York drawl, it's hard to stop yourself conjuring up scenes from The Godfather or Goodfellas. But unlike the Mafia hoods who share his Brooklyn twang, Zander believes that hard work rather than 'offers you can't refuse' is what will keep customers loyal to the supplier in future.

"We have tough competitors. You can't substitute working hard. You have to approach every day as you did before you were successful," he said.

Maintaining this streetwise perspective is only going to get harder, however, as Sun's financial performance continues to improve from quarter to quarter.

And its fourth quarter results, which were announced in late July, turned out to be the best yet. Profits rose 67 per cent to $660m, on revenues that increased by 42 per cent to $5bn, ensuring that the vendor remains a darling of the stock market despite the recent collapse in technology share prices. As a result, industry analysts are upbeat about its prospects.

"It's hard not to be positive about Sun when it's doing so well. Its financial results show it is way ahead in the server market. Even Intel's server farm in Swindon uses Sun boxes," said Peter Lemon, research manager at analysts IDC.

As the right-hand man to chief executive Scott McNealy, Zander has good reason to be bullish. He was in London earlier this month after having taken a tour of Sun's outposts in Ireland and Scotland, and spoke about the changes that he hopes will transform a moderately successful 1990s server supplier into the king of the internet.

A new dawn
"The big reinvention of Sun in the next five years is about providing the next level of massive scalability and continuous uptime for our customers as they operate in the internet era, which means reviewing how we design, build, manufacture, test, sell and support our products," said Zander. "We're breaking the glass, as we say in the US. We're attacking every process in the company. There isn't a group that isn't affected."

Over the last three years, he has tried to reposition Sun as a broad-based infrastructure supplier, providing not just its traditional Solaris-based Unix servers, but storage systems, development tools and internet applications.

With this expansion came the realisation that the old ways would not work in the New Economy. To support companies operating on a 24 x 7 basis across the web requires a different culture from one that sees staff simply waiting for users to ring and say their hardware is broken.

"We want to be a company that's much more responsive to customer satisfaction," said Zander. "We're as dead serious about this as any product or technology. How do we change the culture? It's not easy. It's going to take a while. We have a lot to do to establish ourselves as the sort of company we want to be."

So, while it's all smiles at Sun at the moment, the company is also trying to address the future too.

"We should remember that today's financial results reflect the success of last year's marketing and the research and development from three years ago," said Lemon. "If there is a weakness, it's at the low end, where Sun is not riding the Linux wave. Sun sees Linux as a baby-feeder for Solaris, expecting companies to grow into Solaris. That's a gamble. At the high end, Sun had a free run for two years, but it's going to get much harder now."

Home truths
But its current success has also given Sun the confidence to take a swipe at the competition. The firm has been one of the main advocates of the US Department of Justice's antitrust proceedings against Microsoft, and while the software giant was still reeling from the judgement against it, Sun pointed out a few home truths to the European Commission. As a result, the Commission launched a probe into Microsoft's activities in the server market earlier this month.

Zander's views on Microsoft are typically forthright, however. "In my country, we have courts, we have laws," he said. "Microsoft has shown a lack of respect for the law. Nobody likes to go to court, nobody likes to resort to government, but we have those laws. I think Sun and other companies just want the right to compete in an open marketplace. Microsoft could have avoided a lot of this by just playing fair. All we ask for is a level playing field."

Changing a company as big as Sun isn't easy, but Zander's trying - he's not interested in 'sleeping with the fishes'.