Sun's Rekindled Star

Sun's service business is showing signs of life. Service revenue increased for the sixth consecutive quarter ended Dec. 31. For the most recent period, its $1.3 billion showed a respectable 6 percent year-over-year spike.

Don Grantham, Sun's vice president of services, told analysts that the company's service business has 9,000 salespeople, half of which are presales engineers--an area Sun plans to focus on with more intensity this year, he says.

"We built Solaris. When a customer has an issue or a call, we can contact the inventors...to turn around proper resolution," says Richard Green, EVP of Sun's software group.

The model of integrating services with products has helped drive volumes overall, he adds.

Grantham says the channel represents four to five times its overall sales presence, and it's put margin programs in place for those who sell and/or deliver services. The area of focus this year will be extending that to volume business.

"If we're going to be successful in generating value from volume, we know we have to go to market in different ways," he told analysts.

One key question that remains is Sun's utility-computing effort, Sun Grid Compute Utility. For years, the company has evangelized a model whereby customers pay only for the capacity and processing power they use--much like electricity. But it doesn't appear that model has gained much traction.

"For traditional resale, I haven't seen where that plays," Cate admits. "But for ISVs and service providers, that's a big play."

NEXT: Four projects in Sun's pipeline