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Should Sun Mind – or Outsource – the Store?

So Matt says says that Sun isn’t relevant to startups, citing issues with the recently launched Startup Essentials program. To their credit, both Curtis and Jonathan took the entry seriously, quickly and sincerely apologizing for this particular failure.

From his opening, it’s apparent that Matt thinks – despite his frustration – that Sun could be relevant to startups. And I concur. The problem here isn’t having interesting products: they’ve got some of those, which is good, because that’s the hard part. The real issues are a.) how to increase awareness of them, and b.) how to reduce the purchasing friction.

I actually think Sun is doing an adequate job with the first part. Yes, there are still a host of developers that don’t know that Sun even sells x86 gear, let alone that it’s probably in their price range, but a.) Rome wasn’t built in a day and b.) things like Try and Buy at least demonstrate the willingness to be creative. It’s the second part, in Matt’s experience – and mine – that’s the issue.

Here’s my own history with Startup Essentials (we qualified for the program by a matter of weeks, as we turned four December 2nd):

  • November 3rd: Heard about Startup Essentials at Startup Camp, applied.
  • November 8th: Received an email update saying the following:
    Thank you for your interest in the Sun Startup Essentials Program.

    Due to the volume of interest in this exciting new program, it is taking us longer than expected to review your application. We will let you know your status within the next few days — thanks for your patience.

  • November 23rd: We’re approved for the program, and receive an email containing an agreement number and link w/ password to the Sun store. The Startup Essentials portion of the site is rather primitive compared to the regular Sun store.
  • November 23rd – last week: Receive 4 to 6 voicemails (I’ve been traveling quite a bit the last few months) from Sun representatives wanting to follow up on my entry to the program.
  • January 20th: Retrieve email, click through to the link, put an Opteron workstation in my cart, attempt to checkout. Checkout fails, as I can’t login. Attempt to reset password for my email address. Unknown to me, I’ve created four separate logins, which is exceedingly rare (can’t think of another site where I’ve done this). While attempting to login, I remember why I have so many login IDs: I’ve got the wrong password, but the reminder feature has some serious latency to it.
  • January 21st: Try to login in again, still timing out.
  • January 22nd: First login fails with an error. Try a second login id – success. Add Opteron workstation (2.2 Ghz, dual core Opteron, 1 GB RAM, NVIDIA Quadro FX 560, 80 GB hard drive @ $1250, plus another 2 GB RAM) back to cart. Checkout successfully.
  • January 23rd:
    • 7:42 AM ET:Receive an email from a Sun representative asking for my Sun Startup Essentials number. Not sure why that isn’t part of the ordering process.
    • 7:45 AM: Search through email for the number, email it over.
    • 7:55 AM: Receive a thank you email, which brings us up to present.

There are likely many conclusions and questions to be drawn from these and other experiences with Sun’s program – like how many customers would be patient enough to see this process through? For my part I see one very obvious conclusion, and one more complicated question.

The simple part is something I’ve written about before, and talked to Sun about, actually. Here’s what I said last month:

Know how to separate the wheat from the chaff:
Chaff being, in this case, very small startups with minimal purchase requirements. RedMonk, as an example, qualifies as chaff: I signed up for Sun’s Startup Essentials (we just made the cut, as I applied a month before we turned four) so that I could purchase a box or two at a discounted rate if I need them. No more than that. Having a salesperson call me for that is a waste of everyone’s time. Courting the Joyent guys, on the other hand, is probably a good idea seeing as they (want to) buy a lot more hardware than we do. The point is that all startups aren’t created equal, and you shouldn’t treat them that way. Court them all, but differentiate wherever possible.

I’m sure you can see where I’m going with this: the folks that were wasting time calling me should instead have been burning up the lines to talk to Matt. This is nothing more than failed triage and customer segmentation; a difficult problem, to be sure, but a solvable one.

But after considering the problem, I’m beginning to wonder whether Sun should even bother trying to fix this by themselves. Sun’s business is hardware, software and services – not designing easily used, convenient web storefronts. Unsurprisingly, this means they’re far better are designing hardware and software and delivering services than they are at producing ecommerce sites. Nor are they alone in this regard; while I love their machines, Lenovo’s website is not exactly headed for the web commerce Hall of Fame. So the question that I’m considering is this: should Sun – or Lenovo, for that matter – outsource their storefront to a third party – be that Amazon, eBay, or whomever? Hell, maybe they could even barter.

No, this would not immediately solve problems like customer segmentation, and yes it’s trading one set of problems for a new set of problems. But consider what Jonathan has said on a related subject in the past:

I was recently with a customer in the retail industry that continues to run its own private Linux distribution. The distro was developed a couple years ago, by a team that stepped off the beaten path for good reason (at the time) – that same development team now owns maintaining the distro, and making decisions about whether to replace it. As time has moved on, the customer has found no major ISV willing to certify to their private distro (without a check, that is – we declined the opportunity to port our Identity engines), and the team involved has found themselves buried with support obligations – driving more resource requirements while the parent company is looking to prune costs. I’ve seen a number of companies in this predicament (a few on Wall Street, btw).

My view, in this instance, is the “private distro” mud path should be paved with a commercial product, on the assumption Sun, Red Hat or Microsoft will all outinvest and outsupport the dedicated team – and bring with them a bevy of already certified ISV’s. But neither the team, nor their management, will hear any of this. “Our OS costs less than Solaris, it’s free.” Right, free like a puppy.

Then ask yourself: are Amazon, eBay and so on likely to outinvest and outsupport Sun’s dedicated team? Seems likely, from where I sit. I mean how bad could one click purchasing of Sun’s x86 gear really be?

The other likely counter argument is that storefronts are far too strategic to be outsourced. Perhaps. But are they really that much more strategic than, say, your human relations? Or your customer relations? Or your payroll? I don’t buy it, and that’s speaking as someone who was rightfully skeptical of early commerce front ends like Iconomy during the early part of this century.

As Jonathan admits, decisions like this tend to be emotionally charged, and ones that the entire industry will have to grapple with. But with customers like Automattic on the line, I think it’s important to get to it rather sooner than later.

Disclaimer: Sun is a RedMonk customer, Amazon, Automattic, eBay, and Lenovo are not. Lenovo, however, has provided me with a free laptop for testing purposes.

Categories: Startups.

  • http://billsaysthis.com BillSaysThis

    Even without outsourcing the store, filters could be added in, say, the data validation routines or database triggers so that tasks are routed to the sales team based on appropriate criteria captured in the form.

  • http://soulfood.dk Mads

    I don’t think this is all that clear cut an issue.
    Sun has often been hard to buy things from, and the story is often worse when you’re outside .us.
    That Sun wants to keep control of the process is fine for the large gear, when I buy something costing into several hundred thousand, I expect attention. But when I’m buying machines costing next to nothing, where Sun is more or less competing against whitebox vendors, then I want them at the click of a button. No hassle, no middle men, just speedy delivery at a competitive price.
    I think that Sun is often forgetting that they’re aiming for a new type of customers without having anyone in the organization used to dealing with that type of customers.

  • James

    Sun has always had resellers, and even then they’ve always been hard to buy from (I’m sure you recall the original Joyeur posts). They did try selling servers via ebay: http://cgi3.ebay.com/ws/eBayISAPI.dll?ViewUserPage&userid=auctions.sun.com but that seems to have died.

  • sogrady

    BillSaysThis: yup, wholeheartedly agree. there are many levels of fixes that can be applied, ranging from the simple to the complex – i.e. the outsourcing i recommended. all would be welcome from this customer’s perspective.

    Mads: you’re absolutely right to make the distinction between high and low end sales, b/c the buying behaviors – not to mention expectations – are entirely different. i also think you’re correct in asserting that Sun will need to learn on the fly how to deal with an entirely different kind of customer, and indeed that to a certain degree their future success will depend on how well – and quickly – they can learn.

    James: yes indeed, and i’ve got a bit of personal experience with Sun resellers in my distant SI past. i’m not sure, however, that Sun can rely on resellers here – i think they need to take ownership of the channel much in the fashion that Dell does.

  • http://www.redmonk.com/jgovernor James Governor

    Stephen your outsourcing point is an excellent one. Why not just outsource to Amazon? or perhaps a strategic alliance of some kind. The world is flat posits Fedex’s skills in this area, if memory serves me right.

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