From: jcliu@four-lab4.Berkeley.EDU (James C. Liu)
Newsgroups: soc.culture.japan
Subject: Re: DOES AMERICA SAY YES TO JAPAN? - Off track!!
Date: 9 Jan 1993 20:54:42 GMT
Organization: UC Berkeley Dept. of Nuclear Engineering
NNTP-Posting-Host: four-lab4.berkeley.edu

In article <1imc8rINNjnd@darkstar.UCSC.EDU> philb@cats.ucsc.edu 
(Philip Brown) writes:

  >jcliu@four-lab4.Berkeley.EDU (James C. Liu) writes:
  >
  >  >It is very doubtful that Sony can make a Sparc machine for LESS than
  >  >Sun can make it, because Sun basically buys the cheapest parts and 
  >  >puts them together at a huge profit.
  >
  >Don't matter. They are selling them for less than SUN does.

Still okay.  Just means that Sun is shipping lots of units of Solaris
OS.  And you thought Microsoft had the corner on OS licensing.  You see,
either way, Sun's making money.  In the real world, people have got to
stop thinking that the Japanese are a bottomless money pit with cash
coming out of their armpits.  Especially during this last recession, a
lot of Japanese companies have been in a real financial bind.  In the
real world, marketshare AND profits are needed to stay in business.  If
you were Scott McNealy (CEO SMCC) and you've got 40% of the world's
workstation business, but on the horizon is the threat of foreign
competition in the low-end workstation market, what do you do?  Hang
in there trying to thrash it out with Taiwan, Korea and Japan?  No way!
Let those guys lose money trying to outdump each other in the US market.
While you offer newer, bigger, faster machines like the parallel 20 cpu
Sparcserver with over 2000 MIPS/MFloPS.  You're profitable and still in
business while everybody else is taking a financial bath in red ink.
IMHO, I welcome Sony into the Sparc family of producers.  It just means
that very soon, SolarisOS is going to be defacto standard in the
workstation market and Sun will be on top while HP, DEC, and pitiful IBM
gag and choke and restructure.

  >Funny thing about Sun. Sun just BUYS most of its parts from other
  >companies. Right, Sun buys SONY's monitors. That's because SONY is GOOD
  >at making monitors :-) and surely they can supply themselves with
  >monitors for cheaper than SUN pays for their monitors? :->

Again a fallacy in thought.  Sony makes a run of 100,000 plastic cases
for the 16" colour and 19" colour monitors with the litte Sun logo, and
set a profitable price, expecting Sun to commit and buy monitors.  Sun
says.."screw you, Sony,  We're you're biggest customer.  We want you
to dump your monitors or we go to Philips and get our monitors from
them for less money..."  Sony thinks not only about the $1 million lost
for the cases they can't sell... lost the lost revenue now, and in later
years because Sun buys 50% of Sony's computer monitors...Naaah...Sony, 
eats it and gives their monitors to Sun at cost.

  >Okay, okay.. maybe not faster. but the word is "clone". I dunno if they
  >are actually paying royalties on them. the prices suggest they aren't.

Royalties are royalties.  Everybody pays...Sparc and Solaris go hand in
hand.  There's little Sony can do to get out of it.  The price
differential is due to the much higher profits that Sun makes on its
computers.  If you looked since 1980's and compared the profitability of
major US workstation manufactures like Sun, IBM, DEC and HP, you'd see
that Sun was out on top.  In 1992, the revenue per employee was in
excess of $149,000!  They shipped $3.4 Billion worth of workstations.
Moreover, Sun has a better margin on its Sparcs than other clones. 
Historically, when marketshares been at stake in the high end stuff, Sun
has tended to lower prices in a timely way to maintain its customer
base...while STILL maintaining some level of profit.  Examples include
the current Sparc Classic (IPC shoe box, 16MB RAM, 15" colour monitor,
207MBHD, Sparc2 performance), and the soon to be release Sparc-Tsunami
which will be sold at near i486 PC prices.  Lastly...there's customer
support.  Sony doesn't even have close to the level of support world
wide that Sun's got.  It'll be really embarrassing for some executive
at Morgan-Stanley or Merill-Lynch to have a network problem with their
Sony Sparc Clones...stocks are idle bits in memory and nothing is
moving.  Megabucks are evaporating in lost trade...and the Sony customer
support line puts them on hold for the next available engineer..
...tomorrow..:-)  Nope, I don't think Sun is going to be too
threatened by Sony.  Do you? 

Jaa, James
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