Subject: Re: What should Sun do?
From: Anthony Long <along@flexiety.com>
Date: Tue, 01 Feb 2005 05:59:51 -0500
Tue, 01 Feb 2005 05:59:51 -0500


Ng Pheng Siong wrote:

>On Mon, Jan 31, 2005 at 09:52:59PM +0100, Laurent GUERBY wrote:
>  
>
>>And BTW a totally rational decision in the
>>economic battle of Sun against Microsoft: a very cheap and effective
>>shot at killing Microsoft "cash cow" Office, buy some near abandonware
>>and stick a really free license on it.
>>    
>>
>
>I realise this thread is exactly about Sun's not knowing what it is doing,
>but I thought the corporate responsibility of Sun's officers is to increase
>Sun shareholders' value, not attempt to decrease Microsoft shareholders'?
>
>Wikipedia defines "dumping" thusly: 
>
>    Classically, dumping is a subset of what is known as predatory pricing.
>    Dumping in this sense is the act of selling a product at a loss now in
>    order to drive competitors out of business, with the goal of raising
>    prices when they do in order to recoup the investment. It is illegal in
>    the same way that many other anticompetitive behaviours are. However,
>    in practice, it is enforced far less than other antitrust actions.
>
>Of course, it is unclear Sun can raise StarOffice's price much higher than
>what it is now to recoup its investment on StarOffice. (A quick googling
>didn't turn up the acquisition's $ amount.) 
>
It was between $54 and $68 million.  See:  
http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?FilingID=469127&Type=HTML

>Is StarOffice and/or OpenOffice
>succeeding in driving MS Office's price down? 
>
Well, MS Office Student and Teacher is the leading retail version of MS 
Office (at around $129 ASP according to NPD), and retail is 40% of the 
Office franchise sales.  Before OpenOffice.org/StarOffice, MSFT had 
never really offered an entry level version of Office (not to be 
confused with Works).  In certain Asian markets, MSFT has dramatically 
lowered the price of Office, to the tune of about $35 a copy.  Maybe 
this has to do with OpenOffice.org/StarOffice or maybe it has to do with 
pirates.  I tend to think it's the former.


>Is Sun making money
>(operationally, ignoring the initial investment) on StarOffice? Or is Sun's
>incredibly profitable hardware/OS franchise subsidising its StarOffice
>business?
>
I would assume not.  It seems to have lost significant shelf space at 
retail, and there are few major U.S. enterprise deployments to speak 
of.  I wonder how long Sun can bleed from its investments in 
OpenOffice.org before it decides to pull out.  This is one reason it is 
critical to start moving in the direction of trying to get 
OpenOffice.org into its own non-profit corporate structure, and key 
FLOSS corporations and individuals to contribute to that.




Ng Pheng Siong wrote:
On Mon, Jan 31, 2005 at 09:52:59PM +0100, Laurent GUERBY wrote:
  
And BTW a totally rational decision in the
economic battle of Sun against Microsoft: a very cheap and effective
shot at killing Microsoft "cash cow" Office, buy some near abandonware
and stick a really free license on it.
    

I realise this thread is exactly about Sun's not knowing what it is doing,
but I thought the corporate responsibility of Sun's officers is to increase
Sun shareholders' value, not attempt to decrease Microsoft shareholders'?

Wikipedia defines "dumping" thusly: 

    Classically, dumping is a subset of what is known as predatory pricing.
    Dumping in this sense is the act of selling a product at a loss now in
    order to drive competitors out of business, with the goal of raising
    prices when they do in order to recoup the investment. It is illegal in
    the same way that many other anticompetitive behaviours are. However,
    in practice, it is enforced far less than other antitrust actions.

Of course, it is unclear Sun can raise StarOffice's price much higher than
what it is now to recoup its investment on StarOffice. (A quick googling
didn't turn up the acquisition's $ amount.) 
It was between $54 and $68 million.  See:  http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?FilingID=469127&Type=HTML
Is StarOffice and/or OpenOffice
succeeding in driving MS Office's price down? 
Well, MS Office Student and Teacher is the leading retail version of MS Office (at around $129 ASP according to NPD), and retail is 40% of the Office franchise sales.  Before OpenOffice.org/StarOffice, MSFT had never really offered an entry level version of Office (not to be confused with Works).  In certain Asian markets, MSFT has dramatically lowered the price of Office, to the tune of about $35 a copy.  Maybe this has to do with OpenOffice.org/StarOffice or maybe it has to do with pirates.  I tend to think it's the former.


Is Sun making money
(operationally, ignoring the initial investment) on StarOffice? Or is Sun's
incredibly profitable hardware/OS franchise subsidising its StarOffice
business?
I would assume not.  It seems to have lost significant shelf space at retail, and there are few major U.S. enterprise deployments to speak of.  I wonder how long Sun can bleed from its investments in OpenOffice.org before it decides to pull out.  This is one reason it is critical to start moving in the direction of trying to get OpenOffice.org into its own non-profit corporate structure, and key FLOSS corporations and individuals to contribute to that.