September 8, 1999 2:25 PM PDT
Sun's second shot at thin clients
As previously reported, Sun today released the "Sun Ray," a thin client computer that, ideally, lowers ownership costs, makes remote network access a snap, and allows users to avoid paying Microsoft a dime. The Sun Ray systems are basically display devices with a keyboard and mouse that leave processing tasks to a central server.
Sun plans to lease the diminutive devices for at least $10 a month and sell them for $499. IBM and other companies launched products today as well, hoping to capitalize on an uptick in popularity for thin computing.
However, it's all been tried before. In 1997, Sun made its case for the first time that companies should swap out their PCs in favor of simpler thin clients. Unfortunately, the company basically required those companies to abandon the rest of their computing infrastructure as well, said Andy Bochman, an analyst with Aberdeen Group. Sales were low.
This time, Sun is trying to fit in a little better, which, according to Bochman and others, might lead to some degree of success.
"We expect these initiatives to be modestly successful," said Merrill Lynch analyst Steve Milunovich in a research report. Overall, though, he believes Sun is well-positioned because of its association with the Internet. "We strongly recommend the stock," he said.
Indeed, Sun stock rose to an all-time high today, clearing 87 and giving the company a market capitalization of $68 billion.
Sun, stung by the flop of its first attempt at thin clients, is taking great pains not to overhype the Sun Rays this time, Bochman said. "There's definitely a history of bravura, with [Sun chief executive] Scott McNealy saying 'death to the PC,' then it falling flat, and people saying Sun is full of hot air," Bochman said.
This time, Sun is better positioned. "The potential to displace PCs is enormous," he said.
Sun debuted the Sun Ray systems today at a gala event in New York, along with a system called Hot Desk for using smart cards to transfer computer users' identities and computer desktop settings from one client to another. The news dovetails with Sun's announcement last week of a new version of StarOffice called StarPortal, which lets office productivity software run on a system with central servers and thin clients.
The Sun Ray products use Sun's UltraSparc IIEP chips, said Bob McKee, a marketing manager for Sun's information appliances group.
McKee said Sun is trying to make it easy to fit the Sun Ray system in. "As part of the leasing program, one of the things offered...is installation services. For a fixed amount, Sun will put in this appliance and appliance infrastructure without requiring any of [a company's] information technology resources," he said.
The Sun Ray system requires a Sun server to run, but it can tie into programs running on mainframes, Windows NT systems, and other servers, Sun said.
"Sun is saying, 'OK, we learned,'" Bochman said.
Thin client market growing
Meanwhile, market research firm International Data Corporation predicted yesterday that the thin client business is growing, both in terms of units shipped and money made by manufacturers.
In the first half of 1999, 305,000 thin clients were shipped, IDC said. This was an 83 percent increase over the same period in 1998. In the same time period, revenue grew from $155 million to $192 million.
That's still meager compared to the 50.1 million PCs that were sold in the first six months of the year, according to IDC figures.
Still, thin clients are beginning to show their merit, said IDC analyst Eileen O'Brien. "Because thin clients have been used in enterprises for a few years now, their ease of use, ability to access all types of information, and overall cost savings have been confirmed," she said in a statement.
Wyse is the overall leader in the thin client market, though IBM and NCD/Tektronix are also profiting. "These three vendors dominated the market with a combined share of 78 percent of worldwide shipments and 79 percent of revenues," IDC said.
IBM also has new thin clients
IBM, meanwhile, seems to agree with Sun that thin clients are the way to go. It introduced two new Network Stations models today: the 2200 and 2800.
The 2800, which costs $799, is the first IBM thin client using an Intel chi--in this case a Pentium. The $559 Network Station 2200 uses an Intel-compatible chip. IBM's earlier thin clients use a PowerPC chip.
IBM also introduced a new version of its Network Station management software for administering the systems, the company said.
Hewlett-Packard, which IDC said isn't dominant but has made gains in the thin client market , introduced new thin clients two weeks ago called Entria, including two models that use the Linux operating system.