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Text File | 1990-06-24 | 15.4 KB | 363 lines | [TEXT/GEOL]

APPLE CONFIDENTIAL / NEED TO KNOW From: Brian Fant & Michael Mace, Competitive Analysis SUN INTRODUCES LOW-COST SPARCSTATION & MORE _______ SUMMARY On May 15, Sun Microsystems introduced and began shipping the SPARCstation SLC for $4,995. In some ways, the SLC is reminiscent of the Macintosh Plus: it has an all-in-one design (motherboard and monitor in the same case), no fan, no slots, and no color. Also announced were lower RAM and peripheral pricing, the SPARCserver 470, and new server software products. The SLC will be used against Apple in some Unix bids to corporations and higher education, but because of its direct distribution and limited productivity software, it will not have a big impact on overall Macintosh sales. It is, however, a reminder that RISC technology is dropping in price and will eventually be a very important force in personal computing. ________________ SPARCSTATION SLC SPARCstation SLC is a low-cost diskless RISC workstation. The SLC incorporates the CPU components into the same case as a high-resolution (1152x900), 17-inch monochrome display, weighing approximately 37 pounds. The extremely small 7x9-inch motherboard operates at 20 MHz and includes CPU, floating point chip, RAM, Ethernet, frame buffer, audio input & output, SCSI, and 2 serial ports. Sun says the all-in-one design and easy access to the CPU board make for simplified manufacturing and service. We won't know how simple until we've received an SLC. There is no floppy drive, and no color option. A 104 MB internal hard drive costs $1,599 extra. Sun's CEO Scott McNealy says, "The SPARC/UNIX/OPEN LOOK platform has joined Intel/DOS and the Macintosh and is now the No. 3 volume desktop computing platform." How Sun determined this ranking is unclear, but it is extremely suspect. We think the Apple II, for instance, has a much larger installed base than Sun. Commodore's Amiga might as well. Sun claims this new system is capable of 12.5 million instructions per second (MIPS) and 1.2 million floating point operations per second (MFLOPS). COMPARISON OF DISKLESS WORKSTATIONS* Sun SLC DEC VT1000 IBM XStation 120 MIPS 12.5 ~2 ~2 RAM 8-16 MB 1-4MB .5-8.5 MB Screen Size 17” 15”-19” 12”-19” Mono/Color Mono Mono Mono/Color Bundled Network Ethernet Ethernet Ethernet Distribution Direct, OEM, Direct, OEM, Direct, OEM, VAR VAR VAR Warranty 90 days 1 year 1 year Availability Q2 1990 Q3 1990 Q2 1990 List Price $4,995 $2,895 $2,200 * Source: Sun Microsystems’ SPARCstation SLC Competitive Comparison ______________________ RAM, PERIPHERALS, ETC. Sun also announced that prices for 1-megabyte SIMMs have been cut by 50%, bringing their 8-MB memory expansion kit to $2,000. The company will begin offering 4-MB SIMMs, allowing a maximum memory configuration of 72 megabytes. The new 669-MB hard drive will replace the 327-MB model used for SPARCstations and SPARCserver 330's at the same price ($6,500). Also, the 644-MB CD-ROM drive will now sell for $995. System software for the SLC is available on CD-ROM. Sun said it will distribute system software "on CD exclusively" in 1991. Sun also announced that its three Open Look applications, Sun Write, Sun Paint, and Sun Draw, will now be sold by the company that wrote them, Island Graphics. _________________________________ SPARCSERVER 470 & SERVER SOFTWARE SPARCserver 470 delivers performance of 22 MIPS in a smaller package than Sun’s current 490 server. The new server sells for $59,900 with an accelerated graphics workstation version selling for $69,900. Two new server software products were also announced: • Sun Database Excelerator boosts performance and maximum number of concurrent users for network database applications. The cost to desktop server owners is $1,000, $5,000 for all other SPARCservers. • SPARCserver Manager is for high-end customers who desire data mirroring, remote diagnostics and other server administration functions. SPARCserver Manager sells for $7,500. _____________________ Implications to Apple Little impact on overall sales Sun still does not have a major presence in the retail channel, so the SLC cannot compete with mainstream PCs. In addition, it has very little productivity software, and no floppy drive. As NeXT has demonstrated, a machine without a floppy drive is a very hard sell to PC customers. Some effect in Unix bids and higher education. Sun is already using the SLC against Apple in bids to companies planning to buy low-cost Unix systems. The SLC may prove attractive to some customers who want fast clock speed and a very low price. We also expect the SLC to be used in bids to universities installing Unix terminals. Apple has numerous advantages relative to Sun, which can be used in bids against the SLC. For more information on those advantages, see the section on Marketing Information, below. ____________________________ Implications to the industry A challenge to other Unix vendors. The SLC is enormously faster (and somewhat more expensive) than the diskless Unix systems offered by other vendors like Apollo and IBM. The SLC rounds out Sun's line, and gives it a much more effective weapon in bids to cost-conscious customers. Setting aside all the rhetoric about "SPARCintosh," we think the SLC's real target is the other workstation companies. Rising RISC RISC-based machines continue to drop in price. That's hardly news. But because of the hardware requirements and limited productivity software of Unix, the impact of RISC has been confined to the workstation market. This gives the PC industry some breathing room, but RISC is here to stay. As the base of Unix productivity software improves, and the cost of RAM and other components drops, RISC-based systems will become more and more of a competitor to PCs. =============================== MARKETING AND SALES INFORMATION _______________________ Selling against the SLC. Apple has always lagged Sun in raw computational benchmarks, so the basic competitive situation has not changed. Apple's marketing response should continue to center on real user performance, as opposed to a strict $/MIPS calculation. Here are the points Apple should raise: • The Macintosh software base is much larger. Sun claims 2,000 SPARC applications, but only twelve -- that's right, 12 -- of them use Open Look, Sun's graphical interface (Source: Personal Workstation Magazine, April 1990). If the customer wants to use computers for general productivity, Macintosh with A/UX 2.0 has an enormous advantage. • Compare real prices. Adding a hard disk to an SLC raises its price to $6,594. That still sounds low, but remember that Sun's prices are for direct sale, and therefore are not discounted the way Apple's suggested retail prices are. An SLC with a hard disk is probably equivalent in street price to a configured Macintosh IIcx or IIci. • Configuration options. The SLC has no slots and only a monochrome monitor. That makes it unsuitable for a lot of high-end tasks, including the sort of graphics work in which Macintosh is very strong. In other words, the SLC is weakest where Macintosh is strongest. • Warranty. Sun offers only a 90-day warranty; the warranty for Macintosh is one year. This is the first time in memory that we've been able to list warranty as an Apple advantage. ______________________________ SLC vs. Macintosh: Sun's view Sun provided a sheet of SLC advantages over Macintosh. Most of them are outrageous distortions of the truth about Apple, and we encourage Apple to challenge Sun directly if it tries to use this information. Here are the Sun "advantages," with Apple responses: • "SPARCstation SLC delivers an industry-standard multitasking operating system; although user friendly, Mac/OS is limited to single-tasking operation." Apple response: First of all, MultiFinder offers cooperative multitasking, which gives print spooling and the other multitasking features that most customers want. Second, Macintosh A/UX is an industry-standard multitasking operating system. • "SunOS, OPEN LOOK, and DeskSet deliver a commitment to Unix SVR4 and a friendly desktop environment. Apple's version of Unix (A/UX) does not deliver many of the traditional Mac benefits (ease of use, application availability, etc.)." Apple response: This is an old tactic--choose the product you want to sell against. In this case, Sun wants to sell against A/UX 1.0. The new version of A/UX, 2.0, delivers the "traditional Mac benefits" a lot more thoroughly than Sun does. • "SPARCstation SLC delivers workstation performance and integral high-performance networking." Apple response: Sun's benchmarks have always been highly suspect, so Apple should encourage customers to compare real performance using real applications. Ethernet is not built into every Macintosh, but Ethernet cards are available from Apple and third parties. • "SPARCstation SLC delivers thousands of workstation-class, SPARCware applications, which are available across a broad family of SPARC-based products. Apple can't offer solutions from the desktop to the computer room." Apple response: Because Apple doesn't try to offer everything to everyone, it can concentrate on making great PCs. Also, since Sun has only 12 applications for its graphical user interface, it isn't exactly providing a lot for the desktop user. • "Sun's powerful workgroup environment is the most user-friendly UNIX in the industry. The OPEN LOOK user interface and the DeskSet products combined with powerful SPARCware applications are an excellent alternative for the Macintosh workgroup." Apple response: A/UX 2.0 is the most user-friendly UNIX in the industry. If customers doubt that, they should test it against Sun's product. Studies show that a key to greater productivity for computer users is consistency between applications. Since most SPARCware applications do not use the Open Look interface, they cannot provide the workgroup productivity that Macintosh does. ______________ Sales messages For reference, here's the master list of Macintosh advantages relative to Sun, followed by the typical Sun pitch and Apple responses to it. ______________________________________ MACINTOSH ADVANTAGES OVER SPARCSTATION Easier to set up and configure. The SPARCstation has been designed for a technical audience. As a result, a system administrator is often needed to set up and configure them. For example, the Sun SPARCstation comes with more than 2,000 pages of reference manuals. Easier to learn. The Macintosh was created from the ground up to be intuitive and easy to learn. Sun has now added a graphical user interface (Open Look) to attempt to shield its users from the complexities of UNIX, but it isn’t clear how intuitive this interface is. More productivity applications. Thousands of productivity applications exist for the Macintosh, and virtually all of them have a consistent user interface. In contrast, there are few productivity applications for most workstations, and those that exist are usually character-based and lack consistency with one another. For example, the Sun Catalyst software catalog, which lists more than 400 SPARC-based software packages, lists only one spreadsheet, Q-CALC, and no low-end word processors (only electronic publishing packages). Less expensive applications. Most Macintosh applications range in price from $100 to $500. In contrast, many workstation applications cost thousands of dollars. For example, a QuickBASIC compiler for Sun’s SPARC machines costs from $1,195 to $2,995, depending on the system. Wingz for the SPARCstation is priced at $699, compared to $399 for the Macintosh version. Broader choice of peripherals. The Macintosh supports a large variety of peripherals and add-ons. Many of the SPARCstation add-ons are provided by Sun rather than by third-party vendors, greatly reducing the range of choices for the consumer. Broader distribution channels. Apple is already entrenched among computer retailers. Sun has little presence in the retail channel, which limits its exposure to customers. User-centered design. The Macintosh was designed to give the user the highest priority. In contrast, Sun’s workstations were designed to give the task the highest priority. This difference in philosophy reveals itself when an individual performs an action such as clicking on the mouse: the Macintosh provides immediate feedback, whereas workstations may perform other tasks before giving the user feedback. ______________________________________ SPARCSTATION ADVANTAGES OVER MACINTOSH When Macintosh competes against the SPARCstation, Sun may claim the following advantages. More MIPS. The SPARCstation has been optimized to run standard benchmarks very fast, and so will often beat the Macintosh in dhrystones, whetstones, etc. It runs at 12 MIPS, compared to 8 MIPS for the IIfx, according to Sun’s competitive literature. Apple response: The Macintosh IIfx, like other Macintosh systems, has been crafted so that all of its elements work together harmoniously. Therefore, the Macintosh will often run graphical applications faster than workstations with many more MIPS. Powerful networking. Networking is a strength of the SPARCstation, with Ethernet a standard element of even entry-level workstations. Apple response: The Macintosh comes configured with AppleTalk. When using the $75 LocalTalk connector, the Macintosh network will admittedly be slower than workstation networks. However, a Macintosh with an optional EtherTalk or TokenTalk card is often priced lower than many entry-level workstations when both are fully configured and yet provides comparable speed. Furthermore, connecting the Macintosh to networks is often easier than connecting SPARCstations. High-end technical applications. The SPARCstation offers a wider selection of high-end technical applications, such as mechanical engineering and electronic design automation, than is available on the Macintosh. Apple response: Some of these high-end technical applications can be run on the Macintosh under the A/UX operating-system. More robust operating system. The SPARCstation uses UNIX, which provides some operating system features not found in the current Macintosh operating system, such as: • Virtual memory • Interprocess communications • Preemptive multitasking with protection Apple response: Many of these robust operating-system features will be included in Macintosh System Software Version 7.0. Also, these features are available today on the Macintosh with A/UX 2.0. Direct sales and support. Sun usually provides direct support to customers. Sun also has technically capable salespeople who call on customers directly. Apple response: Sun needs to provide direct support, since workstations are more complex to set up and administer than the Macintosh. Apple relies on its dealers to provide service and support for the Macintosh IIfx. Many of these dealers are becoming better able to provide service for high-end Macintosh systems, and are offering specialized applications and support. _____________________ We welcome your comments and questions. Please link them to COMPETITION.