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PRC Galaxy Plan: the STRATEGY piece

PRC Galaxy Plan: the STRATEGY piece. CDP Product Management Team Nov 1, 2005. Breaking out of the "Unix" niche and into the mainstream "Industry Standard Servers". The “Industry Standard Server” Space. Core Revenue US4/US4+/US3i. Core Revenue US4/US4+/US3i. Galaxy. FY061H. FY061H.

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PRC Galaxy Plan: the STRATEGY piece

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  1. PRC Galaxy Plan: the STRATEGY piece CDP Product Management Team Nov 1, 2005

  2. Breaking out of the "Unix" niche and into the mainstream "Industry Standard Servers" The “Industry Standard Server” Space Core Revenue US4/US4+/US3i Core Revenue US4/US4+/US3i Galaxy FY061H FY061H FY062H

  3. The basic rules of market penetration • In each market segment, there is an entry barrier protecting the incumbent players. • For a new comer to enter and profit from the market segment, it has TWO strategies to choose from: • Be better at the established games • Re-establish the rule of the game • If it cannot do either of them, its return will be ZERO. • PRC Market Engagement Rule No. 1: Don't commit the "China Myth" fallacy.

  4. The x86 landscape: the critical success factors for the incumbent vendors • Horizontal specialization: • Application: ISVs with well-trained Windows or Linux skills • OS: Microsoft Windows, Linux • Hardware: Dell, HP, IBM boxes with Intel Chip • Services: Dell, HP, IBM Nation-wide service network • Economy of scales, delivering high quality solution & service at very low cost: • Application: Microsoft's back-office suite. Easy to deploy. • OS: Windows, Linux training organizations everywhere. • Hardware: relentless driving down costs in every aspects • Service: blex-style national service network

  5. The Unix/RISC landscape: the critical success factors for the incumbent vendors • Vertical specialization: • Application: Highly trained ISVs for mission-critical apps • OS: Each vendor owns its own OS, Sun/Solaris, IBM/AIX, HP/UX • Hardware: Each vendor owns its own chip/box, Sun/Sparc, IBM/p5, HP/PA-RISC • Services: Limited service coverage • Very high System Performance & RAS delivered at high cost: • Application: ISV self-developed IP • OS: Solaris/AIX/UX specialization • Hardware: relentless driving up performance benchmark • Service: turn-key service by ISV/SI

  6. Two opposing forces at the point of contention: Unix/RISC vendor's DNA: strong vendor-direct ISV support ISV 32-bit Apps 64-bit Apps S10x64 Apps Open Source Linux/Microsoft Windows Solaris S10x64 Sparc Galaxy Dell/HP/IBM X86 vendor's definite cost leadership through economy of scale

  7. “x86 market-share”-based strategy:push for hardware volume regardless of the OS ISV 32-bit Apps 64-bit Apps S10x64 Apps Open Source Linux/Microsoft Windows Solaris S10x64 Sparc Galaxy Dell/HP/IBM X86 vendor's definite cost leadership through economy of scale

  8. "x86 Market-share"-based strategythe 1st Sun PRC Opteron Key Account Project in perspective “Hi All XXXX finally won the xxxxxx PC-Cluster project, the final price is about RMB 2,580,000.00. Our final proposed price is 2,680,000.00. We have no space to reduce our price again and again. So we lost the deal." A simple e-mail from our Acc Mgr: Remarks: - we "won" the 1st bid at NEGATIVE 23% margin - we "lost" the 2nd bid at NEGATIVE 30% margin - how much can we afford to "win" at NEGATIVE margin

  9. “x86 market-share”-based Strategy • Pros: • Rapid volume pick up • Cons: • Playing to x86 vendors' horizontal strength • Cost leadership • Need large sum of margin-relief • Before the volume & its associated support infrastructure reach a critical mass, we are still in a non-defensible position, i.e., can be replaced by a simple price drop from Dell/HP/IBM • Solaris Sparc unable to reinforce the Linux/Windows-based Galaxy position

  10. S10x64 ISV Apps conversion-based Strategy - Cherry-pick top Lintel/Wintel ISVs in 14 cities and in 20 accounts - Provide 1-on-1 sales and technical support on S10x64 design-win - End-to-end hand-holding through design-win & go-to-market ISV 32- bit Apps 64-bit Apps 64-bit Apps Linux Windows Solaris 10 Solaris 10 x64 Sparc Galaxy Dell/HP/IBM

  11. S10x64 ISV Apps conversion-based Strategy • Pros: • Playing to Unix/RISC vendor's vertical strength • Cut the x86 market into vertical segments • Horizontal player become defenseless • One ISV/app at a time to establish defensible positions • Create beachhead for Solaris Sparc reinforcement • Cons: • Slow volume curve for Galaxy

  12. Three Steps towards Solaris 10 Galaxy Wins Weapons: Unix Performance at x86 Price Bid Config & Bid Weapons: S10x64-based Price/Performance Request for Proposal Spec-in Weapons: Java, Solaris 10, Galaxy System Requirements Design-win Application Requirements Customer Project Requirements

  13. PRC Galaxy Plan: the EXECUTION piece CDP Product Management Team Sun PRC Nov 3, 2005

  14. Three Steps towards Solaris 10 Galaxy Wins Weapons: Unix Performance at x86 Price Bid Config & Bid Weapons: S10x64-based Price/Performance Request for Proposal Spec-in Weapons: Java, Solaris 10, Galaxy System Requirements Design-win Application Requirements Customer Project Requirements

  15. Sun Sales Directors Galaxy Sales Scoreboard Weekly Tracking How to fill up the Scoreboard with solid numbers?

  16. Galaxy Business Key Components & Success Factors Action Required: - Sun Galaxy Boot-camp - S10x64 Porting Capability Sun RSO/CSO Action Required: - Sun Galaxy Boot-camp - S10x64 Porting Capability Galaxy VARs Galaxy Master Distributors Value Proposition: - 32 to 64 bit application performance boost - Solaris apps scalability Lintel/Wintel ISVs In-house Developer Value Proposition: - Unix Performance at x86 Price - Single OS benefits Enterprise Customers

  17. Galaxy Business Key Components & Success Factors: Enterprise Customers • Objectives: Solaris 10 x64 Buy-in from CEO/CIO • Unix Performance (Solaris 10 x64) at x86 price (Galaxy) • Single OS across all servers (from X2100 to E25K) • Actions: • Enterprise Customers Identified & Screened • 101 Solaris 10 x64 Galaxy Selling to CEO/CIO • Solaris 10 x64 Galaxy PR Campaign • Press conference • Article placement • 14-city NC Road-show

  18. Galaxy Business Key Components & Success Factors: In-house Developers & Lintel/Wintel ISVs • Objectives: • Solaris 10 x64 Application Availability • Actions: • Solaris 10 x64 Buy-in from CEO/CTO • SUN/AMD 12-city Technical Seminar Oct 31 – Nov 18 • Solaris 10 x64 Adoption Program • CDP & MDO August 8 – Q4 • ISV S10x64 Galaxy Sell-through Mileage Program • Q2 started

  19. Galaxy Business Key Components & Success Factors: Galaxy Master Distributors • Objectives: • Master Distributors' competence in Solaris 10 x64 Galaxy ISV ID, Recruit, Develop & Sales Engage • Actions: • Sun Galaxy Boot-camp • Sun/AMD/Oracle October 28 - 30 • Lintel/Wintel Solaris 10 x64 ISV Adoption Program • CDP & MDO August 8 – Q4

  20. Galaxy Business Key Components & Success Factors: Galaxy VARs • Objectives: • Galaxy VARs' competence in Solaris 10 x64 Design-win • Actions: • Sun Galaxy Boot-camp • Teamsun/UEC in November

  21. Galaxy Business Key Components & Success Factors: Sun RSO/CSO • Objectives: • Solaris 10 x64 Galaxy Sales & Pre-sales Competence • Actions: • Sun Galaxy Boot-camp in November • Beijing • Shanghai • Guangzhou • Chengdu

  22. Sun Sales Directors Galaxy Sales Scoreboard Weekly Tracking

  23. Galaxy Simple Guide--For Sun Account Managers PRC CDP Sun Microsystems, Inc.

  24. Galaxy Product Distribution Structure Sun Master DistributorDCL/ECS 10% Discount Teamsun/MDCL/UEC/NS 2nd-tier SI/ISV End Users

  25. Cat E Pricing List Price approximating End User Price No special bid allowed NTS Buy Price for Galaxy Master Distributors, DCL/ECS: 12% off PRC List Price Focus on Lintel/Wintel SI/ISV channel development No back-to-back order allowed NTS Buy Price for other CDPs, TS/MDCL/UEC/NS/CGET: 10% off PRC List Price Focus on enduser engagement No general stock order allowed

  26. Solaris 10x64 Galaxy Sales Methodology Identify: Linux/Windows-based application Qualify: If the application modules can either be migrated to S10x64 or is already S10x64-based? Porting: Port to S10x64 Spec-in: Choose the correct config based on customer's Performance/Budget requirement Project

  27. Sun Galaxy Resources Galaxy Competitive Analysis: David Chen at chong.chen@sun.com http://sunwebcollab.central.sun.com/gm/folder-1.11.988288 Application Migration: ISV Support: Anderson Wong at anderson.wong@sun.com End-user in-house development Support: Victor Jieh at victor.jieh@sun.com Solaris 10x64 information page: http://gceclub.sun.com.cn https://pes-tools.sfbay.sun.com/ifpp/tam/Tx0xLogin

  28. Case Study PRC CDP Sun Microsystems, Inc.

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