Competing through cooperation at Sun Micro-systems
This is always believed that two is greater and stronger than one. Strategically it is a good idea to team up similar strengths to grow bigger to fight the stronger one.
Business through cooperation
The personal computing software industry, once a cottage industry with literally hundreds of small but viable competitors, is now a concentrated industry dominated by a few very large players. Today, Microsoft takes in almost 40% of all the revenues generated by this industry and the giant continues to try to strengthen its grip on the market. Smaller firms are being purchased by the market leaders or forced out of business. The most likely to survive are those firms that are teaming up with one another to take on the giants.
Sun Micro-systems, Inc., is one firm that hopes to survive by cooperating with its former competitors as they team up against Microsoft. While Microsoft is dominant in many different product categories, Sun and its new teammates will focus on developing operating systems for entire networks of personal computers, workstations, and low cost servers, the type of computing environment expected to become the norm in the near future. When Sun began creating the coalition of firms that would challenge Microsoft, the industry giant was selling more operating systems in a week than Sun could sell in a year. However, in the niche that provided operating systems for large networks instead of individual machines or small clusters, most customers felt that Sun’s new product, Solaris, was superior to Microsoft’s competing product, Window NT. This seemed to offer Sun a Window of opportunity, but how could the firm take the advantage of it before Microsoft developed a stronger product?
Sun’s answer was to join many of its archrivals in cooperative efforts to take on Microsoft. Solaris’s two most important weaknesses were the limited number of applications that would run on it and the need for an easier to use object oriented technology. Solaris could run only about 8500 programs, far too few given the 50,000 programs then available for personal computers. To overcome this, Sun agreed to back a joint effort among five competitors (Sun, IBM, HP, Novell, and Santa Cruz Operations) to develop the Common Open Software Environment, a development that would make different versions of the UNIX operating systems look and work the same way. This means that software developed for any one of the five should work on the other four, making software for this operating system much more attractive for program developers. This in turn greatly strengthens the coalition’s ability to compete with Microsoft.
In addressing its need for object oriented technology, Sun turned for help to NeXt Computer, a company that had formerly targeted Sun as its number one rival. Sun agreed to invest $10 million in NeXt in return for the right to use its object oriented software in the next version of Solaris. This is expected to give Sun a year’s lead on Microsoft as well as on an IBM-Apple venture that is developing similar technology. While it is still not clear who will survive the ongoing consolidation taking pace in the personal computer software business, by teaming up against the industry giant, firms such as Sun appear to be greatly improving their chances of survival. In this case, it seems that perhaps the best way to compete is to cooperate.