Sun Chases Web 2.0 Boom with Discounts for Startups

Published: November 9, 2006

by Timothy Prickett Morgan

Philosopher George Santayana famously said that "those who cannot remember the past are condemned to repeat it." Sun is now run by Jonathan Schwartz, who is something of a young philosopher king in Silicon Valley, and it is safe to say that he has studied history and that there is some history that Sun wants to avoid--the hubris of the late 1990s, and the lack of planning for a possible downturn, for instance. But there is also some history that Sun would like to repeat. Like, for instance, the next build-out of Internet technologies, which is vaguely--and perhaps disingenuously--called Web 2.0.

In conjunction with the Web 2.0 Summit behind held in San Francisco this week, Sun announced a special deal aimed specifically at relatively young startup companies that gives them deep discounts on Sun servers, software, and services if they pick Sun to provide their initial infrastructure.

The discounts that Sun is giving in the Sun Startup Essentials program are fairly high, ranging up to as much as 55 percent. This is a pretty big discount for small and perhaps financially iffy companies, and it rivals the discounts that the largest enterprises using lots of Unix boxes can command from Sun, IBM, and Hewlett-Packard when these vendors are brought into a deal to compete. Basically, Sun wants to just win the deals, get as many startups as possible using its wares, and ride up the next wave.

This is, of course, how Sun grew so fast in the late 1990s during the dot-com boom. Sun, like database maker Oracle, was one of the first Silicon Valley startups to go public in a big way, and was hooked very tightly into the venture capital community there. Many Sun employees got rich, and some of them founded their own VCs or went to work for one of the big ones in the valley. This meant they had a preference for Sun gear when they were recommending platforms for the startups they invested in. And many of the companies that started out using Sun iron grew very fast, and they bought lots and lots of iron. This set up a positive feedback loop, and when the Internet went commercial and everyone had to have a presence on the Web, Sun, Oracle, Cisco Systems, Intel, and a number of other companies were more times than not one of the beneficiaries.

No one is foolish enough to think that another dot-com bubble can happen--at least not yet. But the major economies of the world have stabilized and are growing (to varying degrees), and there certainly has been a resurgence on venture capital funding. All of those startups, and particularly those who are providing services over networks--need IT infrastructure, and potentially lots of it if their businesses take off. And while it is probably just a bunch of marketing speak to call this Web 2.0, the Web 2.0 term is no more egregious than Services Oriented Architecture or Dot-Com Boom, for that matter. While the changes in software are evolutionary--not revolutionary--there are nonetheless changes underway, just as there were a decade ago.

In any event, Sun wants to leverage its new "Galaxy" Opteron-based servers and its "Niagara" Sparc T1-based servers, and get companies hooked on using them. Ditto for Sun's Solaris 10 Unix, which is a very good implementation of Unix and one that you can bet your business on now. This was not an easy sentence to believe in three or four years ago, when Sun was on the ropes. (Solaris, by being open source and by being supported on X64 iron, can live without Sun if need be. You can't say that about AIX and HP-UX.) The Sun Galaxy and Niagara machines are respectable and competitive, and they are exactly the kind of iron that startups should be looking at along with Unix, Windows, and Linux alternatives.

Under the terms of the Startup Essentials program, companies have to be in business for four years or less and have 150 or fewer employees, including affiliates. The program is only being offered in the United States right now, so you have to be incorporated here, too. You have to have a company presence on the Web, obviously. Once you apply for the program, Sun responds in about five days, and then you can go out onto the Sun online store and buy your infrastructure. Sun is presumably giving Startup Essentials shoppers a special key to get their discounts. They can spend up to $150,000 under the program, and this amount is after the discounts, not before. In addition to Galaxy and Niagara servers, those in the program can also buy Opteron and Sparc workstations. You can't resell the iron, by the way. Sun's Solaris 10, Java Enterprise System middleware, and Studio, NetBeans, and CoolTools development tools can also be acquired under this deal, but support for software cannot be purchased at a discount. Customers who want to buy more than standard warranty support for the Sun iron can do so at the discounts, however.

Sun hosted what it called a Startup Camp a few days before the Web 2.0 Summit, and over 400 entrepreneurs were told about the Startup Essentials program. Sun got 20 people to sign up in a matter of days. That's a pretty good start.