Sun: Growth Plans In China, Like Everyone Else

September 19, 2007 by Douglas A. McIntyre

Sun Microsystems (JAVA) thinks China will be the hot country in Asia over the next few years. Like almost every other US company, it believes it can double sales in the huge nation. With Sun, its timetable is three years.

Sun plans to use partnerships with local resellers to do the trick. The Wall Street Journal writes "the joint ventures will allow distributors to sell servers under the Sun name and enable Sun to expand quickly while keeping costs down." The Asia-Pacific region is now over 15% of Sun’s revenue.

Sun has had little success in improving its revenue recently. Growth in the last quarter was in the low single digits. Asia may not be able to help that as much as the company hopes.

Sun’s plans will probably run up against similar aspirations from Hewlett-Packard (HPQ), Dell (DELL), IBM (IBM) and local hardware companies in Asia. Sun’s plan to rely on resellers instead of a direct sales force may save money. But, it also takes direct management of marketing and pricing out of the firm’s hands. Which is probably not the best way to approach a foreign market, especially one where IP rights are not at the top of the list of business practices.

Sun’s China plan sounds nice. But "sounds" is as far as it will get.

Douglas A. McIntyre