Sun Shines On

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Sun Shines on Overseas Governments

By Nick Wakeman

Staff Writer

John Marselle has a child-like vision for the government computer industry, one that is perhaps best expressed by his daughter. When things go wrong with their home computer system, she tells the president of Sun Microsystems Federal, "I don't understand why this stuff just doesn't work together."

"It is a vision we as adults wish we could solve," Marselle said.

Chasing this goal has proved to be a moneymaker for McLean, Va.-based Sun Federal, which has evolved into a $1 billion unit of Sun Microsystems Inc., Mountain View, Calif. Sun Federal generated about 14 percent of the 15-year-old parent company's $7.1 billion revenues in 1996.

Sun Federal is also pursuing a business mix that more closely mirrors the parent company's 50-50 split in U.S. sales and international sales. To increase its international presence, Sun Federal is establishing centers in Brussels, Belgium; Singapore; Beijing; and Seoul, South Korea, for bidding and supporting projects, he said.

"We are taking the same core strategy we took in the United States and exporting it to other countries," Marselle said.

Currently, about 75 percent of Sun Federal's business is federal and state work; the remainder comes from overseas. Sun Federal's revenues are evenly distributed among defense, intelligence and civilian work.

Marselle can speak with the zeal of an evangelist on the virtues of using Sun's Java programming language, which runs on any platform, and of creating systems where the network supplants the personal computer as the seat of power. This approach is cost-efficient, easy and the best way to get data into the hands of users, he said.

With slogans such as "Write once, run anywhere" and "The network is the computer," Sun has always pushed the open systems philosophy. For Sun Federal, the open systems philosophy has also been a way to make a lot of money.

When Marselle became president in 1991, Sun Federal had annual revenues of about $360 million. One of his first goals was to reach $1 billion, which the company hit in 1996.

Revenues for 1997 are projected to be $1.25 billion, and the target of $2 billion in the next four years is a given, said Marselle, who expects 20 percent annual growth. "We'll have to do that just to keep up with the rest of Sun," he said.

Sun Microsystems, which was founded in 1982, had revenues of about $1 billion five years later. The company has grown by focusing on two core technologies: scalable processor architecture, or SPARC, for building computer chips; and Solaris, Sun's Unix operating environment.

Now Java and its impact on the Internet, and ancillaries such as Java workstations, promise to be revenue generators, company officials and industry analysts said.

Java will help Sun exploit the growing business and government use of the Internet, said Richard Chu, an analyst with Cowen & Co., Boston. "In the last 18 months, everything [in the infotech industry] has focused on the Internet and intranets, and Java has only helped Sun on that score," he said.

Addressing his unit's push into overseas markets, Marselle said, "Nobody has a patent on intelligence. A lot of foreign governments look at what happens in the United States and implement that, and vice versa."

Some recent international wins include a $5 million project for Unix servers in South Korean air force computer centers and a $4 million to $7 million project to roll out Lotus Notes for the Singapore government.

From Marselle's point of view, no single industry or vertical market is out of reach for Sun. "It is this whole online phenomenon," he said. "It plays right into our growth strategy because everything is on the network."

Partnerships with companies such as systems integrators and software developers are one way Sun pursues future business.

For example, software developer Enterprise Productivity Systems, Napa, Calif., and Sun teamed to provide bulk mailing forms over the World Wide Web for the U.S. Postal Service.

"We are kind of a stalking horse for the hardware that follows," said Paul Jaquish, president of government systems for EPS.

Sun acts as "a giant big brother," he said, aiding EPS in developing marketing materials and hosting conferences. "And of course, they did invent Java."

Partnering with Sun has been a credibility boost for EPS. The company was formed in February 1996 and won the $139,000 postal contract in May, Jaquish said. The Postal Service awarded a $3 million addition to the contract last week.

The follow-on contract is the first step in developing the software to link the information from the Web forms with the Postal Service's legacy systems. This is where Sun comes in, Jaquish said, because these links will exist in the network servers that are Sun's bread and butter.

"They will have to compete for the procurement," he said. "But because of the working relationship they have with us, they have more insight into the customer's needs."

Two trends that Marselle sees playing to Sun's philosophy of open systems are greater use of the Internet and the government's growing insistence on using commercial, off-the-shelf technologies.

"The past paradigm was a very closed system," he said. "When you write a billion lines of code and that code has to run on a certain platform, then you are locked in .... You have no choice, no freedom."

But with an open system, the move to other hardware or software is easier. "If we don't perform, you can go somewhere else," he said. "That is the way the industry should be."


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