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By Suzanna Kerridge, 20 July 2001 18:15

NEWS Sun Microsystems needs to dump its out-of-date hardware-focused company mantra if it is to pull itself out of its current slump. Key to recovery is the company's ability to turn itself into a service provider rather than continuing to focus on the flat hardware market, according to industry pundits. Richard Sykes, chairman at Morgan Chambers, said: "Sun is fundamentally suffering because of its heavy production of equipment and infrastructure. It's failing to challenge the broad vision of the industry that people will not buy equipment ad infinitum." He claimed the company is faltering as it is unable to differentiate itself in any market other than hardware. Analysts have been predicting the slow down in hardware for months. But while IBM and HP have positioned themselves as services companies, Sun has been slow to respond. In a research note, investment house Merrill Lynch blamed sensitivity in Europe towards the US economy for the slow down in European hardware spend. The bank warned that management unwillingness to provide even a near term outlook will raise trepidation in the markets. However, Ian Bramley, managing director at Software Strategies, claimed this was just one of a list of problems challenging Sun. Bramley said: "The company has not made a lot of money off Solaris and Java. Its efforts to get into middleware with Forte and iPlanet have not been on a big enough scale and it's found itself in a crunch over how to compete with Intel with the Sparc chip." Sun's delayed roll-out of StarCat, the replacement for its StarFire supercomputer, has also impacted the company's finances.