Aiming of gaining market share in the OEM market as the major and long-term goal, Sun Microsystems made little progress, compared with its success in the university market, in the first year. Given that Computervision--the leader in its market segment--was going to purchase a workstation platform instead of building one by itself, it seemed to be a big chance for Sun to find an inroad into the OEM market. But Computervision seemingly has decided to choose Apollo and hence Sun would lose the deal. Considering that Sun nearly staked its future on the deal with Computervision, the failure would really be a heavy blow for the start-up. One obvious consequence due to the failure would be that Sun could not successfully enter the OEM market. Sun has been looking out for an opportunity of gaining more market share in the OEM market constantly. Apollo is its major competitor not only in this deal but also in the OEM market. If Computervision could buy a workstation platform from Sun, not Apollo, Sun would be able to further get more contracts and accordingly gain more market share in the OEM market, which is made possible by the reputation of Computervision and Apollo. Sun achieved the contract from the hand of Apollo and would cooperate with Computervision. It would be a milestone in the history of Sun. However, the real market is brutal. Sun did not make it. What Sun would lose was more than a deal, but an opportunity of capturing significant market share in the OEM market. In addition, Sun put all its energy in the Computervision deal. In other words, Sun gave up other possible chances. For example, Sun could spend the time finding other influential OEM partners or even some small ones. In that case, if Sun did not make the deal, it actually delayed the progress of entering the OEM market for Sun. Time is even more valuable than money for a high-tech start-up. Considering the significance of achieving the Computervision deal, it is not the time to simply give up after the call from the president of Computervision. It could be a now-or-never chance for Sun, maybe also for Computervision. So what Vinod Khosla should do first is to negotiate with Compuervision again and further promote Sun’s product. Just to do whatever is possible for Sun to make the contract signed. Especially, Vinod should emphasize the advantages of choosing Sun and prove that the reasons why Computervision did not choose Sun are not reasonable.

Sun is a 40-person company, which doesn’t means it is doomed to lose in the battle versus Apollo. The engineers in Sun are all UNIX specialists who are the most precious resource because the demand for such UNIX specialist would largely exceed the supply when UNIX gets more and more popular. Therefore, the quantity is not a wise judgment criterion. Quality should be also taken into consideration in the evaluation. The product of Sun is incomplete, which is also not completely right. Sun’s product could be regarded as immature, but not incomplete. The idea of standards is the core of Sun. Vertical integration is more and more replaced by virtual integration. In this trend, Sun’s idea of standards would become the future. The success of Sun in the university market has already showed that more or less. Apollo is the standard now and only now. In the trend, it is inevitable for Apollo to change. In that case, Sun is actually in the dominant position. Computervision is during the transition period and it is crucial to look to the future rather than focusing on the immediate benefits. In the long run, choosing Sun would also put Computervision in the position ahead of other competitors in its market segment. For Sun, it would be the beginning of gaining large market share. And when large market share is achieved, the Sun’s product would be defined as mature. If Computervision still does not want to change its decision, Vinod should quickly move on and try to find other potential customers. Meanwhile, he needs to find the ones who share the same value and fit well in the frugal and innovative culture of the company and better build the management team to face the following expansion. At last, Vinod could try talking with the potential venture capitalists about next round investment. It is always right to prepare early.