Zander: Technology spending downturn is unprecedented

Sun Microsystems President Ed Zander says he has never seen a technology capital spending downturn as "dramatic and sudden" as the current slump which has resulted in cutbacks at blue chip technology companies.

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By  Colin Browne Published  March 11, 2001

Sun Microsystems President Ed Zander says he has never seen a technology capital spending downturn as "dramatic and sudden" as the current slump which has resulted in cutbacks at blue chip technology companies.

"I have never seen an environment where capital spending has fallen off as dramatic and as sudden as this in all the years I have been in the business," said the 54-year old Zander, who joined Sun 13 years ago. "I have never seen anything so hysteria based and quick, going from Nov. 30 and waking up Dec. 1 and just watching CIO after CIO put the clamps on capital spending."

Zander made the comments late Friday in an interview with CRN after networking leader Cisco Systems said it plans to cut its workforce by as many as 8,000 employees and take cost-cutting measures. Cisco's cuts came one day after chip giant Intel said it plans to eliminate 5,000 positions in the wake of order cancellations and what is expected to be a 25 percent sequential drop in sales for Intel from the fourth quarter to the first quarter.

When asked if Sun was planning on cutbacks, Zander would only say that the company was in the midst of a "very cost conscious movement" weeding out "non-performers" and being very careful on replacement requisitions and discretionary spending.

"If this is a prolonged economic downturn then we certainly want to prioritise our investment models and our people models," said Zander "This is what you get paid to do. Unfortunately nobody likes to do it. We all like the go go growth phase. But at least for the foreseeable future it is not going to be that way."

Zander said the downturn has not altered Sun's vision to bring to market the products, technology and services that will drive the adoption of the Internet.

"Just because Yahoo has a bad quarter doesn't mean the Internet is not going to be used by every man, woman and child and business on this planet in the next decade," he said. "I think what we are doing is very compelling. We just have to get by whatever caused this downturn: interest rates, energy or lack of consumer confidence. We've just got to go plough through it."

In the meantime, Zander said, "some companies are going to have to do what they have to go do" to get through the downturn.

Zander said that Sun's solution provider partners are critical to its growth, noting that Sun does not want to build a global services company like IBM or a "Price Waterhouse or EDS."

"We want to build great technology and great products," said Zander. "And then we want to leverage our field organization and our integrator partners to deliver the solutions to the market."

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