Will Sun’s R&D Pay Off?

I've blogged about SUN before. Since I own a little bit of stock in them, I do keep up with what they are doing. This article is refreshing because it is the first good news about SUN that I have seen in a while.

Sun has a well-earned reputation for squeaking out of tough spots, and it has long-term projects — ranging from software to managing giant networks of computers to a whole new way of designing computer chips called throughput computing — that could power it out of this pickle. They're the main reason McNealy says Sun has to maintain its $2 billion annual research and development budget, which is one of the biggest in the computer industry.

Analysts, however, fear that the payoff for the long-term projects, intriguing though they may be, is still years away. Until then, all that R&D spending will keep Sun's break-even point high and ultimately translate to meager profits.

I'd love to see them squeak out of a tough spot, and they have plenty of cash to burn so they just may get through this. But in my opinion, McNeely's misunderstanding of the future of the computer industry caused some of the problems they are having now. He seems to be making progress in changing SUN's product offerings and business model. It just may be enough to get them through the years until something new comes out of their R&D labs.

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