During a stockholder meeting last week where Sun Microsystems Corp.explained to shareholders the reason for its poorly performing stock,CEO Jonathan Schwartz said the company’s strategy is to build newinnovative server systems thereby positioning itself for future growth,an approach he admitted will take a bit of time.
Butpart of that strategy, said Schwartz, is to also attract new payingcustomers to its commercial server business (including new innovationsstill in the pipeline) through its open source offerings (MySQL,OpenSolaris).
Theapproach appears much like cross-selling across different arms of abusiness, except that here the company is hoping users of a freeoffering might be wooed into purchasing a commercial offering.
Thatmay be one thought that Microsoft Corp., is entertaining (amid manyother thoughts) with its foray into open source and the work it isdoing to make its products interoperable with open source platforms.While the company realizes a heterogeneous IT environment is the way ofthe future, perhaps too, it is hoping that adopters of those opensource friendly offerings might be wooed into adopting the proprietarystuff as well.
Asa consumer, cross-selling has worked quite successfully with me onnumerous occasions. I recall for instance receiving a free product likehand cream and liking it so much as to want to pay for a different itemfrom the same product line. And in most instances, the freebie was notcore to the vendor’s business but was more like a complement to itsmain offerings.
Similarly,Sun’s core offerings are its server products –- not open sourcedatabases and operating systems (just like despite Microsoft’s moveinto open source, its proprietary offerings at least for now remaincore to its business). But if the success of cross selling in theconsumer world is any indication, then these companies may well be ableto woo new customers to their installed base by dangling the free stuff.