Hi People, The following is my analysis on the Pricing and Promotion strategies of Sun Microsystems.
Pricing Strategy followed by Sun Microsystems: Java
Java is a programming language originally developed by James Gosling at Sun Microsystems and released in 1995 as a core component of Sun Microsystems’ Java platform.
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Java is an Open Source Language .i.e. One does not have to Pay Sun Microsystems for downloading the Source code of Java. But then the Questions is: How does Sun Microsystems generate revenue from Java?
In 1996, Sun created Java and the terms under which it is distributed. Since then, the Java Community Process (JCP) has emerged, allowing companies to participate in shaping language changes, but the ownership of trademarks, licensing agreements, branding, and other fundamental product issues remains unchanged. One is reminded of this fact every time the Sun MicrosystemsTM trademark appears alongside the Java coffee cup logo, or when one is greeted with the message “brought to you by Sun Microsystems” at www.java.com. For anyone to use the Java-compatible logo on a product requires verification against the test compatibility kit (TCK), for which one has to enter into negotiations with Sun. Java, the technology, the trademark, and the language, are owned by Sun.
The current licensing agreements for Java generate revenue for Sun in two ways; one is through direct fees to its licensees, and the other is through indirect revenue generated off the back end of Java’s success.
Besides the above Java also generates revenue by conducting certificate programs and certifications exams like SCJP, SCJD, etc. Clearing these examinations is just like getting a degree which shows that the degree holder has a good knowledge of Java and these certifications are very important for an IT Personnel’s CV. Sun Microsystems charges around 7200 INR for these examinations
When asked how much income is generated from Java, Jonathan Schwartz, CEO of Sun, replied, “about $13 billion.”
Conclusion
Thus Sun Microsystems have not priced their actual product, but they have priced the services that people would require after using their product.
The reason Sun Microsystems could do this is that there a very few competitors in the market and in spite of the competition, Java is the best among them.
Promotion Strategy followed by Sun Microsystems: Java
Promotion through developers
Prior to java there were many programming languages for different Operating systems, Examples include C, C++, FoxPro, Visual Basic, etc. But there was one major common problem with all these languages; these languages were Platform Dependent .i.e. They had to be compiled differently on different Operating Systems .i.e. If a developer develops a code in C language and compiles the code on say Windows Operating System, then that code would not work on Linux Operating system, thus increasing the burden of the developer to compile the code again for Linux and Other Operating System.
Thus there was a great demand for a Programming Language that is Platform independent during the 1990’s. Sun Microsystems soon captured this Niche Segment of the Developers through its Platform Independent Language Java. On top of that the source code of Java was made open source to the developers all over the world. Any developer could download the source code from the website of Sun and use the code free of cost. Sun Microsystems used the fastest means of distribution .i.e. the Internet as their distribution Channel.
The main idea behind making the source code open source was to push the brand to the developers. Sun Microsystems was aware of the fact that the developers will in turn push the brand to many customers and enterprises, thus creating a cumulative effect, and Sun would earn through Licensing and Certifications. That is what Sun Microsystems is doing these days.
Sun Microsystems has also started a Developer network (SDN) to solve the problem faced by the developers that are using Java. This is to give their target audience a better service and support.
Promotion through software applications and Web servers
Soon after the launch of Java, Sun Microsystems also launched its Internet surfing browser Netscape Navigator which was developed totally on the Java Programming language. This move was taken to show the developers the extent to which Java can be used and how developers can add new features in their software using Java.
Sun Microsystems also developed a Web server called Apache Tomcat server to handle web requests in the form of HTTP. This also facilitated the promotion of Java, as the server was built on the Java Platform. (Please note that: A web server is a computer with equipped softwares where the web sites are hosted).
Again, all these facilitated pushing the Java brand to the Developers which was Sun Microsystems’ Main target.
Publicity
Soon after the launch, the Java source code became very popular among the developers. Many people started discussion forums, blogs & eLearning websites on Java Programming on the Internet. Thus, Java gained a lot of Publicity through its developer network and soon became very popular. Also, the increasing popularity of Java triggered the publishing of articles on Java in the Newspaper and online News portals like Forbes Newsletter, etc.
Conclusion
Thus, Sun Microsystems targeted only the Developer network and pushed the brand to Developers who in turn pushed it to the rest of the world.