Is the Sun Setting on Sun?

Those are certainly fighting words. Sun has enjoyed a nice five-year run thanks to two factors: Its smart acquisition of the “right” portion of Cray, giving it the E10000 Starfires, and its invention of Java, the de facto language of e-Business.

Sun is still doing quite nicely, thank you. Q2 results beat the Street by a penny, as order streams avoided Y2K slowdowns. By comparison, HP’s Q4 was weak.

However, a few warning signs recently emerged. Sun’s once-cozy relationship with Oracle has grown more arms-length, now that HP is threatening to become first among equals. HP also won a high-profile deal at Amazon, although it was debatable whether HP clinched the deal with faster clockspeeds or fatter financing.

HP has recently made some shrewd moves in the promising ASP space, especially with its $500 million investment in building SAP hosting centers with Qwest. By comparison, what did Sun do with its $500 million? It bought Forte. Question: Which $500 million investment will be more lucrative in the long run?

These events should serve as wake-up calls for Sun. While all good things eventually come to an end, Sun’s e-Business ride still has plenty of upside ahead. But it shouldn’t fool itself. Java may make Sun relevant to dot coms, but as more enterprises adopt dot com strategies, they will need ASPs to get them there—and that’s where the bucks will be. HP is making the right noises and investments, but the jury is still out on whether it can execute in Internet time. That’s never been Sun’s problem, but going forward, it needs to cop some ASP wins to ensure that McNealy and Co. remain the dot in dot com.