Sun's subscription model in jeopardy in India

Sun Microsystem's push for its Indian customers to move to a subscription
service model seems to be in jeopardy. This is because the company has not yet
finalized the pricing for the Indian market, the reason being the tax and
customs issues in the country.

The trouble spot for Sun is to convince the company's sales partners, its
so-called value-added resellers, that there's profit in selling
subscription-based services as opposed to hardware and software. The company has
started making similar offerings to Indian customers as well, but because of
taxation issues, there are differences in pricing.

Agrees VP and MD- Asia South for Sun Microsystems, Lionel Lim. According to
him, "We have started subscription-based services in other parts of the
world, but in India it would take some time as there are various taxation and
custom issues that needs to be clarified."

Sun offers grid computing for $1 per processor, per hour in other countries.
But in India, introducing this service is an uphill task as here it will have to
pay extra custom duty and taxes that differ from state to state. Therefore, the
customer would eventually pay much more than the $1 pricing. "We are
working on the pricing for the Indian market but what would it be and when, it
is too early to say," said Sun Microsystems India Country Head -
Marketing, KP Unnikrishnan.

Talking about Sun Microsystems' push for its customers to move to a
subscription-service model, he said, "People should move out of proprietary
systems and make a jump towards selling services apart from just simply pushing
boxes. We've been telling them to sell services as well as boxes. Most
value-added resellers understand that they have to add more services than just
shift boxes, and the local partners are figuring it out," he added

Today one of Sun's top priorities is providing more on-demand and
subscription-based services. The company already provides hosted storage and use
of its development tools on a software-as-a-service basis. Last month, Sun
introduced pay-as-you-go computing grid, offering its customers grid computing
for $1 per processor, per hour.

One of the challenges for Sun in offering subscription services-in addition
to figuring out how to make money-is convincing customers to make the leap
from owning a data center to using pay-per-use services. But for that Sun will
have to clear taxation and custom issues before introducing this model in the
Indian market and that doesn't seem to happen in the near future.

RAHUL GUPTA

(CyberMedia News)