SolNet suffers revenue slump

By ADAM GIFFORD

A focus on software and services has helped Sun Microsystems distributor SolNet to weather a tough year in the hardware market.

Managing director Mark Botherway said that despite increased sales of software and services, revenue for the combined Sun-Solnet operation in New Zealand declined 7 per cent to $93 million in the year to June 30.

This was compensated for by expansion into Australia, where revenue grew more than 300 per cent to almost $13 million.

Worldwide, Sun's revenues dropped almost a third from US$18.5 billion ($40 billion) - a figure boosted by Sun's central role as hardware supplier of choice to the dotcom boom - to US$12.5 billion.

Losses were contained at US$628 million, compared with the previous year's profit of US$1.45 billion, only by strict cost control and staff layoffs.

Botherway said the telco sector, traditionally SolNet's strongest, stopped buying during the year and Air New Zealand also put its chequebook away.

SolNet has long been a systems integrator and application developer as well as a hardware reseller, putting it in a strong position as Sun puts increased emphasis on software.

During the year SolNet released its first shrink-wrapped applications, the PerfectTrack and PerfectLoad application profiling and load testing tools, which sell for about $40,000.

"Working with corporate clients, we need to test applications before they are released to users," Botherway said.

"We were not able to find any suitable load test and analysis tools, so we had them built."

The company is continuing to invest in its Open Cloud subsidiary, which is developing an application server in Jain, a subset of Java designed for the telecommunications industry.

Botherway said as well as the Sun-backed iPlanet application server, SolNet has also built up its expertise in the BEA and IBM Websphere application servers. It is also preparing for a growth in use of the Open Source Linux operating system.

"SolNet focuses on the top 50 companies, and many are not ready to do processing on Linux, but the middle market is more likely to be interested."

Botherway said the expansion into Australia was going to plan after a slow start, with blue-chip reference accounts including General Motors Holden, the Medical Benefits Fund, Australia Post, consulting firm Accenture and Telecom.

Australia managing director Paul Muller has bought a 15 per cent stake in the SolNet group.