Special Report: Can that guy in Ironman 2 whip IBM in real life?
| Reuters
Great article in Reuters today on Ellison’s involvement in the restructuring at Sun. He pokes fun at Schwartz’ blogging addiction, which is a treat to read. But more importantly, this bit on sales strategy:
“More infuriating, says Ellison, is that Sun routinely sold equipment at a loss because it was more focused on boosting revenue than generating profits.
The sales staff was compensated based on deal size, not profit. So the commission on a $1 million sale that generated $500,000 in profit was the same as one that cost the company $100,000, he said. ‘The sales force could care less if they sold things that lost money because the commission was the same in either case,’ he said. Ellison added that Sun also lost money when it resold high-end storage equipment from Hitachi Ltd, storage software from Symantec Corp and consulting services from other companies. Oracle is ending those deals.”
This, right here, is why companies like Apple are succeeding right now. They care first and foremost about profitability per unit. Market share means nothing if you’re not making enough to keep the lights on.