Struggling Sun Microsystems Opts for Subscription Model

Hoping to revive its flagging performance, Sun Microsystems(SUNW Quote) is moving away from its traditional sales model -- selling hardware and software and collecting revenue upfront -- and turning to pay-as-you-go services.

The plan, a variation on the subscription model used with mixed results by companies such as Microsoft(MSFT Quote), Computer Associates,(CA Quote) and Siebel Systems(SEBL Quote) has some appeal because it will provide a smoother, more predictable revenue stream.

But the risks are high: even Sun admits that margins will suffer and it is not at all clear that customers will be willing to do business so differently. ...