Figuring that real engineers want real workstations, Sun Microsystems Inc. has always refused to sell X-terminals, a hybrid machine that combines the low cost of "dumb" computer terminals with the fancy graphics of engineering workstations. Problem is, rivals such as Hewlett-Packard Co. and Digital Equipment Corp. have been stealing Sun customers by offering low-cost packages of X-terminals hooked to workstations. That allows more than one user to share the expensive computer. Moreover, X-terminals have taken off: Market researcher X Business Group predicts that sales will jump 46% this year, to $728 million.
Now, Sun is crying uncle. On July 29, it plans to introduce its own line of X-terminals, with a twist: Sun's machines, starting at $2,545, can be upgraded to full workstations by adding additional memory chips and a disk drive. But Sun is joining a crowded party. On July 19, X-terminal pioneer Network Computing Devices reported lower profit margins, placing part of the blame on intense competition.