Slashdot Mirror
Merrill Lynch Rips Sun
cosjef writes "In an open letter to Sun, an analyst for Merrill Lynch tells Sun to change or risk adding itself to the junkyard of formerly-great technology companies like DEC or Data General. The letter even recommends taking the helm away from McNealy, whose 'brash and contrarian personality have been synonymous with the company's image and success. Unfortunately, the act is getting old.' Sun's mistakes are well documented, but the biggest one is believing that what made them successful in the past would make them successful in the future."
Newsforge
The Inquirer also has an article predicting the doom Sun. It references an article by Eric S. Raymond at Newsforge found here.
Bill Joy. Not Bruce Perens.
Who are these moderators? This one is WAY too obvious...
Sun was founded in 1982... see Sun's website
Bruce Perens worked for HP... see article here
The Checkpoint firewall is not a Sun product... see Checkpoint Software Technologies
...that most Merill Lynch analysts were yelling "buy! buy!" in 2000.
That said, I think Sun is already dead. Two billion in cash is all that is keeping the corpse from rotting.
This guy has a reputation for doing this sort of thing, and more people need to know about it.
My alma matta was one of the largest Dec Sites in the country in the early 80's. All the universities infrastructure systems DEC systems and their was a mandate that all incoming students by DEC PC-350's. The net effect was there was no way to avoid the product line.
Funny thing was while some of the equipment (VAX-xxxx, PDP-11 series) were excellent, most of it was an incredible pain. The PC-350 were based on the PDP-11 architecture but wouldn't run any of the common PDP-11 operating systems. Whats more the 350's couldn't even format their own floppies. The mainframes (DEC-10,DEC-20) while solid systems suffered from unique features, 36 bit word size was my favorite.
Anyway, at one point Ken Olsen, the then CEO of DEC came to give a speach/pep talk about the great advances we were making and how wonderfull DEC would be in the future. In his q/a session he had 3000 angry engineers asking him how his company could foist off pieces of crap like the 350. His response was that we lacked an understanding of how his business worked.
DEC is but one. Technology companies must understand that they are about serving customer needs, not their own arrogance. I can go down the list of for days citing companies that either felt they were successfull so nothing could happen, or they were unique and nothing would happen, or they were just plain arrogant.
Scott Mcnealy has always been on the plain arrogant side. Suns products have always been priced very high, and they have never been willing to make the effort to penetrate mass markets. The funny thing is I really love their equipment, the same way I really love apples. The problem is I can't bring myself to buy it or recommend it in most circumstances.
Engineering went into the toilet, and now while Sun's still good at a few things, all but their most insanely-priced hardware is nothing better
I disagree.
Sun's hardware is expensive, but generally pretty reliable. Up until a few years ago, it was worth the money. And still is, but only for a decreasing number of high-end niche areas (64-way systems hooked up to big SANs).
The difference in quality between Sun hardware and PC hardware is not as great now as it was 10 years ago. Back then, people paid for Sun hardware because it gave back performance and reliability that was a joke in the PC world.
But PC hardware is now "good enough" in terms of performance and reliability and the low price clinches it. CPU's are cheap enough you can afford redundant arrays of computing capacity for many applications.
This is not Sun's first near-death experience, though. The SPARC chip and migration away from the Motorola 680x0 was a risk they took that paid off. A lot of folks weren't too pleased with the big shift from BSD to SysV from SunOS 4 to 5, either.
But developing a high-performance RISC chip costs too much relative to what the returns are from selling a few specialized systems. Why should I buy an UltraSPARC V, Power 5, PA-RISC 8700, MIPS 14000 (or even Itanium 2) when I can buy a rack of x86 systems?
Sun's current ventures, Mad Hatter for one, are risky, too. But, realistically, even if they can prove their technology is good enough and cheaper than what Windows offers, they're still competing in a fierce low-margin market with Linux distro makers and, more importantly, with the established base of old Windows PC's which are "good enough".
By not recognizing and planning well for this trend 3-5 years ago, Sun's management has made a mistake. Now, they don't have the time and money they need to make the kinds of changes in a large organization that need to be made.
It sounds like some of Sun's good people are leaving: I hope they can flourish and contribute in new ways in their new environments It will be interesting to see which company does pick up the pieces, though. I'm betting it will be either IBM or Dell.
"Provided by the management for your protection."
But remember that they are nothing without customers like yourself who give them billions in return for a share of the profits of stocks.
If a company is underperforming they should tell the customer and not keep pumping money in them. They want and need a return to give to you and themselves.
Sun is having trouble. Almost all IT companies are. A few like IBM are the exception and analysts predict these things.
http://saveie6.com/
eh? Are you talking about on a %-age-of-revenue thing, or in absolute terms? I think Apple spends as a % of revenue quite a bit because they're using non-standard hardware, and so can't leverage off other's work (their Q&A, testing etc. also costs them more).
On absolute terms though I wouldn't be surprised if Dell spends more than Apple - their revenues must be significantly bigger (their profits definitely are...).
But I distinctly remember in one interview Micheal Dell himself saying that one of the reasons for Dell's success was that they didn't spend anything on R&D (this was in their much earlier days) and (together with other factors) as a result would always have better margins than everyone else. Some of my engineering friends have always felt this distaste for Dell ever since then.
Anybody out there have a link to an archive of this or anything?
10 years ago there was no Apache server. There was NCSA and CERN httpds
I work in the financial services industry. Bear in mind that analysts are paid by banks, not by you. There's no reason for him to give you the 'benefit' of his wisdom whatsoever. Open-market advice is given for three reasons:
To benefit the analyst (bonuses etc.)
To benefit the bank or banking clients (see point 1)
Publicity
The good of the standard investor or the company being invested in doesn't even come into it. The fact he's made this an open letter means he needs Sun's stock to move for one reason or another.
Let me remind you that when you buy stocks, it is the banks who sell them to you. They can sell you stocks at the offered price whether they have stocks on hand or not. The SEC authorizes market makers (banks/brokerages) to sell stock short if they don't have enough shares to maintain the bid/ask. Consequently, any given bank can end up with a large amount of stocks either long or short at the end of the day. Now if they raise the bid/ask the next day when they're short, they lose money immediately. Why would you make yourself lose money? It is common sense. If too many people bought the damn stock, heck squeeze them for ten years if thats what it takes.
Now before you say banks all compete against each other, I'd like to point out that it is/was a common practice for banks to borrow cash from each other in times of difficulties (such as too many people showed up to demand cash out of the electronic accounts).
2. Sun owns Cobalt that make great Linux boxes.
:)
As a former Cobalt/Sun employee, this is gratifying to hear. But you should know that Sun has completely killed off the Cobalt product line except for the RaQ 550. And that's slated for EOL by the end of this year.
The good news is that the Cobalt-specific code that made up the Qube (UI, etc.) has been released under a BSD license. More info and downloads at http://open.cobaltqube.org/. Hopefully the RaQ stuff will be opened at some point as well...
Sun's Linux products are "general purpose" Linux servers now, not appliances. Oh yeah, and some new desktop thingie...