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Should Sun Just Fold Now?
KE1LR writes "The Silicon Insider at ABCnews.com is taking the position that Sun Microsystems, creator of the SPARC architecutre and, oh yeah, Java, should just give up and close shop instead of continuing to wither. I agree that Sun would have to have to do something dramatic to avoid what is looking more and more like an inevitability at this point, but what could stop this slide toward the same fate as DEC? Might they have anything in the works that could save them? What could it be?"
Apple is not what it once was marketshare wise, but it's still a cool company. Why does everyone want to kill these shrinking companies instead of letting them carve their own niche?
TW
Let's take a look at Sun history:
First they built "low-end" workstations. They managed to make a killing at this. Eventually PCs started eating their lunch. So they "reinvented" themselves as a server provider. They did quite well at this until PCs started threatening that market. Then they "reinvented" themselves as a complete solutions company. They did quite well at this until PCs went 64bit.
Now they are "reinventing" themselves as a Desktop provider. They are honestly working to produce one of the most competitive desktops on the market. My current testing of their desktop shows that they still have a little ways to go, but for a first release they've done pretty well. When you combine in the publicity their Looking Glass technology is bringing them with the technologies that Sun is obtaining from Microsoft (I've been told that the next version of StarOffice will have Access support), they are truly posed to begin doing to Microsoft what Microsoft did to them: Eat away from the bottom up.
Javascript + Nintendo DSi = DSiCade
I've worked with Sun hardware for a long time now (from IPC/IPX up through the E10K) and their equipment (sans a few exceptions) is incredibly awesome. It might be on the pricey side but for some reason, they refuse to die! I'm running two sparc20's and a SS10 at home and just love them. Sun's OS (using Solaris 9) is solid and performs well even on this old hardware. I personally think it would bad for business if they went the way that DEC did (worked with DEC Alpha and talk about performance -- nice ...). It's too bad that Sun hasn't tried harder to make their OS competitive with Linux, but then hey, the intel architecture isn't their forte.
Well on a side note, how much this holds for everyone else I do not know, but the College Board (AP) (they do highschool testing for college level courses in highschool) is switching their cirriculum to Java, instead of C++. From this effect a lot of colleges are now switching to Java to teach programming. At my collge the intro level courses are going to be phased over to java sooner or later (I think its next semester actually). If Sun is really going to die, then a large amount of people have put support into their dying product. I think that even if Sun struggles hardware wise, that its Java platform will continue on. Think of Sega, they went from hardware and game manufacturer to just game manufacturer. Why can't sun do the same?
je suis parce que j'aime
Sun has something like $6billion in their coffers. At their current burn rate, they will be around for a long time. Their new JDE push (and associated service revenues) could be the thing they have needed to appease stockholders and get back in the game.
Of course, they could just take that cash, distribute it to their employees, lay them all off, then sell their receivables, contracts, and customer base to some other company *cough*IBM*cough*, then split that money amongst the 'execs'. There would be a lot of retired ex-Sun folks lounging around the pool.
One would need to see a lot more client/server integration, but I think if Sun/Apple (one of my labmates suggested Snapple) marketed enterprise solutions consisting of high-end multiprocessor servers serving Java apps to Apple workstations, they might really get somewhere.
It's a gamble, but Apple could only profit from it and Sun needs new ideas fast.
Sigmentation fault - core dumped
Sun took a little bit of a beating because of cheap servers and cheap clusters. The ultrasparc is still a pretty bad-ass CPU though. Sun has figure out that they need to keep entry level server at around the $999 level and have done so for over a year now. With the new Opteron's and a metric ass-load of cash, Sun is most certainly not going to be another DEC. There are still DEC systems being made (just under the HP flag now), and you can still buy new Tru64, OpenVMS stations, etc...
If my company needs anything beyond the $600 and $700 range, I would recomend Sun any day of the week.
/* oops I accidentally made a comment, sorry */
A company can survive without growing. Wall Street may not like it, but look at Apple, as an example.
Sun has a pretty cool niche - They produce some of the best server-class machines in the world. And I say this as a fairly vocal proponent of using commodity PC hardware whenever possible... I've had the opportunity to use a few decked-out UltraSparc boxen, and quite simply, they rock. A cluster of PCs can do the same task 90% of the time, but when you need high performance in a single box, you just can't do better (I also say that having used some of IBMs high-end offerings, and they just don't compare IMO).
So should Sun fold? No. They need to reprioritize, from growth to maintaining market share and quality. Not cutting costs, not appealing to more of shrinking market, but just doing what they do well.
As for the whole Java debacle... Well, if they can find a way to make money from it, okay. But if not, they need to stop flogging a dead horse, and just bury it.
Unfortunately this is true, there seem to be an internal struggle between geeks and suits, as much as I admire the idealism of Sun they still don't get what the market wants, try to develop a database application with the latest JDK and you will be frustrated, the retarded complexity of Swing and sloppy sluggish end result, recently I regained a little faith of Java after giving up on it long ago, but still the productivity is much lower than comparable tools, the learning curve alone is a major demotivator and don't get me started on the J2EE platform, recently this struggle became visible when top notch suites and geeks walked out of Sun, it is a typical case of lack of vision, Sun is sending mixed messages some times the planning is good but the execution is shoddy at best and vice versa.
What about these possible scenarios:
Apple is definately making moves into the workstation/server space and OSX _can_ play there. Perhaps Apple could buy what's left of Sun in a year ot two (when there's much less than there is now) for firesale prices. This would mostly be to gain acess to Sun's sales channels and some engineering resources.
Or, more likely: IBM buys Sun and then takes Java in the direction it wants to take it. Of course, they also would probably want to wait for a lower price, so don't look for this to happen right away.
I like Sun's massively parallel Niagra architecture. Each chip runs 32 threads in parallel with an impressive 80% efficiency in pipeline usage.
If they can get this off the ground, it'll be great for servers.
Unfortunately, it's lousy for single-threaded compute-intensive processes like chip synthesis and simulation tools which are what I need.
It's interesting that they are kinda going back to the mainframe mentality where I/O and over-all throughput are more important than single-threaded performance, but with the way servers are going, this, I think, is really what is needed.
So I read the article, and was puzzled why a Forbes editor would ask a company with 13 billion in market capitalization to just fold up shop. So I googled on the author, Malone, and found some interesting gossip. He evidently went to elementary school with Steven Jobs. When Apple was on the outs (remember when Malone suggested Apple should just fold up shop?) Malone wrote a slanderously nasty book about Woz, Jobs, and apple. Here's a sample of from a web page that corrected some of Malone's numerous mistakes:
Malone, the editor of Forbes ASAP, reserves his most caustic remarks for Jobs, with whom he attended elementary school. He asserts that by the age of 19, Jobs had been ''involved in numerous felonies'' and was a drug user, bulimic, liar and cheat -- and went downhill from there. As the head of Apple, Malone says, Jobs was ''a lunatic megalomaniac,'' ''an executive horror and spoiled brat'' who was ''smelly,'' ''paranoid,'' ''vicious and belittling.''
http://www.xent.com/FoRK-archive/apr99/0054.html
Wow. The guy is a total tool. It's not like he wrote just one bad column in his life. Just going on what google kicks up, it seems like every week we puts his foot in his mouth. But I guess it's like Rush Limbaugh or Howard Stern. People don't necessarily like or agree with them, but tune in to listen to them make a complete train wreck out of journalism. It must be the same thing with Malone.
I guess it's one way to make a living. It probably pays better than other media-stunt professions like hosting Fead Factor, denying the moon landing, or mongering JFK conspiracy theories (or more recently, 9-11 conspiracy theories).
I was at Sun back in Feb. of 2003 and pointedly asked the speaker these questions - where were they going, what new products did they have and how were they going to deal with the rise of cheap servers/Linux.
After hearing the speaker waffle on about MadHatter, thin clients, new opportunities and that most-hated MBA word (and I'm an MBA) "monetizing" for about 10 minutes, I realized I already knew the answers to my questions.
At the short and informal reception following the speaker, an engineer who had sat on the panel (but didn't say anything during it) button-holed me to tell me that I had hit the nail right on the head - he said virtually all of Sun was trying to figure out the answers to my questions and as yet they did not have any answers.
Not much is sadder than the rusting hulk of a once great company in total denial.
Sun is a Unix vendor. SCO is suing people with any connection to Unix. Linux, because it resembles Unix (plus some spurious claims about code in the kernel); IBM because of AIX; Daimler Chrysler and Autozone because they used to use Unix systems and ported those systems to Linux.
Right now there are two mainstream platforms: POSIX and Windows. SCO's actions may be primarily directed at Linux and GNU/Linux, but do not for a second believe that SCO isn't harming the entire POSIX sphere, and that includes Sun.
You are not alone. This is not normal. None of this is normal.
Just MHO.
Check out my sci-fi/humor trilogy at PatriotsBooks.
After getting hammered by the PC market, the comparison of Sun to DEC is a good one. They both were competing with Intel. DEC ended up selling the alpha to intel and having them produce it, ending the competition and settling a lawsuit over IP. The alpha was a great chip, too, but it's dead now.
Sun is also competing with intel and it's hurting them just like it hurt Apple. Businesses realize that they can buy 5 PC's for the price of one Sun, so even the awesome support sun offers pales when compared to the bottom line (provided you're saavy enough to swap a DIMM).
There is one hardware product that they will continue selling, IMHO. Sunrays. These machines rock. I'm using one right now. The footprint and lack of fans are awesome... my office is so quiet I can hear the fans in the machines across the hall and I barely even notice the space it takes up (about 12" x 6"). But this is not going to be enough to keep their thousands of employees.
"Smartly Sun now also sells Linux based servers - but their servers do not have the assumed Windows/Linux flexability of the commodity hardware servers sold by the competition."
Actually, they do. Sun just certified one of their x86 servers with Windows
, and announced plans to certify ALL of their x86/Opteron hardware to work with Windows.
IMHO this could be the thing that saves Sun, because one reason many people stick with Sun is the quality of Sun support, which has always been some of the best technical support available. Now you can buy your Windows/Linux/UNIX hardware from one vendor, and know that you will get great support with a fast turn-around, and not end up on the phone talking to Apu in Bangalore.
Of course, given that some companies are opting to just make all of the x86 hardware disposable due to low per-unit costs, this might be a moot point. But then again, when a strange problem pops up in every machine in your 1,000 system cluster, you probably don't want to be dealing with a vendor who has cruddy support services.
(and I suspect, soon, Motorola)? Motorola? Motor-ola?
They are leaders in embedded tech. What does the idiot think? That because Motorola is going to go broke because Apple is shifting a small volume over to IBM (lets face it, its a small volume, they're great but 5 million CPUs/year is a drop in Motorolla's bucket.)
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I think it is important to see how Sun is doing comparatively...Sun's BETA vs. the S&P is 1.72. That's pretty good. Since the beginning of the year, their adjusted beta is 1.79.
They haven't had a profitable quarter since Q402, but they did breakeven in Q203 and Q303.
They have $3B in cash and marketable securities. They have $2.3B in accounts receivable. Not bad there either. They have $6.4B in total liabilities, but only $1.5B is long term debt. That leaves $6.4B in shareholder equity.
Their price/sales ratio is a measly 1.2. That's pretty low. Maybe the market is underestimating their chances? Or maybe it's the negative sales growth that is scaring people away?
Sun is usually bought for the high-end servers where Linux is not considered a good substitute. I like Linux, but if I need a 64 processor machine with over 200gigs of RAM, I'm buying a Sun. In fact, that's exactly what we use at my firm. We use Linux boxes too, but those are for smaller tasks. The majority of the heavy lifting is done with large, expensive machines like Sun Fire 15k machines. When we have a system problem, we need the machine backup pronto and it really needs to be able to handle the crisis. Suns do that well. So we continue to dish out $3mm per machine and have about 300 Suns in each datacenter. We have other vendors as well of course and quite a lot of other machines, but the Suns aren't going anywhere.
Now, I'm one of the first to say that Sun is losing a very large share of its market - the lower end. They just can't offer price-competitive counterings to Xeons and Opterons.
However, they've still got the most lucrative part of their market, the ultra-high end. With their big models starting out at about a million bucks (and that's FAR from fully equipped), they've still got plenty to keep them going.
There are still lots of apps that don't cluster well, so a room full of PC's just doesn't cut it. and there are still companies willing to shell out for the hardware they need. Sun will have to scale back on the low end, there's no doubt, but that's not a problem for them. They've always preferred to make a large profit margin on smaller volume.
steve
Oh, you're not stuck, you're just unable to let go of the onion rings.
I don't know if Java is a relevant source of income to Sun. I would think rather that it's a drain. It may be that the only value Sun gets from Java is brand name recognition. That in itself is worth a great deal, as it helps you sell other things that aren't a drain. However, that is only true if a competitor doesn't come along to duplicate and improve the Java technology with a catchy, if familiar, name to developers. Also, it wouldn't help if they do you one better and actually establish the clone as an official standard. If the clone should become a standard, it's entirely plausible that Open Source implementations would arise, giving developers Java without the name.
What would be even worse is that if those Open Source guys happen to decide to use the same bullet-proofing that allows the Linux juggernaut to currently cause havoc with Sun's UNIX businesses. You know that killer app that isn't an app, but a license called the GPL. We know the GPL eats competing proprietary licenses for appetizers, and the products attached to them as entrées. I think Sun's main competitor (now bosom-buddy) called it a virus, and are clearly afraid of it as they're the next course on the menu.
No, as long as those things don't happen, Sun should be able to continue on as it has for the past several years without worrying about their product being usurped from under them, and under a different name. No point heading off the disaster as long as such clearly ridiculous fantasies don't come to pass. Even if it would really cost them nothing (just save them a bunch on development and administration cost), and they would still be able to retain the brand name (the only value Java adds to Sun) while Open Sourcing Java.
If they GPL/LGPL'd it, their fears of permanent forking and the product being locked into proprietary platforms would all vanish. And, similar to Linus, they retain brand name, copyright,trademarks and control over the name. The JCP process would remain the defacto standard.
= 9J =
I find that hard to believe. I can buy a fully equipped SunFire V240 for $10k Australian (about $7k US). That's multiple disks, multiple CPUs, multiple power supplies, multiple gigabit ethernet, etc. Any single component can release blue smoke and the system won't care. I can hotswap just about everything. This isn't white box territory btw. These are 15000RPM Ultra160 drives, quad gigabit Ethernet, and an industrial strength case you could parachute drop onto site.
An equivalent x86 computer from a real vendor like IBM or HP runs around the same price (in fact sometimes IBM and HP are more expensive for the same performance). You could get slightly cheaper x86 systems (around $6k) by going to Dell but I wouldn't touch a Dell on a dare. You could go for whiteboxes - I could do an equivalent whitebox system for around $3k - but then you're definitely getting what you paid for.
I certainly don't buy your argument that you could get *12* whiteboxes for the price of one decent Sun box. The price ratio isn't that bad. My impression is that you have only ever bought personal computers for home use from a local whitebox supplier because Sun gear is certainly priced competitively for the corporate server market.