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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
Move over Apple, move over BSD! There's a new game in town, and its name is SUN!
Come on, guys. Everyone's been talking about all these guy's deaths forever, but they're still here. There's a market for all of them.
~Will
sig?
How does folding the company stand a chance of increasing shareholder value? Would the board legitimately be able to follow this course of action?
Also do you think anybody would invite them to work at their company after that?
SURELY NOT!!!!!
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.
"Sun is not coming back. It is a giant company without a business."
I think the article went a bit too far in predicting Sun's demise. Whilst it's true that the rating of their stock is poor and they have really failed in many areas where they would have liked to succeed, I'd say there are signs they may be coming back.
Now they have a collaboration of some description with Micro$oft; it's hard to get an ally with more punch than them, regardless of what you might think (or indeed Sun and Scott McNealy might think!) of them.
They finally seem to be realising that you can't have both the hardware and the software market. Look at IBM and Apple for precedents there. Sun has started a new price war on Linux and Windows on the x86 platform.
My operat~1 system unders~1 long filena~1 , does yours?
Just a bit of info:
Sun's stock (SUNW) is now hovering at about 4.00 (down slightly today).
Here's SUNW over the past 5 years
Casual Games/Downloads
Sun insists that they won't sell Java to IBM. IBM is now quite dependant on Java and have all sorts of ideas for how they would like to change it if they didn't have to constantly butt heads with Sun.
So, okay, fine, IBM can just wait a bit and buy Sun for a reasonable price. That way, Java won't have been released into the public domain and IBM won't have to argue (as much) when they want to change it.
IBM has the most to gain from control over Java -- arguably Microsoft has more but for legal reasons they won't bother even trying to buy Sun -- so they'll be willing to pay the most, so they'll get 'em.
"Those who have never entered upon scientific pursuits know not a tithe of the poetry by which they are surrounded."
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.
Silicon Graphics, another early bay-area unix workstation success, was in a much smaller niche, even at its peak. SGI has been circling the bowl now since the late 90's and still hasn't gone away. They barely even lost any money last quarter.
Sun has a much more stable market of business buyers. They have to be selective to get back to profitability, but it's definitely possible, even without a radical change in market. People still pay big money for mid-range and high-end servers. People still pay big money for solid enterprise software. Business customers are willing to pay real money for real solutions. A company like sun just needs to make sure that it solves today's hard problems, and does it at a price that's similar to the competition.
A slump doesn't mean a fall. A re-org doesn't mean a death knell. Sun has lots of chances left to redefine itself, and figure out how to be profitable. They just might have to lose market share and girth in the process.
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).
It's not about speed. It's about reliability.
-30-
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.
Google spent... oh, roughly $100m in software development getting to the point that they were saving enough money by using the distributed low cost low reliability PCs. That is a huge barrier to entry on such largescale clusters.
And Google is in a business where a little data loss in the searches is not going to seriously harm anyone. So they operate slightly lossy. They admit this pretty explicitly; one of their people, Anurag Acharya, was an invited speaker at the second Evaluating and Architecting System dependabilitY symposium in 2002.
Neither the software investment to make reliable distributed apps nor the lossy data model are acceptable to typical business software. Do you want your bank losing 1-2% of your deposits, or having a consistency check error balancing your account at the end of the month? How about Amazon randomly deleting or inserting a few things from your orders...
And even where there is off the shelf distributed software like Oracle RAC, it's such a management and performance hit that people typically go back to buying larger single system image servers after testing it out... ask Oracle what percentage of their sales are RAC versus straight Oracle 9 some time.
There are applications... web farms spring to mind... where the Google model is a natural fit for the problem set. Strangely, that particular answer was well known five years ago, because people are not stupid.
Until every major business application is naturally and easily distributable larger servers will continue to sell. The software is just plain not there yet. Things are trending that direction; in ten years, the current model is in real serious trouble. Maybe sooner. But now? Don't believe dumb hype.
Ok, so let's compare. Let's compare a Sun Fire V440 and a HP DL580 G2. Let's assume each is equipped with 4 top end CPU's, 8GB memory, dual Gigabit NIC's, 2x36GB disks, and a DVD-ROM drive on each -- sounds like a fairly standard server configuration to me.
Price
The V440 is more than 50% less!!!!!!!!! Ok, let's go to performance. Going to use the SPEC CPU2000 info for the DL580 G2 3.0GHz Xeons and going to use the Sun Fire V250 config mutltiple by 1.8 (since Sun has not yet releaed info on the 4-way V440 with the same 1.28GHz US IIIi CPU's tha the V250 has). (Listing below represents Cint2000/Cfp2000/Cint2000 rate/Cfp2000 rate).
Performance
Hmmmmm....two things jump out at me here -- the UltraSPARC IIIi is lousy at integer math, while the Xeon is lousy at floating point math. Either way, the 3.0GHz Xeon, which represents a clock speed difference of 234% greater than the US IIIi, only performs better than it by 28.7%. Increasing the CPU to 1.7GHz or going to US IV CPU's as Sun plans to do with the upcoming V490 will close the gap.
So overall, for 109.6% of the price of a V440, you're only getting 28.7% of the performance. Umm....what was your original point?
Rule #1 -- Politics always trumps technology.
So let's say I have a massive computing need for, oh say, chip design. Chip designers, like Texas Instruments, Cirrus Logic, or General Semiconductor, require massive amounts of CPU time and even more memory. Sun's ultra-high-end offerings are worthless, since you simply can't cram enough RAM into their higher-end Enterprise servers.
... But when they're Linux, clustering is free (software-wise.) And while the hardware costs for RAID and SAN remain high, the software to make them work is dirt cheap compared to anything you would have to buy for Solaris.
... no longer do we stick Ultra 5's and 10's on the designer's desktops, now they're running their tools on Microsoft Windows 2000/XP.
That is nonsense. How about you show me a PC that takes from 96 to 192 Gigs of ram and can use most of that in a single process? You can't. Sun's midrage servers can do that sort of thing.
If you are doing BIG chips, you are almost certainly going to need either an IBM, HP, or Sun Unix box somewhere in the design flow. Linux just isn't there yet to handle the really big stuff.
Your idea about distributed processing is great... if the software supports it. There is still a lot of EDA software that is single threaded doing tasks that are either hard to split, or can't be split. And that is assuming that you can afford the extra seats of software to actually use it in a distributed computing scheme. Since there are tools that cost $750,000+ per seat there don't tend to be a lot those those dedicated to grid computing.
And now that major vendors are offering Linux versions of their design tools, we are no longer tied to Solaris.
I doubt that you would have ever really been tied to Solaris. You could always go to HP or IBM for most vendors. Now you can also do to Linux for the stuff that will fit. Not all of it will fit though if you are doing anything substantial.
Oh, you want those servers to load balance/load share? To be in a cluster? More $$$'s.
Free and open source from Sun.
Want RAID?
Disksuite is free from Sun.
Want some kind of SAN solution?
So, what software would you use on Linux that you wouldn't or couldn't use on a Sun?
I would guess from this that you aren't doing anything too tough since practically every serious EDA vendor (Synopsys, Cadence, Mentor Graphics, etc) has pretty much bailed from Windows for their tools to do real chips as opposed to FPGAs.
Based on your comments it looks to me like you have been out of touch with what Sun has been doing for quite some time.