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Sun Microsystems, a CEO's Last Stand?
pillageplunder writes "Businessweek's cover article is a sharp look at Sun Microsystems. The gist of the article? That its fall can be laid at the Feet of its CEO, Scott McNealy. Overall, a balanced read, one that does a good recap of the the high and the very low low's that Sun has reached under McNealy."
This is starting to get as funny as "This is the year of Linux on the desktop," but while we get those articles once a year, we get Sun-is-dying articles on a monthly basis. It isn't going to happen anytime in the near future guys, no matter how many times you write articles that lack any supporting information in the hopes of someone viewing your BusinessWeek site.
Interested in open source engine management for your Subaru?
At the various conferences and other tech events I go to, I've met many Sun and Microsoft employees. One thing that really strikes me is that I've yet to meet a Sun employee younger than about 35, but I've also never met a Microsoft employee (other than an executive) over 35. I think this creates problems for both companies.
It makes some broad brush statements about Java facilitating sales of Sun's big boxes. This just isn't so. Java had nothing to do with it. There was a time, early on in the commercialization of the Internet, that you bought Sun if you wanted a reliable web server. That's what sold Sun boxes. This is long over, however.
IBM Global Services pulled the plug on its Sun hosting somewhere around June 2001 - that was the first sign of things to come. A whole side of a huge server room populated with disconnected Sun boxes waiting for collection and ultimate resale, i'm sure. Did not bode well for Sun.
The Army is not using Sun boxes for critical systems anymore - the last dozen-odd projects I have seen have been Win32 or even Linux in basis. Lots of junk Sun equipment floating around, whether on Ebay or in storage closets.
The company is ultimately dead unless it reinvents itself - that is true enough. Saying that Java or R&D expenditures have anything to do with it is sophistry. The elimination of the value added associated with Sun's gear in real world applications is the reason why the company (as currently constituted) is doomed. There's just not enough difference between what they offer and what is offered for a much lower price point by other vendors.
They do have many quarters worth of cash to lose, of course. It isn't going to happen tomorrow, but they are rapidly becoming irrelevant, even if they still exist.
HBI's Law: Frequency of calling others Nazis is directly correlated with the likelihood of the accuser being Communist.
They have $7 BILLION in cash in the bank right now, have a strong R&D budget.
Take a look at their P&L's. Seven billion doesn't last that long with a company that size if you're not making money.
They're not going anywhere. Either is McNealy.
That's exactly the problem, if you read the article. I hope some of that new research on running multiple tasks simultaneously works out for them.
However, I think a billion spent on cluster computing would be a better bet. I think they were going in the right direction with the hot desktop switching. They just need to take it to the next level. A PC is more than a screen and a keyboard+mouse.
We have scanners, CD burners, webcams, and all kinds of other peripherals we want to use. Give me all that, and give me reliable access to my applications (office, ERP, calendars, development tools, etc. served off off a big fault-tolerant cluster) and now you're talking.
Sun will ultimately go out of business if none of their new projects is a big success.
But they have A LOT of innovative new projects and they have the money, time, and culture to start a lot more. Betting against all of them seems unwise.
In related news (for real), Sun's COO Jonathon Schwartz has just recently started his blog.
Bruce
Bruce Perens.
The company I came to work for in 1994 was a training partner with SUN. We taught SUN classes; system admin, maintenance, some programming, etc. In 1995 Java came on the scene and we ramped up to teach that too. The demand for SUN instruction boomed so much we eventually branched out into 8 other locations around the country and the money was just pouring in. We almost had to beat back excess students with a stick. SUN also had their own training centers, but we (along with other training partners) got a lot of the overflow, or students who couldn't travel to SUN sites. (SUN did certify us as qualified instructors, if you must ask, and we often travelled to teach in their centers).
When the dot-com bust came, it came hard on training. Nobody wanted to learn any more. Most all of the training partners folded, and SUN absorbed a few of the more profitable ones for itself. Eventually, SUN divested itself of the education part and sold it off to a 3rd party named Accenture, while keeping only 3 centers for themselves (San Jose, Broomfield CO, and Burlington MA). Accenture has many of the other former SUN sites, and there are still a few struggling and starving training partners waiting for an upturn.
The demand for training is ever so slowly and painfully rising, about as fast as SUN's fortunes are now. But the heyday of the late '90s is long gone. And most of the instructors I personally knew were either released or they quit. These were some mighty bright people, too-- it was hard to see them go.
My outlook is wait and see. I myself am hibernating while teaching at a local technical college. Maybe things will get better, maybe they won't. Time will tell.
Distribute all the cash and sales proceeds from their stuff to the employees and shareholders and then just close down. Then people can get back together and do something more promising. Why let good money go to waste.
Most computers are workstations and Sun's workstations have no chance against Dell. Apple is a "higher-quality" niche player, spends good money on R&D and has a good head start. What is Sun going to offer to get even 1% of the market?
Now the problem is that people want servers to be extensions of their workstations, not something totally different. Same UI for management, interoperable applications from the same vendors, one place to call for support and so on. Windows-based servers and to some degree XServe fit this model well. I wonder how Sun will address this problem. Even IBM better make sure that their Linux servers remain cheaper/more stable than Windows. You know, you could just run Apache on Win server and firewall everything except port 80. Instant security! I am sure Linux is currently better at multitasking/SMP but on the other hand driver support sucks (want to do some server-side rendering using your ATI video card?) and Microsoft will not sit still forever on performance.
One thing I don't get about Sun is how they operate in the PC market. They got the high end, workstation market nailed down during the Internet boom, but one would realize quickly that Sun would need a strategy to deal with the PC market. PC performances approach much faster to what a workstation is supposed to be a few years ago than workstation performances do to the next level at fractions of the cost. It should have been done a long time ago. Not seeing that is pretty myopic of McNeal, I'd say.
Not only that McNeal failed to make good strategic alliances. He is too preoccupied with Microsoft. Does anyone here realize that when a company is preoccupied with MS, they lose? One loses the focus one needs to innovate and instead, tries to survive by cutting costs something the likes of Microsoft and Dell can easily deal with since they have the volume. I thought a long time ago that Apple and Sun should have made great partners since some of their philosophies were similar. But, as much as McNealy hates Gates, he views Apple-Sun alliance as cumbersome. Notice how Sun release JVM for Wintel and not for Mac OS X? Star Office for Wintel and not for Mac OS X? You'd think that when you are threatened by microsoft, you'd need as many friends as you can gather.
I was there when the stock quadrupled in value, split and quadrupled again and split again. I even made some money along the way. Some of our machines were big hits and we helped change the industry, if not the world in sorts.
I was also there for the big turnaround, When we, the design engineers didnt' deliver such hot products as we did in the mid 90's. There is a lot that contributed to that, but I won't go into my opinions on the matter.
I just want to say when the economy and market turned vicious on us, McNealy stood up and said "look, you guys invested alot of time in this company and brought us to where we were. Now we're here, the market isn't right, you guys have developed the best machines you could, but the market isn't right. But I'm not going to let you sit there and cry. Sun's invested alot in you, Sun's invested alot in R&D. Sun's going to protect it's investment in you and protect it's investment in R&D. You are Sun's richest resource and R&D is our future. We have umpty ump billions in the cash and we can hold out and forge ahead with no layoffs and continue our R&D".
That was before the first RIF 3 years ago. Since then Sun has had 5 RIFS and I can attest that every RIF'ed employee over that time, was RIF'ed grudgingly. Every project that was cancelled -- was done so because our executive management felt it wasn't going to meet the market demand or window. And I've no reason to doubt them. I didn't doubt them when we where high flying, and I'm not going to when times are tough.
Management that recognizes that I've made investments in them, as well as they've made investments in me and treat me like an asset -- is the type of management I want to work for.
So eat your hearts out. I work for a CEO that smart and daring and willing to take risks and make good gambles, while at the same time doing his darned best that I have a job with good benefits and strong and healthy corporate culture.
OTOH, people like us are viewed as "resources". Therefore, we can be replaced, upgraded, downgraded, or simply pitched out like used up garbage. We have the skills, but not the connections. The people who have the connections frequently don't have the skills to evaluate OUR skills because they were hired, again, because of their little piece of paper rather than promoted because of what they proved they knew.
And yet because of business you can get a job that pays $75,000 a year, have cheap commodity hardware to play on, and live in a world largely shaped by the efforts of 'people like us'.
Look, of course business has a tendency towards evil. It's sad that the most altruistic and non-money-oriented people don't get paid more, but the truth is as immutable as a physical law: People with lots of money and power are generally that way because they pursue it. Sure they need us to have power, and it's a bit of a good ol' boys club, but we are all complicit because a) we are not so power hungry, and b) they give us cool stuff.
I know it's frustrating to be viewed as nothing more than a cog, but don't let it bother you. The powerful few view everyone this way, and why not? They couldn't run a business if they took the time to know how to evaluate every type of employee. You can take consolation in the fact that they are no more likely to be happy then you are, and probably have a much higher stress-level. They are surrounded by sharks day in and day out, and may have a very difficult time discovering who their true friends are (if any).
Bottom line is, we didn't choose this career for money and peer recognition is more important than manager recognition anyway. If they knew what you knew they wouldn't need you, so be thankful you have a job doing something you love. This is a pretty unique time in history as far as that goes.
Ultimately, Sun is doomed. It has carved itself out a niche between IBM's big-iron machines and Dell's cheap-iron ones, but the gap in which Sun lives is rapidly narrowing. Even Apple is taking sales away from them, and if that happens, you know you're in trouble. As for Java...well, it's a good language and portable, too, but the coming onslaught of .NET is only going to hurt Sun more.
This means that Sun no longer has an edge it can use to drive a wedge between Dell, Microsoft, Apple and IBM, all of whom are rapidly closing in on it like a pack of wolves. Ultimately, Sun will go the way of Netscape (except that in Sun's case, it will be the rest of the industry crushing them instead of just MSFT). If they're smart, they'll open-source Java, because that's the only way I can think of for there to be something left of them once the company is gone.
I'm just waiting for the inevitable comparison of a company that went higher and higher up-market until there was nowhere to go.
In the meantime, the lower, broader-based competition ate their potential market by coming out with new competitively attactive, but not forward looking, product.
So called innovators in computing are just commiditizers. The difference is that now the time gap between innovation, read profit, and commodity , read cheap-ass knock-off, is shrinking (which USED to be the purpose of a patent system.)
Sun is not a viable company in the long term unless the do what Apple did and head in another direction.
MSBPodcast.com The opinions expressed here are my own. If you don't like 'em... Think up your own stuff.
"Yeah, its true that SUN's hardware is expensive... but when shit hits the fan and your server is down... and you're losing money 1000 transactions BY THE MINUTE, you really need someone to come down and save you!!"
If that's the case you may have picked the wrong solution or wrong architecture..
Sun is by no means high end or "exotic stuff" or even "overengineered". If your application is easily HA clustered then Dell etc will do just as well.
If it isn't and it's that critical maybe you should be using something like Tandem (now owned by HP), or OpenVMS (now owned by HP), both of which are targeted to run on HP's Itanium offerings (along with Windows and Linux). Or perhaps a mainframe from IBM (seems mainframes have more _scheduled_ downtime than the other two though). Then even if your server is down, the users hardly notice.
Sun's hardware is caught between the Dells and the Big Blue + HP. Sun's hardware is not mainframe class. Even Fujitsu says Fujitsu's SPARC offerings aren't mainframe class (note Fujitsu does mainframe's too, so they may be biased), just getting closer ( Fujitsu's recent SPARC CPUs have hardware instruction retry and Sun's don't).
Sun hardware used to perform decently- good bang for buck, but they are now way behind. They are now resorting to Fujitsu for SPARC CPUs (who makes arguably superior high-end SPARC CPUs and servers than Sun, but rather more expensive too...).
There are places for Sun servers, but the ecosystem is shrinking and changing.
I'm not sure what Sun should do. Maybe the Opteron thing will work. But I don't see Dell etc just standing by if Sun makes good money from it. Wonder if Dell have an "escape clause" from their contract with Intel for such situations. I bet they do.
They're not dying yet, but there are a few grim battles ahead.