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."

Comments

How do I apply for his position?

[Kjuib]

can I just email my resume to HR@sun.com? or should I walk in and say I want the job?

Again?

[bconway]

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.

Brave Sun

[Anonymous Coward]

and the very low low's that Sun has reached under McNealy.

I certainly wouldn't want to reach under McNealy, especially near his low lows.

Sun employees vs Microsoft employees

[GGardner]

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.

Re:Sun employees vs Microsoft employees

[Daniel Dvorkin]

Yes, you really do need a mix, and I think the tech world as a whole is starting to realize it. (I can't speak for whether Microsoft or Sun has done so, of course.) Experience and energy both count; you get the best results when you have both.

Re:Sun employees vs Microsoft employees

[Anonymous Coward]

/me waves ... 33 and been at Sun for 4 years. Of course, I was aquired, not hired, and most of the people my age who were aquired have been fired ("RIF'ed").

There are a number of Sun engineering offices that have a majority age under 35, but alot of those are overseas so you won't meet them. The offices in California and the Sales offices definitely are of an older average age.

As for the article ... it was spot-on. Alot of us down in the lower ranks have been saying the same things that the execs quoted in the article said. And most of us knew that McNealy was the one dodging the issues (sorry, holding steady). Personally I won't be too surprised, if Sun keeps the current stock trend, to see a company like IBM buy Sun out and strip out everything but R&D. We're good at R&D, but we've lost touch with the market.

Re:Sun employees vs Microsoft employees

[IOOOOOI]

I too have some first hand experience comparing M$ and Sun.

Whenever a M$ sales team comes-a-knocking, its always 3 or 4 pushy guys.

Whenever Sun calls, its a smoking hot sales chick (to weaken your resolve) and a grandfatherly guy who actually knows his shit (to instill confidence).

Classical big-company problem

[Bruce Perens]

Sun is stuck in making a transition from high-margin products to low-margin ones. Their workstations had 70% margins in their heyday. Linux and MS Windows have eaten that market - 5 years later than people outside of Sun thought it would happen, but it happened. But Sun can't make the transition to low-margin products without damaging the remainder of their high-margin ones, and they can't accept that. So, expect them to behave as if their low-margin products are directed at the high-margin products of other companies while simultaneously attempting to protect their own high-margin products from their own low-margin ones. The result is that they will exhibit a sort of corporate multiple-personality disorder, something evident with Sun for several years.

Bruce

Re:Classical big-company problem

[scoove]

Sun can't make the transition to low-margin products without damaging the remainder of their high-margin ones

Clayton Christensen has got to be mildly amused at Sun's disposition (and probably wondering why McNealy didn't fork out the $12 bucks to buy his rather significant book).

This is classic high-margin "focusing and developing your product line's evolution on your top 5% customers" as well as a clear non-response to Clayton's "trivial technology" via Sun's insistence that Linux could not do what Solaris does.

In the mid-90s, I began predicting Sun's demise when we encountered their Netra Internet "server" fiasco. Sun took a Sparc5, completely crippled its OS, removed its video card (serial or network interface - progressive, eh?), and then made misrepresentations as to what software was included. For instance, it was billed as a web server - but in actuality, it had a FTP server and a copy of Mosaic client software for download. Wala... it was "serving up web software."

Having bought several dozens of these based on Sun's misrepresentations, the only salvation was to buy video cards, full Solaris licenses (with a C compiler which was also excluded from the Netra) and make them a Sparc5 once again (at well over the cost of simply purchasing a Sparc5). Not only was the Sun product manager's response mystifying (blaming the customer for having unique and special needs - what, running http as falsely advertised?), but even more amusing was that no Sun support group had any awareness of this product.

More revealing, however, was that Netra was a stillborne attempt to enter lower margin (ala 40%?) products without threatening the cash cow. It failed miserably and I would expect some of the behind-the-scenes politics might explain why support knew nothing of the product and why it was permitted to leave Sun crippled to the point of unusability. Shortly after my public criticism, it was pulled.

I encountered similar high-marginosis several years later when Sun was pushed as a required platform for numerous Lucent products. The gifted Linux and FreeBSD work of an company employee allowed several thousand dollars worth of Intel hardware to replace quarter-million dollar Sun servers.

As Bruce writes, I'd suggest Sun's high-margin cash-cow myopia goes back well into the early 90s, when according to Clayton's theory, the time to respond to Linux and *BSD was immediate. It'd be interesting if others have Sun experiences, especially with respect to any lower-margin product introductions/failures, that might further illustrate Sun's trouble.

*scoove*

Re:Classical big-company problem

[Anonymous Coward]

Wala...

Sorry, I can't read any further; all breakers tripped. "Voilà." It's from the French, idiomatically used to express triumph and delight; it translates roughly into "see here!" "Wala," on the other hand, is, well, it's... it's just pathetic. "Wala." I mean, come ON. How can you get to the age where you can manipulate a computer, and even write seven internally consistent paragraphs (your conclusions are another thing, but this is a spelling flame; let's not get too off-track), with a link to a real book and everything, that you even appear to have read, and still we get: "Wala."

Here, let's at least make it a little more dramatic: "wa-LA!" Now I feel a sense of the theater; the magician has just performed his best trick. Pity it was a with a deck of TV Magic(TM) Cards, but what did you expect? The guy said "Wala" instead of "Voilà!"

Wala. You don't happen to use "formally" instead of "formerly" too, such as in, "I formally had credibility, but then I used 'wala' instead of 'voilà'"? That one drives me nuts, too.

Wala.

Re:Classical big-company problem

[reynhout]

eh?

I loved the Netras. They were exactly the right product.

What is the value of a video card on a webserver? Or a floppy drive? Or even a CD-ROM, though I would usually end up ordering them, for the additional $135.

Would you really have run the Sun-supplied httpd under any circumstances?? At the time, they were always shipping versions that were seriously outdated. They shipped sendmail4 for YEARS after sendmail8 was out! (This I never understood.)

I bought hundreds of Netras (literally, for a dozen different clients). They were a great way to build a cheap presentation layer for a web farm.

The standard pair of network interfaces was nice too (and rare among HW vendors, at the time). It saved $800 for a quad card.

Yes, they were IDE and there was no MBus. That didn't bother me at all. I used them where there were already good design reasons for system redundancy, either for failover or scaling.

So obviously, the Netras fit my needs perfectly and not yours. For those who weren't around at the time, Linux was *not* a viable option for a large production web farm at the time. It definitely *is* now, and IMHO that's why Sun is so devalued.

Solaris is still superior to Linux in many ways, but Linux is just as good or better for the vast majority of the market. If they were priced equally (TCO- admins, hardware, and software combined), Solaris would still be holding on. They aren't. It isn't.

I still own a bunch of Sun stock that I'm unwilling to sell at this deep of a loss. Come on Scott, make me proud of my stubbornness. Steve did! :-)

Re:Classical big-company problem

[Bruce Perens]

I would propose as the cardinal sin of the computer industry: protecting your own higher-priced or older products from your own newer, lower-priced products. This was a primary contributor to DEC's demise. When the VAX 750 came out, it really could have been as fast as a 780. For a while there was an aftermarket kit to un-cripple it so that it would indeed have performance close to a 780. But having a much cheaper machine of similar performance available would have hurt those high-margin 780 sales, and worse, would make the people who had just caused their companies to buy big-ticket 780's to look stupid or even lose their jobs.

But nobody made Sun protect DEC's lines. So, Sun won. Sun seems to have forgotten that lesson.

Bruce

I'm kind of disappointed ...

[Daniel Dvorkin]

I couldn't find the word "beleagured" anywhere in the article.

Oh, wait. Sun, not Apple. Got it.

Everything is dying

[Anonymous Coward]

OMG Sun is dying
OMG Apple is dying
OMG *BSD is dying
OMG Linux is ... wait a minute. Almost slipped.

I'm confused about "wildly"

[AndroidCat]

"The Internet is still wildly underhyped, underutilized, and underimplemented

How do you wildly underhype something? (Or even wildly underutilize or underimplement.) Does it involve caffeinated valium?

Simple: the PC killed the SUN

[Anonymous Coward]

SUN started in the 1980s as a Unix workstation vendor. They were very successful because, for a Unix vendor they were pretty cheap. Unfortunately for SUN, the PC was cheaper and progressed much faster than anyone in the 80s or early 90s could have imagined, and surpassed the SUN workstations while remaining much cheaper. Although SUN still has a pretty good presence in High-End computing, the market there was never really that big (apart from the fluke during the dot-com boom).

New numbers out soon

[deanj]

The new numbers for the latest quarter are coming out soon, so we'll have more to go on then.

I do find it a little distrubing that I'm even saying something like that.... The short term mentality for success is putting a lot of un-needed pressure on companies.

Anyway, like a previous poster said, this is the quarterly, "Oh, Sun's gonna die soon" thread. Don't believe it.

Look at SGI. They were going great during the early nineties and had their legs cut out from under 'em when the ATI/NVidia wars started and people realized they didn't need to buy those mondo-expensive graphics systems anymore.

Yet, they're still alive. Barely, but they're still alive.

It takes a lot to kill a company, and Sun's not going anywhere anytime soon. They have $7 BILLION in cash in the bank right now, have a strong R&D budget.

They're not going anywhere. Either is McNealy.

Re:New numbers out soon

[ansible]

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.

No, you need experience.

[Moderation abuser]

First, you must have some experience of having brought another major corporation to it's knees in the past.

On a serious note, why is it that CEOs are rewarded very handsomely for poor performance and failure when the rest of us get fired when we don't get the job done, or even are perceived as not being value for money?

Re:No, you need experience.

[Zocalo]

First, you must have some experience of having brought another major corporation to its knees in the past.

So, you're saying that Darl McBride might still have career opportunities after SCO? Damn.

Then again, SCO isn't a major corporation and was already scrabbling in the industry detritus when he took over, so there's still hope.

Re:No, you need experience.

[the_mad_poster]

I always figured that if you were at the top of the heap, and you were surrounded by friends, you could do pretty much anything you want.

In theory, to get to the top, you should know what's best for the business, how to implement what's best for the business, and be trustworthy to do so. However, anymore, it seems like an ivy league degree and some friends in high places are what it takes to get to the top. People aren't made into leaders just because they have that little slip of paper. Sure, it helps cultivate people who already have the talent, but just forcing your way through school won't make you a leader if you didn't have the skills to begin with.

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.

It really is a scary deformation of the way things are supposed to be. I'm sure management has a different view of things, but that's how I see it, and, from talking to other people, I don't seem to be alone in having that view.

Re:No, you need experience.

[Roached]

I'm a software engineer who recieved my Masters in CS and am about to complete an MBA as well, so I've got some perspective from both sides.

Basically, you're right in that management views you as a resource that is somewhat replaceable. To expand on this though, you're not as easily replaceable as the fry cook at McDonalds so a little more strategy is involved. In order to accomodate for this, the MBA program teaches classes in "Leadership" and "Organizational Behavior". These classes veil themsleves as "making the employees happy an productive" but the reality is that they are courses in how to manipulate people into doing what you want, possibly to their detriment, while still thinking things are great.

Someone skilled in these management tools can keep you thinking you're work environment is awesome right up till you get your pink slip.

Bottom line: always look out for yourself and never trust the management

Re:No, you need experience.

[telbij]

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.

The PC put the knife in but Sun twisted it

[Anonymous Coward]

The PC was just a wound, it is Sun itself which is killing Sun. More acuratly it is the Sun directors which are causing harm. Watching Sun is like watching a schizophrenic. Do they hate Linux or love Linux this week? Do they love Java or hate Jav this week? Will they dilute the Java brand name with some other half assed project only tangebly connected with Java or will they hype up some new super-cool Java feature? Will they hate Microsoft or be in bed with them this week? Will they, won't they? Yes, no?

It would be unfair to say that Sun don't have any direction. They do; but it involves thousands of twists and u-turns and someone keeps changing the map.

Re:The PC put the knife in but Sun twisted it

[chromatic]

I wrote a little program to generate Sun's strategy. Here's what they're doing today:

• Sparc works on the desktop.
• Java belongs on servers.
• Linux means nothing to us.
• Solaris should be open source.

Next month, it'll be:

• Sparc will never be open source.
• Solaris works on the desktop.
• Java means nothing to us.
• Linux should be open source.

(I realize that half of those statements make no sense. That's how you know it's working.)

Astrophysically speaking...

[Beast in Black]

...does this mean that when Sun actually dies, it will turn into a black hole and suck all the other silicon valley companies down? It sure is massive enough :)

Disappointed with SUN

[DrDebug]

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.

Opportunistic

[KernelHappy]

I was once told by someone in the top three executive tiers at Sun that they are an opportunistic company, meaning that they see a trend and jump on it. I didn't quite realize how true this was or more specifically how dangerous it was until it sank in. If you look back, they jumped on the band wagon catering to databases, then the jumped on webserver train, then they tried jumping on the low cost linux server trail, then they jumped in the Office Suite cubicle and finally grabbed onto the OSS bandwagon, each time spending more money for less or no profit. There has not been a concise vision or plan for this company for quite some time and they're paying for it now.

Unfortunately for Sun, they're not innovators and there are no current trends directly in their area for them to latch on to. Unfortunatley in lean times you need to either a) innovate and create new markets or b) produce commodity items cheaper. Neither of these things are congruent to Scott's vision or Sun's current form.

Even if Scott was to step down, what do you do with Sun? Java is not going to make it any money as a product, their in house developers are terrible and IBM has pretty much gobbled up large enterprise development market, Microsoft, agreement or not, is always looming in the corner looking to spank McNealy. If McNealy was smarter, he would have tried to be a visionary by latching onto biotech or something, developing other hardware that would leveraged his existing product base and created a reason to use his products over someone elses. But again, not innovators, regardless of how much they complain about Microsoft stiffling innovation.

Ultimately, Sun isn't quite a ship headed towards an iceberg, nor is it headed toward land. It's just circling in the middle of no where waiting for a volcano to build an island in its path.

Every ship needs to refuel at some point.

Some old time Corporate Values

[Anonymous Coward]

I'm an employee of Sun, been so for all of the 90's and still going strong. Alot of the young people in the Industry are young high flying jump to the latest high tech startup. You think nothing of 3-4 jobs over 8 years. When you are young, you are after the big score. Some get lucky, make good contacts become high flying consultants, others like me just chug away doing our best for our employeer.

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.

Re:disagree with article

[Anonymous Coward]

"IBM Global Services pulled the plug on its Sun hosting somewhere around June 2001"

Are you just pulling this stuff out of your ass? I work for Sun, deal with IGS on a regular basis, and they are bigtime Sun *fans*. Blows me away every time I talk to them. The number one deployment platform for IBM software such as DB2 and Websphere remains... Sun.

"The Army is not using Sun boxes for critical systems anymore"

Again, where are you getting this?

Re:How is SUN dieing?

[mritunjai]

Instead of modding, I think I should reply to you sir!

What kind of service exactly are you getting from ebay or newegg ???

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!!

This is enterprise grade hardware... not any DIY stuff!

If you can manage a whole day replacing and restoring everything from backup, and waiting for your homemade RAID to replicate all data, by ALL means do that. Incidently there are a LOT of businesses that can NOT afford that.

The only problem with SUN is that they've overengineered their products and right now, the market for such exotic stuff is limited... and SUN has been slow to respond to changes.

If you want to blame their management for that, do it. But don't raise a finger at their products!!

Blame Apple

[Matthias Wiesmann]

I think the reason why see those Sun is dying articles is because the 'Apple is dying' articles are starting to be really difficult to take seriously.

Actually, the article is eerily similar to the 'Apple should have' articles. Basically, what was done wrong was to try to do new things, invest in research. Instead the company should have built wintel boxes like Dell and fired a maximum of people.

How many companies have been successful in imitating Dell except Dell?