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Ex-Sun CEO Warns Oracle of Death By Open Source
gearystwatcher writes "Former Sun CEO Scott McNealy talks to The Reg on where things went wrong, and acquisition by Oracle: 'We probably got a little too aggressive near the end and probably open sourced too much and tried too hard to appease the community and tried too hard to share,' McNealy said. 'You gotta take care of your shareholders or you end up very vulnerable like we got. We were a wonderful acquisition — we got stolen for a song at the bottom of the Dow.'"
Definitely, if all the valuable assets of your business is in software (Solaris, StarOffice, Java, etc) and you give away such software for free then your business does not make sense at all.
Ubuntu is an African word meaning 'I can't configure Debian'
Sun's biggest problem was that its various flagship products were out-competed or unprofitable. On the high end hardware, IBM could build better mainframes. On the lower end hardware, Dell could build cheaper workstations and servers. On their Unix, Linux became as good as or better than Solaris. And Java, while nifty, had no way of turning a profit.
By open-sourcing its software offerings, Sun ensured that while its business was screwed, its legacy lives on.
I am officially gone from
The mistake they made was that they forgot (or didn't know how) to monetize the open source solutions they had. OpenSolaris was great, Java was great, OpenOffice was great but there was no option to buy support or custom development for those products. The only way was to go with closed Solaris and StarOffice which were quite different products and required IT folks to migrate. Basically they pushed OpenSolaris as a development vehicle for their closed Solaris which made for a bunch of OpenSolaris installs way ahead and more feature-rich (patch-wise) than Solaris, migrating back was a pain (or impossible if you upgraded your ZFS pools), installing Sun software on it was a pain.
If anything I would say they didn't open source enough of their products for it to be a success. OpenSolaris would've been great in a well-marketed product like Nexenta did - take the closed source out of it, allow for the great amount of Linux software to run directly on it and make it easy as Ubuntu. But their stock repositories were crap and hard to find requiring signing up to get keys or stick to the handful of community repos. Their HA and Storage solutions are still the best you can find in the market but again, hard to install on OpenSolaris and not very compatible with other software and systems.
Their hardware was also overpriced which pushed them right out of the market. I can understand the higher pricing on their SPARC products but not for their generic x86 systems.
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That's hardly news, and McNealy is far from the most powerful guy who loves Ayn Rand. For instance, former Fed Chairman Alan Greenspan was a big fan of her as well.
The reason, I think, is that Ayn Rand's philosophy is that people become rich and powerful because they're better and more valuable people than those who don't. Compare that to, say, Karl Marx, who would argue that people become rich and powerful because they're scum-sucking leeches who like to steal from everybody else. Now, if you're rich and powerful, which philosophy would make you feel better about yourself and what you did to get to where you are?
I am officially gone from
That's strange. Red Hat does all via Open Source and is about to pass the $1 Billion mark. Sounds like to me McNeally was a very poor CEO and it had nothing to do with the things they Open Sourced.
My karma is not a Chameleon.
Right, the only mistake Sun did was open-source too much. Like all the closed shop were doing wonderfully well too.
The summary is incomplete. Somewhere else in the interview he mentions that one of his regrets is not open sourcing Solaris earlier, claiming it was better than, and could have beaten Linux. His point is that they didn't have a good business model and didn't make enough money from the open source, but he also clearly still believes open source can be profitable, and open source was the right direction for Sun.
Google is doing it right. Its google-docs does not do much, in terms of bells and whistles it pales when compared to Ms-Office. But it is well positioned based on a simple truth. 90% of the people need only 10% of the features of full fledged Ms-Office. Give that 10% free and effectively deny Ms-Office the mind-share of 90% of the people. Force Microsoft to interoperate with a significant part of this 90%. Give customers of Microsoft some ammunition in price negotiation. Anything that will make Microsoft play defense in the Office arena, is the resource it can not spend in fighting Google. It is ably helped by Microsoft that has promoted to leading positions people who won the corporate desktop market. Like Civil War generals fighting the war using Napoleonic tactics against machine guns, or the WW-I generals fighting that war using Civil War lessons, the management of Microsoft is fighting the consumer market war using corporate desktop war tactics.
Coming back to Sun, it was effectively done in by amortization. The cost of development and research of intel chips was spread over so many more customers compared to the sparc chips. The same way cost of development of Windows was spread over a much larger number of customers. When there is an order of magnitude difference between you and your competitor in terms of potential for amortization of cost of R&D, you should have the vision to react early and react decisively. For all the high salaries paid to these MBA types, they did not see it coming.
I'll grant you I am Monday-morning-quarter-backing. But I not getting Sunday-after-noon-quarterbacking salaries either. Scott McNealy got paid to see this coming. He failed. Miserably.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Sun succumbed to the same thing that felled SGI, namely the boom in commodity computing. Sun made some really great products, the problem was that they also that made products that were really expensive. Back in the day when the difference between the high end and commodity was significant enough that a lot of companies were willing to shell out the money for the primo shit. However so called "commodity" computing(both hardware and software) has eventually caught up and a lot of companies could no longer rationalize the difference between Sun's stuff and the much cheaper products.
For instance 2 years ago we were looking for a new RAID and were considering Sun's ZFS storage appliance but the $10k for 2 tb was just waaaay to much money for the tiny extra bit of redundancy we could get. It was cheaper to just buy a much bigger raid, split it in 2, and do an rsync. Not the greatest situation in the world, but ultimately it saves a lot of money. Sun just could not compete for anything but a relatively tiny niche market while having massive amounts of capital tied up in labor and facilities.
Monstar L
Red Hat does quite well giving away its open source OS and apps as fast as it can. That's not what devalued Sun.
What devalued Sun was that its CEO, McNealy, was unable to run such a company. He kept proprietary products like Solaris propped up for years longer than they had a market among competitors like Windows and Linux, even as primary competitor IBM deprecated its proprietary OSes to embrace them both. Then McNealy punted on Solaris, opening its source only when there was no demand for it. Sun's Solaris business didn't get taken by competitors copying Solaris' source or anything like that. In fact, opening the source kept it going for years, even if it was too little, too late to save it. Especially with the CEO failing to actually embrace open source, but rather seeing it as a dumping ground for nonproductive assets instead of a hothouse to grow those assets into productive centers to be monetized.
McNealy is like any failed CEO whose failure was trying to control something better developed by letting it go more: blame the "liberals" ("liberal" means "free from control"). If McNealy can blame open source for his own failures, he might find new income from the many other incompetent businesses that need a scapegoat like open source to hide their own failures. And in today's corporate world, especially America's, there is no higher demand for anything than for a scapegoat.
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make install -not war
The mistake they made was that they forgot (or didn't know how) to monetize the open source solutions they had.
Absolutely wrong.
The mistake McNealy made was in refusing to adapt Sun's business model of selling ridiculously-overpriced proprietary hardware with obscene profit margins in an increasingly-commodotized, increasingly-Intel/AMD CISC-centered marketplace for far longer than was sustainable. It's the classic Wang/DEC/WordPerfect business model error - stick your fingers in your ears, squeeze your eyelids shut, and go "Nah, nah, nah, nah, nah!" at the top of your voice, and just keep on keepin' on, while the dominant paradigm shifts around you.
Check out my novel.
So when he said "We probably got a little too aggressive near the end and probably open sourced too much and tried too hard to appease the community and tried too hard to share" he was just lying like a weasel, as his contradictory hindsight also says he should have done more of what he did "too much".
Open source wasn't the problem, as he freely admits. Doing it too late was the problem. By the time it was "near the end" it was too late to "take care of the shareholders" by doing anything different. Open source was the only thing keeping Sun relevant near the end, and therefore the only thing taking care of the shareholders.
McNealy screwed up, as everyone watching Solaris sink could tell. He should have opened the Solaris source, ported it to Java running on every CPU but optimized for highest speed on Sparc - and then maybe Xeon. Should have made Java applets actually work on every CPU/OS/browser, the way Adobe did Flash, and bought Macromedia instead of Adobe getting it - or just competing with it. So many things he could have done if he'd managed for the 2000s instead of the early 1990s. Now he's just a whiner whose day is long gone.
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make install -not war
I don't think it's even about rich or non-rich. What Ayn Rand does isn't as much a defense of being rich, as a defense of psychopathy and of not giving a damn about the others or their well being.
And while in her writing she does somewhat tone it down, in her diary she was going all fangirl over people like William Edward Hickman. That was her ideal of superman and she loved a quote from him saying "what is good for me is right."
Just to make it clear, what William Edward Hickman was famous for was kidnapping a schoolgirl and mailing her father taunting ransom notes signed with names like "Fate" or "Death". Then when the father came with the money, and thought he saw his girl sleeping in the abductor's car, she got thrown out of the car... dead. Hickman had cut off her limbs -- by his own testimony, _alive_, as the blood was coming out in small spurts, i.e., the heart was still beating -- hollowed out her torso and strewn her inner organs all over town. Actually living out an earlier fantasy he had told a former accomplice about, to take someone apart and chuck bits of them all over town.
Ayn Rand thought Hickman was some kind of dashing romantic adventurer whose only "crime" was rejecting the unreasonable conformism of society. (Like, you know, not taking live children apart.) She pretty much foamed at the mouth against those boring sheeples who dared so self-righteously criticize her hero. A bit later she blames society for basically not offering him anything better to do than gut and dismember a little girl. I mean what was the poor guy supposed to do? Get a boring job and a boring wife and all that? No, really. That's her justification for Hickman.
And really, that's what her writing is about. Even the economic angle is Bullshit with a capital B. I mean, her utopia needs an infinite free energy source to even function. But she manages to do a heck of a job in lionizing the psychopaths who doesn't give a damn about anyone else, and calling those "statists" and "collectivists" names, and fantasizing about their destruction.
Now consider that a large number of those at the top _are_ psychopaths. See, for example: Is Your Boss A Psychopaths?
If you were one, wouldn't you just _love_ a philosophy that says it's just normal to not give a damn about anyone else, and that it's an _objective_ (or Objectivist) fact that it's all about caring for number one?
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IBM's success with Java pretty much proves that it was Sun's management of java rather than Java itself that was the problem. On the same note, IBM's success with Linux pretty much proves that McNealey's whole rant makes little sense.
Hah, McNealey's blaming FOSS for his own management shortcomings. The bad thing is people not in the industry (not in IT and more in Financials) will read this crap and come to the conclusion that FOSS == BAD for Business. I think its more a case of McNealy == BAD for business.
Python: 'And then suddenly you have a language which says "we're all stuck with whatever the whiniest coder wants".'
Did anyone ever try to buy things from Sun?
No other company I ever worked with made it so hard. Unless you were a megacustomer, it was actually fairly difficult to actually buy anything from them.
In contrast, buying RedHat on the small scale is click, click, done.
Here's a summary of Ellison's rant on why Sun died, notice the complaints are mostly about sales and engineering decisions, open source had very little to do with it:
http://blogs.barrons.com/techtraderdaily/2010/05/13/oracles-ellison-sun-execs-were-astonishingly-bad-managers/
Blessed are the pessimists, for they have made backups.
IBM has seen open source as a means of creating "solutions" for customers not a money maker in of itself. Ibm views linux as a sturdy and inexpensive tool that it can spend money to become very expert at. Sun sells expensive tools, IBM sells solutions to customers needs using inexpensive tools. That is why IBM is very very rich.
Interestingly, IBM and Oracle got more value out of using Java than Sun did by writing it. That appears to have been one of the decision points for Oracle.
One of the extra advantages of Linux for IBM was that it offered a new OS for the 390s, and of a very popular flavor. Sun already had a Unix OS for SPARC, so they didn't get the added value.
Sun was, IMHO, always a "BSD vs Bell" shop: they understood the struggle to free BSD, and learned how to deal with Bell and the commercial world, but that's where they stopped.
--dave
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