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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.'"
Sun just couldn't compete with Linux and Intel. Open sourcing wasn't the problem. It probably helped, just not enough.
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.
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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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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
That is the point. Java is only valuable begause it is given away for free. If Sun (or Oracle now) tried to sell it, it would be nearly worthless.
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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
Exactly, and part of the reason the free alternatives exist is because Sun made them free (e.g. Openoffice, or Java open-source friendliness).
What Sun failed to do when open-sourcing their "valuable software assets" was to establish a business plan to go with it. RedHat has a business plan related to go with their open-source Linux distributions; IBM has a business plan to go with their Eclipse open-source software... Sun? even though I like them a lot ... it is true that they were not business sound from a long time.
They had the complete vertical stack (hardware [Sparc], middleware [Java] and software [Solaris] and services [cloud services]) but never really came up with a business plan.
Again, it has been really good for us (the open source community, free software advocates) but it was terrible for the economic viability of the Sun corporation (thus resulting in its end).
Ubuntu is an African word meaning 'I can't configure Debian'
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.
Obviously I'm not Sun's ex-CEO; but in watching Sun over time, their problem seemed to be less with OSS and more with a complete lack of any clue as to how OSS fit in with their strategy.
Clearly, you can't run a business with expenses and shareholders and stuff on puppies and altruism; but there are a good number of circumstances where investments in OSS fit within a larger profit-making strategy(generally when your core business is hardware or consulting, or where you are trying to spike a competitor's profitable software business so that they can't use the profits from it to crush you in your profit center).
Sun, on the other hand, kind of tacked back and forth with no clear direction. One day, it'd be "Java will be open, to encourage even more mass adoption, and pricey SPARC gear will be the premiere architecture upon which to run JVMs!" The next day, "Thanks to OpenSolaris, our superior Solaris technology will roxxor your linux, even on commodity intel silicon, thus totally gutting our SPARC line that we were enthusiastic about yesterday!".
It could also be that, when you come right down to it, OSS is mostly a nonissue in Sun's declining fortunes. The moment AMD introduced 64-bit X86 extensions to save themselves from Intel's IA64 squeeze plan, most of the remaining "custom UNIX on fancy architecture" vendors cried out in terror and were slowly suffocated. SGI was gutted and sold, Sun twisted around for a while and was gutted and sold, IBM remains strong in mainframes and consulting; but their x86s are nothing special and POWER is pretty niche(the workstations are dead, some servers still survive).
Had Sun been less OSS friendly, they quite possibly could have wound down their operations into a smallish but profitable legacy/consulting/niche hardware outfit, rather than being sold off; but their real problem(and that of companies in a similar position) seems to have been Intel's massive capacity to fab cheap AMD64 chips on a very aggressive schedule, along with the existence of a "good enough and really cheap, unixlike OS". Even Chipzilla's own precious IA64 has been largely murdered by this development, and that is Intel's own baby...
Sun might have extracted a bit more value had they realized earlier that marketshare may not be worth the price and done some gouging while they still could; but I'm not sure that minor changes vs. OSS could really have saved them...
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.