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April 24, 2006 | Comments: (0)
With McNealy out, what should Schwartz focus on?
The news that Sun's Scott McNealy stepped aside today from the helm should come as no surprise. The only thing I would be surprised at are those who think he actually stepped aside and wasn't pushed by the board.
The financial news coming out of Sun has been bleak since 2002 with estimates that the total loses since the dot-com bubble burst is about $4.5 billion.
Some say Jonathan Schwartz will complete the move to the network computer.
The question is, does the concept of a super-thin client, no hard drives, intelligent cache, running anything but Windows have legs. Can Sun under Schwartz sell it. And I mean literally sell it.
Others, like Josh Greenbaum, principal at Enterprise Applications Consulting, has different advice for Schwartz.
Greenbaum says Sun's major failing is it has never been able to capitalize on the software leadership that it generated over the years, with Java being the best example.
There is no Java revenue stream.
Schwartz has a better sense of what the software side of Sun's future is about.
Greenbaum believes in order for Sun to survive it has to follow the lead of IBM up the food chain and offer middleware.
Hardware, as far as Greenbaum is concerned, is a deadend street -- a commodity that is going now where. "Sun has been growing wheat [hardware] while everyone else is selling bread [software and services]" says Greenbaum.
There will be a brief honeymoon as the board gives Schwartz a bit of room to show what he can do.
What next for Sun? I agree with Greenbaum that hardware is a dead end. I'd like to hear from readers what they think. Or let's offer Jonathan Schwartz some guidance. I'll post your comments below.
Posted by Ephraim Schwartz on April 24, 2006 02:50 PM
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What a goofy posting. With $11-12B/year in revenues derived from IP that Sun/STK has created, there should be no questions on Sun's ability to survive. $4.4B in cash AFTER buying StorageTek. Hardware is dead? Get real. Successful technology companies still differentiate based on integrated hardware, software and service offerings. You probably use a Java-enabled handset and don't even know it. McNealy isn't out, he's still fulltime Chairman of the Board and one of the technology world's foremost leaders and visionaries. Schwartz will manage the day-to-day business, McNealy will continue to influence the industry and sell at the highest levels. Get over whatever inclines you to offer Jonathan Schwartz guidance, you're obviously not qualified to offer it.
Posted by: Jim White at April 24, 2006 04:29 PMYou're in dreamland if you think this company is going to survive. I suppose you would advise someone to invest their life savings in Sun. I don't think that would be a good idea.
Posted by: Ephraim Schwartz at April 24, 2006 04:38 PMhi ephraim,
I kinda agree that hardware only won't get sun anywhere(than it already has reached).
It needs more consultants at all levels to be able to reach across the various industries and follow the model of IBM/HP.
I hope SUN acquires a few creditable consulting companies and get big accounts.
OpenSolaris : I hope a GPL'ed version gets released soon so that it can compete better with Redhat/Suse/Ubuntu, etc.
Redhat, after its acquisition of JBoss has a pretty decent technology stack and consulting staff. It seems that both Oracle and Sun have a common formidable rival. Is there a way Sun and Oracle can merge (a merger of equals) ? Oracle and Sun's merger will surely create a big powerhouse that is second only to IBM. What then prevents Larry and Jonathan from discussing it ?
BR,
~A
First, congrats InfoWorld for giving us a hint that this was coming :-) I was holding my fingers and praying your inside information was good. I even bought a 1000 shares that I will sell tomorrow. Nice Job! Change is good!!
I don't know where Scott will go and I don't care. Sun was the dotcom champ but the new environment requires better relationship management.
Thank you, Scott, for the Enterprise 10,000 Server, Solaris 10 and the free computer-based training I got because your website actually accepted checks without routing numbers. May you rest in peace. Thank you for moving out of the way so Java can live through an acquisition. End Program.
Posted by: George Carlisle at April 24, 2006 05:24 PMCheez, you folks sound like the "Apple is dead" crowd of a few years ago. The Opera ain't over till the fat lady sings. Mr. Schwartz, do not listen to these bozos, keep looking for the real demand under the demand, (such as compute power per watt) and never forget that the very best technology NEVER gets top market share, but there is always a market for the elegant solution. If you must take part in another round of mergers, my dream combo would be Sun, Progress, Apple! Talk about a sweet, elegant, scaleable, bullet proof, hot rod, software/hardware stack! If Sun is dead, long live Sun!
You are right in that there will always be a market for elegant solutions and there is no doubt that Sun has the engineering talent to innovate elegant hardware. However, the reason McNealy is out is because of the insatiable demand of Wall Street to meet earnings projections rather than his inability to develop elegant solutions. You are indeed correct that Apple was also in the same position before Jobs returned - but as I far as I know Mac users are loyal like no other, and there never was a time when people dumped their Macs for an alternative. This is quite different than what Sun is experiencing; a sampling of the IT shops I know have been dumping Sun hardware and Solaris for the inferior Intel platform and Linux at a rate where Ephraim Schwartz could probably pick the year, month, day, hour and second that Sun will run out of time and money to build a "growth" business. E. Schwartz is right - would you invest your life savings in this business model? Even if the elegant hardware and "Green" computing comes back into vogue - is IBM and HP going to sit back and not compete? The hardware market is a treacherous road for Sun.
Sun's strategic direction must be derived from their software assets. The reality is the largest open source software deal that has been completed to date - Jboss - was developed on Java. And what did Sun actually get from the IP it created to make that transaction even possible? What software as a service application is not being developed on the Java platform? How is Sun leveraging the use of its platform?
The software industry is moving to a services offering whereby companies are willing to pay for maintenance and consulting for a support model and community. I think Sun has proven that it has the horsepower to be THE community for application development platforms, SaaS, desktop tools (open office), and middleware ( short of a database). Providing that software services model along with hosted services that leverage their elegant hardware platform and data storage to leverage their StorageTek purchase and they could have a great story for Wall Street, their employees and the software industry.
Posted by: James Francis at April 25, 2006 12:28 PM
Mr. Francis, so right you are! Hardware is and has been for years, absolutly cut-throat. Moreover, surely everyone has realised by now, software can sell hardware, but rarely if ever the other way around. But one cannot dismiss hardware innovation just because the competition is fierce. Note the AMD / Intel saga. But how can you put "if" in front of "elegant... back into vogue"? Elegant means the clean, tight, effective solution, and that is always in vogue. If you are the best, you always will trail the acceptably mediocre in the market, but you will always have your supporters (think Apple). Sun too, has it's supporters. A buddy of mine is primary Admin on 174 24/7 mission critical boxes in 40 of the lower 48. If you try to migrate his boxes to Lintel you'll have to factor in breaking in a dozen new admins. I can guarantee the old one will leave and it would take a dozen talented Linux admins to generate the functionality of a gray haired Solaris hack + Solaris 9/10. In the intrest of honesty I must admit I am an I.T. Director and my shop is currently Lintel/iSeries. However, when we reevaluate the stack, I will invite Sun to bid. You also nailed the key software issue. Yes, Jonathan I will be rooting for you to find the Java revenue stream too. And yes, I suspect it will be service and support based.
Posted by: Outtabox Thinker at April 25, 2006 03:50 PMTOP STORIES
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