Sun's troubles have been mounting for a while. Founder Bill Joy's departure was an ominous recent symbol, but the substance of their problem is that their hugh-margin server business is being eroded from the low end by PCs running Linux at a rate that doesn't leave it much of a future.
Nobody should cheer the prospect of Sun's demise. Sun screwed up some major decisions very badly, from wrecking Unix standardization efforts in the 1980s to throttling the dream of Java ubiquity by keeping the language proprietary. But nobody should forget that Sun was founded by Unix hackers for Unix hackers. For most of its lifespan Sun remained the archetype of an engineering-driven company. Sun was, mostly, among the good guys; to hackers and geeks, disputing with Sun was almost a family quarrel.
But inside Sun, I hear that talent is bailing out of the company because they just don't believe the Solaris-will-prevail story management is peddling. Most of Sun's techies are running Linux on their PCs at home. They can see the handwriting on the wall.
In retrospect, the recent pronunciamento that Sun has no Linux strategy was their final admission of failure. Sun can't run at the lean profit margins that are all a commoditized Linux server market will support, their cost structure is all wrong for it. They got trapped in a classic innovator's dilemma and didn't cannibalize their own business while they had the investor confidence and maneuvering room to do so. Cuddling up to SCO didn't help, either.
And now it's too late[1]. Moody's has just about dropped Sun into the junk-bond basement. The stock closed at $3.31, 15% off for the day and falling in heavy trading. The recent product announcements have been duds, and the upcoming quarterlies are going to be a disaster. Wall street analysts are calling for drastic job cuts and speaking the code phrases that mean "run for the hills!" The smell of death is in the air.
Any of Sun's people and tangible assets that don't scatter to the four winds will probably wind up in the hands of IBM, HP, and Dell -- three companies that have shown they do know how to play the commodity-computing game. The SCO lawsuit probably won't be affected. Sun was the lesser-known of of SCO's sugar daddies along with Microsoft, but Redmond can pick up Sun's share of funding the lawsuit out of petty cash -- and it undoubtedly will.
The real question is twofold: can OpenOffice.org survive without Sun, and where will Java land? Probably not at Microsoft; with C# in the picture, it is unlikely that Microsoft even wants to own Java any more. I have to guess that IBM is the most likely to shoulder both technologies, simply because nobody else is really positioned to do it. But that, of course, raises other worries -- is it really good for us if IBM has a lead position in everything?
[1] reuters.com
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Sun has 5 billion in the bank and low debt. How exactly are they "doomed"? And have you ever heard of reverse splits (here's a guess, Palm did it).
However, it's time Sun spun off Java.
<A HREF="http://www.petitiononline.com/spinjava/petition.html" TITLE="petitiononline.com">http://www.petitiononline.com/spinjava/petition.h<nobr>t<wbr></nobr> ml</a petitiononline.com>
- A. San Juan
An analysis of the balance sheet says printing & imaging are paying the way and computers are at best breaking even.
Sun, on the other hand, went from us$3.8B in the bank in April to us$5.7B in the bank three weeks ago. It is covering it's operating costs.
Sun is not healthy, to be sure, their multi-threaded SPARC idea has yet to be proven (things like memory bus capacity really are worthy of being pondered -- but we're promised that they've got a rabbit to pull out of their hat). Their Linux non-strategy is a mess and any interaction between SCO and SUN is plainly offensive. N1 and thin clients still have yet to prove their worth or their ability to be integrated into the real world.
I think the answer is wait and see. They are cash-flow positive and as long as that is true they're still in the game. The same can not be said about HP's computer business.
-- Multics
What is proprietary about the SPARC? I thought the instruction set was actually a standard? (IEEE or ISO; I forget which). Or does that only apply to the 32-bit SPARC?
SGI do the high-end stuff much better - do they do a 106-CPU box?
Look into Sun ONE some time - application stack for $100.
While I will have hope for Sun, your example of IBM is easily countered by the example of Tektronix. It's true that Tek still exists and hasn't died, but it's just a shell of what it used to be. From what I've been told, in the '90s they missed the boat on the UNIX market by choosing a bad CPU (from what I've been told, it was even worse than Intel) and seem to have missed the boat on the consumer and mid-range printer market. They're basically kept alive these days by the high-end printer market.
Sun can't run at the lean profit margins that are all a commoditized Linux server market will support
Who'd want to do that? If lots of people start getting interested in Skodas - good, low-cost cars - it doesn't mean that there's no market for Mercedes and BMW. Quality engineering is in a league of its own.
If Linux were to steal SMP code, it could do worse than stealing it from Solaris (not that any rational being believes anything from SCO)
One great comment I heard recently was that Linux on a 3GHz PC is faster than Solaris on a 366MHz Ultra10 - a 6-year old workstation!
Don't believe all the Wall Street hacks and "interesting" people like ESR too readily when they want to write off Sun; think of Magrathea (HitchHikers Guide) - with $5.7b in the bank, Sun can afford to ride this without having to do anything (not that
standing still is McNealy's way!)
eh. they'll get no tears from me.
Posted by: Martijn Vellinger on October 02, 2003 09:02 PMthey've systematically messed up every project they did, bad marketing, conflicting interests in the OS market, keeping java proprietary, ridiculously expensive servers that could have been replaced by clustered linux solutions, the list goes on and on.
goodbye sun, no hard feelings.
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