- Sun is shipping SPARC processors with a top speed of 750MHz, whereas Intel
architecture servers clock at twice the speed. OK - that's happened many times
in the past, and you could argue that running a 64 bit OS at 750MHz is every bit
as fast in a multi processor environment as running a 32 bit OS on 1.5GHz
Pentiums. But the biggest Wintel servers aren't just snapping at Sun's heels any
more. They're already in the datacenter.
- All the easy customers have gone. The get-rich-quick dot-coms which were
Sun's fastest growing customer segment are dust. The slowdown in the US is
hurting everyone, but Sun is going to have to kick its dot-boomer habit.
- Enterprise storage represents a huge growth opportunity for some computer
companies. Unfortunately, Sun started behind the leaders, and is growing its
storage business at a laggardly rate compared to the fastest storage companies.
Sun says their storage business is growing, but it can still grow while
losing market share. OK, during the last year, Sun has acquired a clutch of
storage companies and changed the top management in this division, but the
metrics on our sister publication
STORAGEsearch.com suggest that
most storage buyers are underwhelmed by Sun's changes. This is a market where
you have to delight your customers, and just doing the same old stuff as
everyone else is not good enough. Actually maybe all markets like that
now...
- Sun is still in denial about the desktop. You can't help getting the
impression that if they could try out that DeLorean in the movie "Back to
the Future" - Sun's senior management would like to go back to the early
1980's and have another go at taking on Microsoft and the PC market. Sun invests
and wastes a lot of economic energy wishing it was Microsoft. This creates
amusing opportunities for journalists, but doesn't achieve anything
constructive. IMHO Sun should spin off Java, Jiro etc maybe as open source
projects. Those individuals who wanted to join the anti-Microsoft playpen could
be given inducements to join the new start up. Then Sun should recruit a bunch
of top managers from Dell or Intel who really know the PC business, and
re-engineer better solutions for users who want to use SPARC servers in the real
heterogenous world.
- As has been widely reported - Sun is closing down operations for a week in
the Summer. Maybe not so well known, is that Sun seems to be planning major
surgery on its reseller channel. That, could be a very big mistake in the long
term. Currently less than 2% of the computer VARS in the US sell Sun
Microsystems or compatibles. VARS have to invest a lot to understand the SPARC
and Solaris environments. If Compaq cans a VAR, they can always go and find
another Wintel solution to sell from somewhere else. If Sun cans a VAR, that
company may decide that the game isn't worth the candle, and be lost as a Sun
technology compatible channel forever. At a time when Sun should be working hard
to make more friends in the computer business, alienating friendly VARS is a
dumb idea. The channel strategy which works for Dell Computer, won't work for
Sun.
The time comes in all organizations when they lose direction, and maybe
could be better managed by people who are not necessarily their founders. The
top management gets older, and starts becoming resistant to change. Or in the
case of Sun, maybe boredom is creating an urge to make too many of the wrong
kind of changes. There's also a problem caused by believing your own hype.
During the dot-com boom, Sun was a real beneficiary of that hype. Today, it
doesn't help. The hubris factor resulted in Apple giving away the dekstop PC
business in the early 1980's. Before Gerstner, IBM was a lumbering elephant,
with everyone taking pot shots at its business. It took a long time to
re-energize IBM, because the decline had been going on so long.
Sun's market started to change dramatically about 9 months ago. For a while
it seemed like it would be business as usual, and Sun's revenue growth continued
on momentum. But today Sun seems to be shooting in too many different
directions. They should concentrate on making the world's best servers and
multiprocessing operating system. When they re-establish their lead in that
area, there may be more time for the play pen. |
...5 years
later:-
Sun finally got the message and changed its CEO
Editor:-
April 25, 2006 - according to industry reports Scott McNealy has
indeed, finally resigned his post as CEO of Sun Microsystems.
The
new CEO will be Jonathan Schwartz.
Sun says that McNealy will focus
his efforts on Sun's government and academic relationships globally, as well as
expand his role with key strategic partner relationships. McNealy will also
assume the role of chairman of Sun Federal Inc., which focuses exclusively on
U.S. government business.
Although McNealy's stubbornness and single minded determination to
focus on SPARC were significant assets to Sun in the period
1987 to 1998 -
when the company was establishing itself as a supremo server company, those
qualities meant that the company was slow in reacting to changes in the market,
and in particular the growing power of Intel Architecture processors, and
threats and opportunities posed by alternative operating systems. McNealy's
clouded market views and poor judgement were masked by the windfall of the
dotcom boom era which benefited Sun until its own revenue crashed in 2001.
There
is little cause for most Sun VARs or OEMs to mourn McNealy's overdue exit from
the CEO slot which the SPARC Product Directory first advocated
5 years ago. In
an article published last year I chronicled the
main culls of SPARC
Compatible OEMs and their causes from 1997 onwards.
As we've
reported in these pages, Sun shareholders too, have had many reasons to
question why after the IT recession of 2001 to 2003, Sun's rivals managed to
return to double digit server revenue growth while Sun's own server business
maintained a steady decline.
But unlike
Ken Olsen (DEC's founder)
who stayed at the wheel far too long, steering his company on the wrong course
- there are still realistic prospects that McNealy's departure, while
overdue, is not terminally late for Sun. There is still time for Sun to grow
its server revenue. I outlined these prospects in an
article 2 years ago
in which I described the unique opportunities posed by the merging of server
architectures with high speed storage accelerators.
If Sun's new
CEO fails to recognize these exciting new market challenges and opportunities
- we'll have someone new to blame.
Other commentators have suggested
that the timing of McNealy's downshift is related to
Sun's
quarterly results announced yesterday. Sun reported that its "revenue
had increased by 21%" compared to the same quarter last year. But if you
take into account the contribution from acquired StorageTek's revenue - then
the revenue growth for the sum of the parts is nearly exactly zero per cent
according to my reckoning. That's not too bad for acquisitions as a whole.
Less good, however, was the $217 million loss.
Benchmarked against
other leading storage
companies and against other leading server companies Sun currently looks
like a loser. But looks can be deceptive. Another interpretation is that the
company is at a pivotal point where it can benefit from its new storage
footprint and new SPARC chips, and that it has the potential to outperform
the rest of the rat pack. Which way the coin falls will depend on whether
its new CEO can take the bold steps necessary to capitalize on its SPARC /
Solaris/ storage assets.
See also:- a good article which includes a
graphical representation of Sun's many screwball business plans, nutty marketing
strategies, turnarounds and restarts on
Ars Technica
| |
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