Wired, McNealy’s Last Stand: Technical muscle and a history of innovation made Sun a Silicon Valley standard-bearer. It also blinded famously combative Scott McNealy to the coming Linux wars. Now he’s fighting to survive.
Excellent article on the challenges facing Sun.
Like many other technologists that came of age in the UNIX era, I’ve always had a soft spot in my heart for Sun, and probably always will. Not only was Sun a pioneer technologically, but it arguably did more than any other company to permanently establish open standards in the industry’s balance of power.
Ironically, Sun is one of the more closed vendors today, while IBM, the king of closed vendors during the UNIX era, is now one of the most open. Why? Because as the world around them changed, Sun was on top. IBM’s Michael Fay explains:
“You recognize the world’s changing,” says Michael Fay, who works in IBM’s server group, “but it’s just too easy to keep cashing checks.” Just as IBM’s attachment to its lucrative mainframe business meant Big Blue was late to enter the server market, Fay says, Sun’s success blinded it to Linux.
While Sun no doubt saw what was happening, they didn’t pay much attention, because the status quo was just fine for them. Because they didn’t pay attention, they didn’t appreciate the magnitude of the shift going on around them. Meanwhile, IBM, HP, and virtually everyone else did pay attention because they didn’t have as much to lose by accepting what was happening – if anything, the shift presented an opening.
Just as IBM eventually recovered, Sun will as well. My prediction is that a battered and bruised Sun will eventually pick itself up, dust itself off, and finally embrace the disruptive nature of commodity technology, just as IBM, HP, and others did in the 1990s. In a way, this will be Sun returning to its roots. After all, looking back, the introduction of the Sun workstation was one of the major spikes along the commoditization curve.
After numerous fits and starts, Sun finally seems ready to embrace Linux. However, it’s hard to take their commitment seriously when a dismissive attitude continues to come from the top. For example:
So the same hardheaded pride that got Sun into trouble with Linux is alive and well. Nowhere is this clearer than in the office of Scott McNealy, where he keeps what he calls a “decapitated penguin” on a shelf (it’s the head from last year’s costume).
In fact, while it’s clear Sun does finally realize they need a stronger and more central Linux strategy, it’s not clear they fully understand why yet:
[McNealy] points out that Red Hat, the leading purveyor of Linux systems, announced revenue of $24 million for its last quarter of 2002. “I don’t know where this multibillion-dollar Linux business is,” he says. “There’s IBM math going on here somewhere.”
[…]
Of course no one is earning billions packaging an operating system a key selling point of which is that it’s free. It isn’t a matter of the riches Linux will generate but the billions it’s siphoning off a server market that shows no sign of rebounding anytime soon.
It misses something to just say that Linux is “siphoning off” billions from the server market – those billions are going to go somewhere, and that somewhere is going to be “Linux”. But what is “Linux” in the traditional business context?
One thing is clear: “Linux” isn’t a product. As McNealy rightly points out, Linux product sales are miniscule. As numerous Linux vendors learned in 2000-2002, you can’t make money selling Linux as a traditionally packaged OS product.
Rather, it is the ecosystem around Linux that is the multibillion dollar opportunity. HP and IBM have figured out how to tap into this, but not all of us have the depth and breadth of resources as HP and IBM.
The good news is that the ecosystem is vast enough that there’s room for entrant and established firms alike; and there are plenty of new business models out there waiting to be tried, many of which are disruptive by their very nature and thus suitable only to the entrant firms.
The game isn’t over yet. Not by a long shot.