Sun: Dead company walking?

Over the years I've had mixed feelings about Sun. I like SPARC systems, much of the software, and several of their senior staffers are great, bright people. On the other hand, for ages the company kept going back and forth on such fundamental questions as: "Are we a hardware or software company?" And, "Are we a proprietary or open-source software company?"

That used to really tick me off about Sun, and, far more importantly, I think it also confused Sun's customers, which made it easier for Red Hat, Novell, Microsoft, and IBM to grab Sun's business. Today, Sun has finally become a true open-source company. Unfortunately, I think it may be too late.

Sun is laying off 15% to 18% of its employees, that's between 5,000 and 6,000 employees, after a quarter which saw a $1.68 billion quarterly loss. Even before the economy started its nose-dive, Sun had been bleeding red-ink for several quarters.

I don't see how Sun can recover. The bulk of Sun's business came from high-end financial companies. You don't have to know a thing about the stock market to know that the financial sector is a burnt-out husk.

So what happens next? Well, since Rich Green, Sun's executive vice president of software, jumped -- which I read as he was pushed -- out of the company, and the stock holders hate the company's current path, I think Sun CEO Jonathan Schwartz will soon be fired. I think this will be a mistake. While I certainly haven't seen eye to eye with Schwartz, he does have a plan for Sun, and, in the long run, I think his embrace of open source would put Sun back on the right track. What I can't see, however, is the stockholders giving him more time to make it happen.

I'd like to ask Sun's stockholders though one simple question: "If not Schwartz, then who?" I can't see former Sun CEO Scott McNealy coming back, and I can't see anyone else wanting to steer this ship. Besides, it was under McNealy Sun couldn't seem to make up its mind what kind of company it wanted to be. Can anyone really think returning to those days would be any better?

The only other alternative I can see would be breaking Sun up and selling the pieces. To that, my question is: "Who has the money to buy a significant chunk of it?" Dell? Come on, have you seen their financials lately? Microsoft? I sure don't see any synergy here. IBM is focused on servics these days, not hardware or software per se, No, Sun's owners may want Sun be magically be all better, but there's no Harry Potter to wave a magic wand and turn Sun's assests into cash or take the company private.

Here's hoping that Sun stockholders and board gives Schwartz more time so that Sun can eventually right itself. It won't happen anytime soon, but it's Sun's best, perhaps only, chance to survive.

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