Editor’s note: Russ McGuire is the online director of Business Reform Magazine. Each issue of Business Reform features practical advice on operating successfully in business while glorifying God.

This week, Sun Microsystems announced that Bill Joy, one of the company’s founders, had left the company. Although his departure has virtually no impact on the company’s current operations, I believe it is symbolic of the grace that has similarly left the company. Does Sun have any future?

Sun Microsystems was founded by four young men in 1982. Bill Joy was the software guy. Andreas Bechtolsheim was the hardware guy. Scott McNealy headed up manufacturing, but was really the marketing guy. Vinod Khosla was the finance and business guy. The company was primarily born out of a technology that Bechtolsheim had developed working on the Stanford University Network, so they named the company S.U.N. Of the four founders, only McNealy remains at Sun.

While working on his Masters in Computer Science and Electrical Engineering at the University of California, Joy led the development of the Berkeley version of Unix (called BSD, for Berkeley Software Distribution). The original Unix had been developed at Bell Labs and AT&T maintained control of the intellectual property. The BSD version built upon the work at Bell Labs with strong support from AT&T, and in fact incorporated so much of the original Unix software that its users also had to have a license from AT&T. However, the portions that were uniquely developed at Berkeley were licensed under terms that would later be adopted by the Open Source community.

Sun Microsystems was formed as a computer company. But the company’s strength came from the combined assets of Bechtolsheim’s hardware design and Joy’s software design. The resulting product was a low-cost, high-performance computer with full networking support (featuring the TCP/IP protocols required for the Internet) and the open Unix operating system.

Over the years, competing hardware solutions have largely commoditized Sun’s market space. Time after time, the company’s software (under Joy’s leadership) has lifted Sun back to the upper echelon of computer companies. And time after time, management has bet the company’s future on hardware sales.

At times this strategy has worked well. In the 1980s, Sun dominated the engineering workstation market, providing one of the few cost-effective solutions that could support the compute-intensive needs of CAD/CAM engineers. In the 1990s, Sun dominated the Internet server market, pumping out computers perfectly configured to meet the Web server and E-mail server needs of companies suddenly discovering the global network. Today, Sun struggles to find a growing niche that isn’t better served by low-cost Intel platforms running Linux.

I’ve been a long-time fan of Sun. I’ve started two companies and the first computer I bought for each was a Sun product. Comparing those two purchases clearly spells out Sun’s challenges. At the beginning of 1995, I co-founded Digital Frontiers, a web development firm. We bought a Sun Sparc server for $20,000. In 2002, I founded Seek First Networks, a communications software company. We bought a Sun Cobalt Linux server for $2000. The Cobalt server has 10 times as much networking power, 6 times as much storage, more memory, more processing power, more software, and is easier to use than the Sparc server. In just 7 years, the value of Sun’s solution had been reduced by at least a factor of 10. That’s a problem.

What’s the solution? With Joy’s departure, the answer is incredibly unclear. Sun’s competitors are software companies. CEO McNealy most clearly positions Sun against Microsoft, a software company, but Sun is losing market share most dramatically to Linux solutions – i.e. software solutions.

There was a time when Sun had the opportunity to develop and deliver a software solution that would’ve made Linux unnecessary. Sun missed that opportunity, and by doing so, has ceded the “open software” space it once championed to the Open Source community.

There was a time when Sun could’ve become the champion of Open Source solutions into corporate America. However, the company failed to recognize Linux and its brethren as either opportunity or threat, so they ceded the opportunity to IBM.

Today, Sun’s opportunities appear small and fading. Sure, there will always be times when Sun’s specific product solutions may be the best choice for a customer’s unique requirements. But, the company continues to focus on commodity spaces: computing power, storage, and networking. Sun continues to emphasize the need for all of these parts to work well together, but this challenge to most customers isn’t great enough for the opportunity to be large enough to reestablish Sun as a leader in the industry.

The letter from Scott McNealy to shareholders in the company’s most recent annual report dramatically demonstrates the fallacy of the company’s myopic focus on computing. McNealy argues: ” Wireless phones, pagers, PDAs, game players, cars, radio-frequency ID tags, embedded controllers, security cameras, environmental sensors – all these things, and more, are being connected to the network. The sheer volume of data and transactions will create demand for new and more powerful computing architectures, and we believe Sun is well-positioned to deliver these systems to the market.”

The first sentence quoted above is exciting and screams of opportunity. The second sentence slams the door on that opportunity. Although increasingly, “the network is the computer” as Sun has always proclaimed, Sun is not pushing that network edge. Sun is not focused on the opportunity represented by the computing power of the network contained in that diverse array of edge devices. Sun is instead focused on the big iron in the data center at the core of the network.

Sun has become the big-iron-IBM that died in the 1980s. I, for one, hope the company can become the nimble, software-focused-IBM that rose from the dead in the 1990s.

It appears Bill Joy, for one, has given up on trying to make it happen.

Russ McGuire is Online Director for Business Reform. Prior to joining Business
Reform, Mr. McGuire spent over a dozen years in the telecom industry, serving as Chief Strategy Officer for TeleChoice and Vice President of Strategic Development for Williams Communications, among many other roles. Mr. McGuire is currently focused on helping businesspeople apply God’s eternal truths to their real-world business challenges through
Business Reform’s online services.

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