Posted on 07/06/2006 8:21:34 AM PDT by ShadowAce
Sun Microsystems is in deep trouble.
So say a number of analysts, most recently Brian Richardson from Meta Group who says the company has got it all wrong, with its hardware seen as proprietary and expensive.
Richardson said that it was hard to see any upside for Sun -- and he's not alone. Merrill Lynch analyst Steve Milunovich wrote last month to CEO Scott McNealy and the board: "The company has gone from being pure in vision and predictable in financial performance to an underachieving, bloated, unfocused reflection of its former self."
Sun has lost money consistently ever since the end of the boom -- when it boasted it was the dot in dot-com -- and is about to post another set of quarterly and annual results. It declined to comment on what those results might contain.
However, revenues have declined year-on-year from US$18.25 billion in 2001 to just over US$11 billion in 2005. It lost US$11 million in 2005.
The company has also shed thousands of jobs in recent years. In May, it announced it would slice a massive 13 percent -- some 5,000 people -- off its employment roster; last September it cut over 1,000 posts, which itself followed cuts of 11 percent in 2002, and 10 percent the year before.
It's lost people at the top-end of the company too, most notably last month when company co-founder Bill Joy quit, and when co-founder and chief Scott McNealy announced in May that he too was leaving.
Sun used to have a US$7 billion cash pile but this year's accounts will show a sizeable dent as a result of the US$4.1 billion acquisition of StorageTek which it completed last September.
While you can't attribute such decline to one single factor -- execution in particular being tough to pin down -- it's notable that HP and IBM have been eating Sun's lunch at the top end of the Unix market, while cheaper Linux boxes have been making serious in-roads into its systems business lower down.
In the meantime, analysts have suggested moves that Sun could make to stem the rot. They include the urgings in 2004 of Merrill Lynch to buy either Novell or Red Hat in order to get into the Linux market -- a suggestion it's yet to take up.
This is hardly surprising given that Linux would offer Sun very little differentiation, and Sun trades on the perception that its products are a cut above the common herd.
On the plus side, Sun does have revenues from Java to buoy it up -- a revenue stream likely to grow as more mobile phones incorporate it -- plus the promise of new developments on the SPARC processor front which appears to remain its priority.
It has also open sourced Solaris and parts of UltraSPARC in a move that's been described as jumping on a bandwagon, or attempting to gain free R&D.
However, the market is consolidating on the x86 architecture, making Sun look even more like a niche player. Even Intel with massive marketing dollars has failed to capture the mass imaginations of Unix systems buyers with Itanium.
And the trend is likely to accelerate as the one-box-one-application approach becomes less important with the advent of robust virtualization technology.
The foreign clone Linux has stolen lots of business from US businesses like Sun, who has laid off thousands of engineers, while the Linux mob cheered.
Sun did what few expected though, and released their Solaris O/S under a (non-GPL) open source license, which has seriously slowed Linux's momentum.
While it's unfortunate they had to open up their intellectial property to the rest of the world, and did considerably lower their future earnings as they would have existed sans Linux, it did pretty much guarantee Sun wouldn't be completely destroyed by the foreign clone.
So while Sun's future is nowhere as bright as it would have been, they did counter the Linux threat without having to GPL their code or open source the the final shipping product. Kudos to them, and best wishes to other US companies combatting foreign clones like Linux.
BTW, if you follow the sun when it sets to see where it went and keep walking, it will dawn on you.
So all those prior statements of yours implying if sun falls it will be mainly because of Linux are incorrect?
Yes, they do. If you want to make a Java interpreter, it had better be with Sun's blessing, and they will enforce strict compatibility. Sun brought Microsoft to heel over that issue.
The fact that you can read Sun's code doesn't affect Sun's ownership.
The question was asked by someone not quite so versed in the nuances.
IF Sun falls it will be because of Linux, which has already devistated if not destroyed other US companies like SCO, Silicon Graphics, and Cray. Sun is simply too large and diversified, and Apple has diversified itself the last couple of years as well. They are still being damaged by Linux, but probably won't be completely destroyed thankfully. Too bad for the foreigner behind Linux, Linus Torvalds, who has always claimed his ultimate goal is "total world domination".
how do "IF Sun falls it will be because of Linux" and "I was simply showing how miniscule these Linux companies are when compared to Sun, since the article infers they will lead to their downfall, when in reality Sun could buy any of them with the stroke of the pen." live in the same thread?
Cognitive dissonance
I guess you didn't notice the past tense.
IBM's Linux-related sales alone (not counting the rest of the company). Red hat alone is looking at $300 million for this year (and they don't add hardware sales like Sun). And don't forget, Sun ships Linux too.
Obviously I don't think Sun will fail, they suffered huge losses as Linux devestated many of the US Unix businesses, but it's momemtum has slowed and the latest server sales reports showed Sun's revenue rising, as I already indicated.
Linux was created by a foreigner so that he wouldn't have to pay the US software companies for our products.
Linux was created by a foreigner so that he wouldn't have to pay for an OS written by another foreigner.
Silicon Graphics, Cray, SCO,
And of course forgetting that 1) SGI and Cray died because of hardware (blame Intel and AMD), and 2) SCO started as a poorly-managed Linux company that bought the UNIX business only to get good distribution channels for Linux.
How could I be John Kerry, when the severs for John Kerry and the DNC all run on Linux? No, I'm much more of a RNC kind of guy, that likes to expose the left. Look at this thread, for example, from your buddy that just showed up.
Democrats ahead of Republicans on Open Source?
http://www.freerepublic.com/focus/f-news/1016247/posts
You might note he made that title up.
Simple, you make contradicting statements in the same conversation and try to justify it..
I haven't contradicted anything. Linux is obviously damaging Sun but isn't going to destroy it like it has others, whether you guys keep posting threads like this or not.
That was a total troll and I'm suprized you are the only one who bit :)
LOL! I kinda thought that. I figure that if GE hadn't shown up, others would've bit as well.
Python+Django>Rails. But they're all good; I'm pleased to see high level dynamic languages gaining momentum.
Sun is in the process of open sourcing Java. Eventually, it will be an open project, which should ensure its survival.
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