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.
I remember all the shots that McNealy used to take at Microsoft. Who's laughing now?
If they go under, which seems unlikely, Java will just be sold off to a wealthy company to compensate investors. Could be some burdensome shake-ups in restructuring, but the language department won't go extinct for some time.
LOL. FYI it's called "RISC", and according to the latest Gartner report (May 2006) Sun's server revenue rose while IBM's fell.
add Dell. They are the largest Linux server share, after IBM, I believe. HP is in there too.
IBM isn't a Linux company, most of the Linux servers they sell come with Red Hat, which Sun could buy by writing a check.
typo, thanks for the correction...
Trying to re-frame the debate here? any company which offers anything other than Linux cant be counted? why count Sun they sell everything from Office Suites, to Directory Servers, to Operating Systems (including Linux and Unix), to hardware, to Support.. sound a bit like IBM now?
I was only pointing out IBM's *Linux server sales* not any other aspect of their business your statement implied that there is not a Billion in revenue selling Linux servers out there when clearly that is incorrect. You could have said, well gee I did not think of IBM, still 2 Billion is less than SUN and you would have been right without looking like a weasel..
Java really has two parts:
1. Java the language is the successor to the popular programming language C++. It provides the benefits of object-oriented programming without the legacy-related flaws C++ inherited from C.
2. Java the virtual machine is a way to make programs written in Java (the language) run on practically any computer. It lets programmers write programs without having to worry about whether it will run on a PC, Mac, Sun, Windows, Linux, QNix, or other common (or uncommon) computers or operating systems.
The two are deeply intertwined.
Whoever buys it from Sun's shareholders. What do you think Microsoft (or IBM, or HP, or Hitachi, or Nokia, or...) would be willing to pay to steer Java (and its huge programming community) in exactly the direction they want it to go?
Prediction: if Sun really gets into trouble, it will avoid bankruptcy by selling off its Java division.
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. If all you can do in response is call names, maybe you're better suited on one if the typical Linux sites than this one.
So communism beats capitalism?
How is that communism?
The Innovator's Dilema is a book they decided NOT to read. Every executive from middle manager to CEO to shareholder should read it.
But there must be some pretty substantial code in the javac and JRE to make the language platform independent. I guess maybe that's what Sun "owns."
Java sucks a lot.
.NET is cool tho.
Ken Lay is still dead.
I think Sun's real problem is making the argument that their hardware is a good value. They used to have such a performance advantage that the pricing made sense. Now, I'm not so sure.
Umm... Not really. Apples and oranges here.
The Java run-time layer is written in C/C++. You just can't do things with Java that you can with C/C++. Yes, the syntax is similar, but the actual scope and power of the languages is not.
"languages" = "language"
The article infers what? The article talks about high end competition from IBM and low end from Linux. You, on the other hand have made a career on free republic saying that Linux is the driving force behind UNIX market share losses. Here are just a few samples..
Linux was created by a foreigner so that he wouldn't have to pay the US software companies for our products. And many years later it is now stealing market share from US products it originally attempted to clone. -- Golden Eagle
SCO, they may be headed to bankruptcy. Just like SGI, and several others before open source has finished scavaging the rest of the old Unix vendors. -- Golden Eagle
[OSS Makes Money] Only at the expense of our traditional software companies, who lose a lot more than the open source cloners ever make up with their freeware fakes. -- Golden Eagle
It's already eaten through much of the fat profits of the Unix companies, and left them suing one another over where all the money went. Silicon Graphics, Cray, SCO, all shadows of their former selves, and IBM and Sun laying off tens of thousands the last couple of years. -- Golden Eagle
If the remaining Unix stalwarts Solaris and OSX get consumed by Linux, there won't be much of anything seperate from Microsoft's influence. -- Golden Eagle
As Linux grows in strength due to user growth primarily outside the U.S., those companies are now suffering as they are being pushed into a "service only" income model instead of their previous "sales and service" income model. -- Golden Eagle
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