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Splitting Up Sun Microsystems

Sun never fully recovered from the dot-com bust of 2001. With the company attempting to rally around open source software, is now the time to get out of the hardware business?

Amid the news surrounding Sun Microsystems’ announcement that they had only lost $209M last quarter (resulting in a 20% bump in their share price) was a suggestion over at the Motely Fool that the company should not be allowed to continue in its current form.

My suggestion is simple: Split the old Sun into two businesses. Let one company figure out how to sell chips and servers, while the other gets a handle on turning a profit from open-source software.

That’s not a terribly wild suggestion. Clearly the company suffers from being too big (two rounds of layoffs in 2008) and too unfocused (could you sum up what Sun does in one sentence?). Part of this stems from the need for the company to reinvent itself from a hardware-centric company to an open source software powerhouse.

At least that’s what Sun seems to be remaking themselves into. On the one hand, the MySQL acquisition appears to be paying dividends. On the other, Java developers seem to have been hit hard by the most recent layoffs, making some question where Sun will take Java in the future or if they haven’t already mismanaged it into an increasingly diminished role. And the company just announced that their 16-core Rock UltraSparc-RK processors will be ready before the end of the year. Launching an ultra-highend server in this market? Seriously, even Intel’s having trouble selling chips right now. Is a lack of highend hardware really Sun’s problem?

Sun’s server revenue fell 14 percent to $1.37 billion in the latest period. Storage revenue fell 13 percent to $570 million. — AP

There’s no sense in speculating on Sun’s eventual downfall. The company has managed to exist in world of IT by operating at a loss for much longer than I’ve been paying attention to it.

“In my first quarter as CEO we had revenues of $2 million and a loss [sic] $500,000 loss” — Scott McNealy

But you have to wonder how well Sun will navigate the current recession. And if splitting up the company wouldn’t allow it to better focus on innovating in the area of software and not seem like it is perpetually missing the boat.

Comments on "Splitting Up Sun Microsystems"

comptex

It all relates to focus in sales. Their products are great I think that one could split up sun into several well-focused companies…. storage, servers, processor semiconductors, datacenter infrastructure, open software (perhaps a couple of opportunities here). Each would very quickly be a multi-billion dollar business.

Reply
magpiper

HMM, obtuse software and antiquated sales model. Yep, time to do something different. I am a Novell bigot. Novell has recovered from the DOT COM bubble and are stronger than ever. Sun has coasted on “old school UNIX dweebs”. I say this with authority because I work in the Department of Defense (DoD) arena.

The project I work upon is enfatuated with Sun. This is due to a left over mentality from the late 80′s and early 90′s, prior to commodity hardware. Back in the day IBM, DEC, NEC, Sun sold a hardware platform that was proprietary. The hardware was of no use without an OS. Thus Solaris, AIX etc. were born out of necessity. Given the hardware was far superior to Intel architecture.

Thus Sun has been left to sell their wares to government entities and the like. SPARC processors have not been developed since 2003. Sun now sells AMD processors in their hardware platforms. Java is being adopted quite readily. Sun denies open source or specifically GNU license. If Sun were smart they would let the open source community develop their software; instead of the team of foreign engineers, whom I converse with on a regular basis.

With the downturn in the economy, companies are jumping at the opportunity to reorganize; and blame it on the economy. Sun has been treading water since the DOT COM era. Adding the Java name to every product they have, did nothing but confuse customers. Linux, open source and GNU license have knelled the death blow to Sun. Management at Sun has done nothing to expel the fiery darts.

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ynegorp

Why does the so called “new” thinking rush to save share holder equity at the expense of company longevity?
Sun should NOT be split up. One hand feeds the other one. I have zero reason to consider a vendor of either hardware or software if there is nothing that gives me end to end support and unique development support.
Otherwise why buy their processors, or JAVA. I don’t need or want the grief of finding third party support contracts. But I do want seamless feature and dev. support built in for the specific hardware.
Otherwise, I’ll just go to IBM or HP or should one be forced to “go it alone” use white label equipment or Cray.
Keep them together but demand absolutely unique performance and feature delivery.
Or admit you’ve become inconsequential in todays fad driven world, therefore from a business view unremarkable in the real meaning of the word. At that point perhaps only the processor R&D remains valued.

Reply
sandholm

I never cared for Solaris. I felt that IBM AIX and HP’s HPUX were far batter products. I fell in LOVE with SuSE and yast2. Having been an AT&T SVR4 instructor and working with sysadm, I saw Sun’s SVR4 port to be weak and thrown together; and what? No sysadm?
Okay, I can deal without have a nice admin-interface, but when Sun announced that Ian Murdock was coming on board, I thought, “Great Idea! Maybe Sun would distribute and support Debian!”. Debian is one of the best distributions. The package management is unparalleled. But Sun’s done nothing, no mention of Debian. All they’ve done is purchased MySQL. Come on Guys! HP and IBM are offering support on Debian, and don’t forget Canonical and Ubuntu. If Sun offered Debian distributions and support, I could convince my mgmt to switch over from RedHat. But no, I suspect they’ll still continue to flogg the old gray solaris horse until it drops.

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mschoon

Splitting up Sun would certainly reduce the confusion, such as the back and forth bickering that went on when the company was considering open sourcing java. Ultimately, the open source employees won, but it seems like the lines have been drawn in some regards. I’m not sure how deep this rivalry is, but it was strong enough that everyone witnessed a media leak and counter-leak fight that lacked any class for the size of enterprise that Sun is. It’s never good for a company’s image to reveal internal conflicts. I really hope Sun doesn’t have to split up, they’ve been a wonderful supporter of open source and allowed some exceptional developers to be paid for their long hours of work (the mySQL and virtualbox ones especially). Unfortunately, if they do not split up, I believe they are going to need some tough decisions in order for clients to trust their future, such as mopping up the in-fighting with severances.

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