October 21st, 2008 // 19 Comments
Filed: Tech
Other ticker symbols considered included WTF, OOPS and OUCH. In case you haven’t heard, My Little Pony announced yesterday that they’re going to lose buckets of money and take some huge charges related to some acquisitions. See their press release here. Of course the villain in all this is the economy. Not My Little Pony. Nope, he’s been doing a great job. Like paying $4.1 billion for StorageTek, an aging tape storage company. Or paying $1 billion for MySQL, a software company best known for giving its product away at no cost. Other smart moves by MLP include open-sourcing Sun’s software, so that it generates less revenue. Plus some keen window-dressing, like a one-for-four reverse stock split and a stock ticker name change to JAVA. Yep, the board is so happy with MLP that last year they paid him $11 million – up from $7.7 million the year before. MLP said in a statement that the company is “positioned to offer the kinds of products that can radically help customers reduce expenditures.” In other words, this downturn is actually gonna be good for us.
For what it’s worth, I happened to be visiting Sun just as the last downturn was beginning. This was for a big cover profile in Forbes which ran in January 2001. (You can see it here.) McNealy and Zander were running the place and they were as arrogant as any team I’d ever run into in tech. Here was Zander explaining why a downturn in the economy would be good for Sun:
“I think there’s going to be a shift in capital spending, and it’s going to be lucky for us,” Zander says. “I don’t care who you are—if you’re General Motors or Deutsche Telekom, you’re going to keep investing in Internet infrastructure and dot-comming your company, because that’s going to let you gain global advantage and be more competitive.”
McNealy has stepped aside and is now chairman. Zander went to Motorola, drove it into the weeds, and then left.
Tagged: My Little Pony, Sun
Brutal Dan. Sun seems less and less relevant every year. I don’t think JAVA is dead yet, but its sure being squeezed. It will be interesting to see if we have any of those nightmare mergers of desperation in the next five years. Any bets on who?
An Open Letter to Sun Microsystems:
The biggest problem I have witnessed at Sun having followed the company performance for the past decade is the seeming lack of common sense business management and the inability to take exceptional technical products and monetize them.
Consider the Sun Ray product which I saw at least five years ago. This product is basically a dumb terminal (thin…anorexic client) that over 100 million people in the US and many more globally (mostly business owners and their workers) could easily use. All of the applications and files can be hosted server side and users could pay a fee of let’s say $39.99 a month to access their files from any dub terminal. You could sell the hardware for $300-400 bucks or a little more for a bigger higher quality screen. So let’s do the math. $480 per year per user times 100 million users equals $4.8 billion in recurring retainer revenue plus the $4 billion or so in hardware sales.
Sun has consistently forgotten one very large customer segment, the end user. Remember the tagline you wrote “The Network is the Computer” the end user segment is where the money is for that strategy.
Apple is basically doing this now for music, media and voice (IPod, IPhone), but there is still an opportunity to do it for applications. Sun could eat Dell’s lunch for them. Cisco is doing it with WebEx but it is not a core business. Microsoft hasn’t pulled this off yet, Sun could do it for them. Sun could do this better than Google because of the quality of your OS and hardware. Sun could do it more securely than anyone.
Sun should immediately set up a 100 day task force of the best minds in the company to develop this strategy and market it to a select group of businesses with the goal of having it live for 100 clients at the end of 100 days. Then run a Super Bowl ad that shows the client going from New York to Chicago to LA to Shanghai to Dubai to London literally following the Sun rise. He would access the same simple screen to continue his workflow. End the spot with: The Network is the Computer. A New SUN is Rising.
It’s time to re-energize this company in a direction that has a future. Pontificating about technical superiority and trumpeting open source while giving away shareholder’s technology for free is the wrong direction. Management and the board have a fiduciary responsibility to take the company in a direction that maximizes shareholder value.
There is a huge opportunity ready to be seized. The only question is whether you have the courage to grab the gold ring.
Activist Investor
Wow. Nice. A re-energizing would be fantastic. I just wonder if anyone is listening to these new ideas, or do they really have something up their sleeve the rest of us are unaware of. But I did like your comment. Bold and focusing on something really important. Profit. Maybe you should be running a company and find out some things about your own ability to foment ideas and execute them to completion. Really. Peace.
@Activist
Time to start a shareholder revolt at Sun because these people will not follow your advice, they are incapable. Pick your team for the BOD, hire attorneys, white knights, angels, anyone, get started now, the sooner the better.
ALSO:Since Java has been GPL’d, it is no danger of dying out for a long long time, will probably evolve and work a helluva a lot better in long run.
I work at Sun. I don’t know of a single person with whom I work that believes Jonathon is the right person to lead this company.
Internally, people thought well of him at first, because he and Mike Lehman (CFO) passed the simple adult test that Scott had failed for five years – they brought costs into alignment with revenue, and turned a profit.
Since then, he has been a disaster. He is overly technology focused, and has a complete disregard for customers and markets.
There are three fundamental flaws to his management. First, he is unable/unwilling to focus on customers and market requirements. This has led to poor prioritization and focus for R&D, product development and all related downstream activities through to sales and service. Instead of being focused on a clearly defined set of market requirements and priorities, when reductions are made, the peanut butter is merely spread ever more thin across products and programs, regardless of their relative importance in driving revenue growth. The outcome is an ever more half-assed set of results as groups are too underfunded for success.
The second fundamental problem is that there is no organizational alignment around customers and markets. Sun is matrix managed to the point of dysfunction. Everyone is involved in initiatives, but no one is accountable. This has led to decision paralysis, and an almost complete lack of accountability for business results.
The third problem is his strategy. It’s too unfocused, too long-term, and too “Hail Mary”. In the famous words of Lou Gerstner, the last thing Sun needs right now is a vision. It needs day-to-day, week-to-week execution against a very tangible business plan. Instead, what we have is a strategy that is focused on recapturing the hearts and minds of college students with Solaris. Or capturing 15,000 new customers (even in the face of similar past efforts that have yielded new customers that have initially spent, on average, $1,000 with Sun, and never to repeat their purchases). Jonathon’s stated objective with this plan is to capture the next FaceBook or MySpace startup “while they are still in their dorm rooms”. Internally, this initiative is derisively called “Jonathon’s 15,000 Lottery Tickets Strategy”. Jonathon is going to buy 15,000 lottery tickets, in the hope that one or more of them will be winner. This is how desperate his growth plans have become.
His inability to focus on customers and markets, and his inability to drive organizational alignment will likely result in Sun being caught in a downward spiral; revenue will decline > which will require further cuts in costs/people/investments > which will result in further revenue declines > which will lead to…
Sun is a great company in many respects, it just has a CEO that is not up to the job. Sun’s prospects will not improve until the notoriously slow-to-act Board of Directors removes Jonathon.
Sun is the new Apple. Just wait until they warm up SunOS, add some animations to the GUI and try to sell it for 10x times the price. This will drive Apple’s marketshare into triple digits and the Sun will set for good. Akhenaten will leave Amarna. New Pharaoh will reign.
I read the article you linked to, Dan. Nice quote in there about how Enron has ‘committed to buying bazillions in Sun Servers, with no intention of slowing over the next 5 years’. A delayed-release punchline, to be sure.
Seriously, how many employee-shareholders can get their act together to find replacements for MLP and his constipated BOD? Are you gonna’ sit there commenting that the water is getting so hot I suppose we’ll be parboiled for long, yep, are leaders are terrible, gee, it’s hot – OR are you going to become pro-active and start a revolt?
Thought so!
Another Red Lobster special.
No smart employee holds Sun stock. No one in their right mind would actually BUY the stock, and every option granted in the last decade is under water.
If they’re so smart, why are they and you still working for Sun? Even this guy flew the coop (the CEO is kinda’ smokin’!)
Will The Real Lastangelman Please Stand Up?:
Simple. Just waiting for a change in the CEO. There are pockets of this place that are actually doing well. Sun actually has some very good potential…with a good business person in charge.
What SUN needs to do is to make a discreet, quality product that is relevant to an end user, and sell it. It’s pretty fucking simple.
The CEO is just looking to continue MILKING the Company of millions each year in executive compensation, and the board of directors is asleep at the switch.
It’s incompetence all around.
Activist Investor is right on the money. Unfortunately, SUN is not going to change its ways unless management and the board of directors are expunged, and that is unlikely to happen because it’s easier for any investor that cares to simply liquidate their shares and invest elsewhere.
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So when did you stop giving props to the artists?
very nice
ticker symbol?? Doh!
/b/
“..it’s easier for any investor that cares to simply liquidate their shares and invest elsewhere.” Ok well said, but dont forget that Sun’s technology is very relevant till now, and likely to stay relevant in the near future.
So I gave it 10 ten days since I last checked this lame blog to see what lame stuff Dan might have added…Low and behold…..lig tv izle
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deyimlerşiir türleriçetchatsohbetNot a friggin’ thing! Not even a piss poor link to same other lame article or video that Dan had nothing to do with