Sun: Losing its shine?
It happened to Microsoft, to mention one of the best recent examples. Say what you like about Bill Gates, but he oversaw an ambitious refashioning that left his company stronger than before.
The same can't be said for Sun Microsystems, a one-time high-flying server maker whose strategy -- if you can call it that -- has been to throw a lot of stuff against the wall and wait to see what sticks.
To be fair, Sun does have an idea what it wants to become. It just can't make up its collective mind about how to get there. One day it's Java. The next day it's N1 -- or Jxta or the Integratable stack, or Throughput Computing or the Big Friggin' Webtone switch. The latest buzz is Provisioning, an idea which actually may have something going for it. Unfortunately Sun's history of zigzagging belies its management's profession to want and make the idea work out in practice.
When the SunNetwork conference opens next week in San Francisco, Sun will surely drive home its central theme that the network is the computer. You'll hear a lot about Sun's Orion server software project and selling integrated hardware and software, among other things. Is that vision enough to pull Sun out of its funk?
Besieged by rivals old and new, the pressure is on to come up with that eureka moment. Attacked on one side by Dell and on the other side by IBM and Hewlett-Packard, Sun is a hardware maker trying to morph into more of a software company. The company also faces a tough sell trying to convince the IT world that Linux doesn't really matter -- at least not for the really serious applications that concern corporate data centre managers.
If any of this is troubling McNealy, he's not letting on.
True to form, the wise-cracking chief executive dismisses sceptics, arguing that everything is on track and it's the other guys who really need to worry. He said much the same thing about Microsoft throughout the 1980s and 1990s, starting with his relentless promotion of WABI (Windows Application Binary Interface) as the next Windows-killer on down to the network computer and Java.
But Microsoft figured out a way to sidestep the minefields (in part because it broke the antitrust rules. But that's another story.) Fact is that Microsoft executed a remarkable 180 as it redirected its business to fit in with a changing future. For that, Harvard dropout Gates gets an A.
Sun shareholders might like to know what the company's board of directors thinks about all of this. McNealy, who co-founded Sun, has been in charge since 1984 -- a lot longer than most high-tech chief executives in Silicon Valley. During that tenure, Sun helped put the minicomputer makers into early retirement as it grew into a multibillion-dollar enterprise. Clearly, those are considerable achievements and McNealy obviously believes he can steer the company away from the shoals. But for Sun shareholders, the question isn't so much whether he's up to the task. It's whether he still deserves another chance.
Not only has McNealy failed to do something for Sun's shares, he's been unable to stop an exodus of top talent. Bill Joy (another co-founder) this week became the latest high-level exec to call it quits. To be sure, there is no evidence the departure has anything to do with a disagreement over policy, though the company didn't wait to turn Joy into a non-person by killing Joy's bio on the corporate Web page.
"The thing that scares me to death is that people are afraid to tell me what they really think," McNealy told CNET News.com in 1996.
He should be concerned. The brain drain has included the likes of Sun's former No. 2 Ed Zander, former CTO Eric Schmidt (now chief executive of Google), former CFO Mike Lehman, John Shoemaker, who headed the company's server group and Stephen DeWitt, who headed the company's Cobalt group.
Other hotshot execs have since taken their place, but the results to date speak for themselves. With Sun's stock trading around $4 (£2.49) in an otherwise bullish tech market, many on Wall Street believe Harvard graduate McNealy deserves a D grade. I'll be more charitable, but he still winds up with a report card that, at best, rates a gentleman's C.