Sun’s present predicament – which has now culminated in Scott McNealy taking chairman’s bum rush – can be boiled down to one simple fact: this is a hardware company that has never understood the value of software.
Sure, Sun has tons of software: Solaris, I'm told Jonathan Schwartz knows a thing or two about software. Java, lots of other stuff as well. But in the over 20 years that I’ve watched Sun grow up – and watched McNealy’s never-flagging sense of humor eventually become the best thing you could say about one of Silicon Valley’s greatest companies – it’s been the software side of the company that has always been its weak point.
And I blame McNealy: Back in the day, McNealy’s unwavering maverick-dom helped him lose the Unix wars to Unix System V, the desktop wars to Windows, and the network switching war (one Sun hardly ever engaged in, despite its "the Network is the Computer" battle cry) to Cisco. More recently, and much more spectacularly, Sun lost the Java war to IBM, Oracle, and just about everyone else. And the open source war isn’t exactly going in Sun’s favor either.
Losing Java was particularly galling: Sun invented a weapon of true mass disruption, only to watch everyone else learn how to make hay while Sun’s own Java prospects were left in the dark. (Except, ironically, arch-rival Microsoft. It’s like a bad inside-the-valley joke: What do Scott McNealy and Bill Gates have in common? Neither knows how to make a dime on Java. It would be funny if it wasn’t so sad.)
Meanwhile, Sun has continued to make great hardware, in an era in which hardware of all types is becoming a commodity. That’s a function of Moore’s Law, in part, as well as a function of how rapidly progress in software has made it easier to use less hardware to do much much more. Either way, it means that Sun has been making great inroads into the least strategic part of the technology stack, while the real money, and growth, has been somewhere else.
That somewhere else is in software and services, something Sun has just never understood, at least from a revenue standpoint. Too bad. For Sun, its shareholders, and, finally, for Scott as well.
I’m told Jonathan Schwartz knows a thing or two about software. Good. It’s never too late for a second act. But beware. This is a company that even lost the "best hardware platform to run SAP" war in the 1990s, after having been the undisputed leader for years. Software failure is in Sun’s DNA: it’s going to take a little genetic engineering to make a change for the better. Good luck, Jonathan……..