The failure of McNealy's ponytail strategy

The failure of McNealy's ponytail strategy

Summary: Now that IBM looks ready to sunset Sun for around $7 billion, will open source take the blame? Open source has certainly been set up to do so.

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TOPICS: Oracle, CXO, IBM, Open Source
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Now that IBM looks ready to sunset Sun for around $7 billion, will open source take the blame?

Open source has certainly been set up to do so.

By installing Jonathan Schwartz as CEO and loudly proclaiming a switch to open source, Sun chairman Scott McNealy tried to put himself in a heads I win, tails you lose position, the software ponytail wagging the hardware dog.

It's possible that, without the world financial meltdown, he could have pulled it off. But Schwartz was never really the man in charge, and Sun's numbers were never really related to its open source offerings.

Sun was always an enterprise hardware outfit. A complete collapse would prove a disaster for its customers, both large U.S. companies and the government. The current deal is the best possible outcome for everyone.

That's because the financial collapse has hardened hearts, even at IBM, and it's this gimlet eye that is making today's deal possible. Draconian cuts to reach a profitable core can be criticized in good times. Now I doubt the objections carry any weight.

McNealy's model in his turnaround effort was IBM itself, which in the 1990s used Linux to unify its product lines, open source to share its development load, and enterprise services to bring in the cash.

Schwartz was the public face of that strategy because it would lack credibility with McNealy, a Sun co-founder, seemingly in charge. But he was in charge. And as Sun began circling the drain the mask of Schwartz (and his ponytail) came off.

Thus in the end IBM was the only possible buyer, because its business model was the only possible fit. My prediction on a lower price also looks prescient.

And Schwartz? See how many read his blog when it's being written, like this one, by just another unemployed has-been.

Topics: Oracle, CXO, IBM, Open Source

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14 comments
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  • Kind of sad.

    Sun has brought many great technologies to the market so it's sad to see them go. I don't think Sun knew how to sell open source? It's a tricky thing when a company sells software with it's hardware and then gives it away. If I remember right, Solaris had a big Unix price tag at one time. I wonder what Bill Joy would have to say? Are Robots taking over now?

    I was never really impressed with the ponytail guy. In the end I think it will make IBM stronger and it's already a Roadrunner super computer builder power to be reckoned with!
    xstep
    • Moore's Second Law

      I think Sun was done in by the same force that
      eventually did in Silicon Graphics -- Moore's
      Second Law.

      That is, as things get more complex they get
      more expensive to engineer.
      DanaBlankenhorn
  • Complexity breeds complexity

    IBM is a has been in technology, HP has better Blade
    Systems and Servers I choose them over IBM.

    Plus the fact when you get in bed with IBM you are stuck
    just like 'Windows'......

    I have grown to like HP Servers and HP Blade Systems, they
    are superior and offer hardware flexibility that IBM is
    lagging behind several years in.

    Christian_<><
  • Suns open source strategy IS to blame

    Solaris dwindled along with Suns hardware business.
    Profit margins was shrinking as Linux (and even
    Windows) was gradually eating into the traditional Sun
    markets (web servers). Of course that demanded an
    answer from Sun. But all the other bases were taken,
    only the open source road was still open. So that's
    where they went.

    Sun bought MySQL for $1B (!), only to see it forked by
    the very same people who sold it to them. They bought
    this 2nd rate database system which were extremely
    popular among cheapskates but for which practically no
    one was ever going to pay for anything. Monetizing
    such a product is extremely difficult.

    You don't need a calculator to figure out that the
    claims that "Suns software business is profitable" are
    grossly misleading.

    Sun payed $1,000M for MySQL <i>alone</i>. Over how
    long a period should the ROI be calculated? 3yrs,
    5yrs? Even with 5yrs that would be $200M a year just
    to reclaim the investment. Add to that interests and
    it all but eats up the "software" revenue right there.
    And that is NOT counting running expenses for
    engineering, support, bugfixing, marketing, sales etc.

    The same story with Star/Open Office: All expenses and
    very little monetization.

    Java - Suns gem - became pressured by .NET and an
    array of smaller, less complicated (higher
    productivity in targeted areas) stacks which were
    typically open source. Suns answer: semi-open source
    Java. Not that they were ever very good at making
    profits off Java in the first place.

    OSing Java was more of a gesture, though, as the Java
    <i>implementations</i> don't matter much. It is the
    spec's that matter. And Sun only semi-opened up the
    JCP. They always reserved the right to return to
    dictatorship (which IBM may now leverage). But Suns
    stewardship of Java left something to be desired, to
    say the least. JCP has grinded to a halt. Java (the
    language) is seriously lagging and Java has earned the
    reputation of being big, low-productivity legacy
    stack. Java gurus and developers has jumped ship en-
    mass, going to Ruby (e.g. Fowler), Python, .NET (e.g.
    Gafter).

    Jonathan Swartz believed blindly in the open source
    <i>hype</i>. The hype which resembles a religion: Just
    believe in it and it will happen. And he was backed up
    by a chorus of ideologically infested minions.

    Now reality has struck. In a down economy companies
    put in place rigorous expense reviews. You'll have to
    answer tough questions for every major investment. The
    goodwill motivated sales are all but gone. Sysadmins
    with (ideologically) preferences for open source
    cannot slip "donations" through disguised as "support
    purchases".

    So yes, open source as a business model will be
    tainted by this. And Sun will not be the only one
    struggling.

    This says nothing about open source as a development
    model, though.
    honeymonster
    • Sun didn't know what it wanted to be when it grew up

      Are we a hardware company or an open source software company? The moved away from their hardware company roots and so pursued a disjointed do it all approach.

      Since they didn't know what they wanted to be, they succeeded and became nothing.
      cornpie
    • Open Source does not make money?

      After all this time are we finally going to admit that all those fervent developers donating time and writing for the good of the world does not put food on the table? Maybe it does for the CEO class who get paid before anyone else.

      Is the LAMP mantra still going on?
      amin_adatia
  • RE: The failure of McNealy's ponytail strategy

    This is a VERY biased article IMHO: "See how many read his blog when it?s being written, like this one, by just another unemployed has-been" ? Why needing to use this aggressive tone against Schwartz ? And that the IBM-SUN deal will go smoothly to its conclusion is not sure, because it could trigger antitrust scrutiny from US and EU.
    P.S.: I'm not employed by Sun or affiliated to Sun in any way :)
    atari_z
    • Couldn't agree more

      and pity the authors had to resort to using "ponytail" yet again. Yawn.
      Please try and author an article which doesn't resort to purile, overplayed
      nicknames, hmm?
      enigmaforce
  • RE: The failure of McNealy's ponytail strategy

    I don't think it really mattered whether it was Schwartz or McNealy that eventually was dragged kicking and screaming into the open source era. By the time Sun did it, it was way too late. Sun is and always has been a hardware company, in terms of profitablity. Solaris, Java, MySQL, are nice products, but they are not big moneymakers and never will be.

    The big issue for Sun was server sales(or lack thereof)...by not open sourcing Solaris in Linux's infancy, they gave IBM a path to making the mainframe not only relevant but a growth market with their specialty engines, running Linux. Now the midrange market has gravitated towards the x86 units, as they get more powerful, but with better price points and/or to mainframes and Superdomes with virtualization, consolidating hundreds of traditional midrange images in a single unit, more cost effectively. That left little footing for Ultrasparcs caught in the middle.

    scotth_z
  • McNealy is worm ridden filth

    Good riddance. Sun was never anything more than a bunch of morons who were in the right place at the right time. "The network is the computer", yah whatever. Here's an idea. The network is the network, the computer is the computer. Oh, and Microsoft was never your primary competitor, Linux always was. Of course, McPuke was never bright enough to figure that out. Hey Scott, you lost, Bill Gates won. Take that to your grave deuche bag.
    jackbond
  • Sun irrelevant?

    You can think what you want but I see Sun as having great potential. In the storage market, their new hardware that uses ZFS, automated healing, and Analytics is a major leap forward for the industry. For example, it easily supports SSD for caching painlessly and their native CIFS server is orders of magnitude faster than the user-level Samba product from my own real-world benchmarks.

    They are still playing catchup with others in the desktop arena, but even there they are making steady progress. Recently, I saw a JDS package released for OpenSolaris bringing a clear and clean desktop to replace their me-too Ubuntu look. Unfortunately, they're in a catch-22 position with Skype and other relevant commercial products which needs to be resolved for them to succeed.
    GAGendel
    • Yes completely

      If Sun and all their products were to disappear tomorrow, would anyone really care? Maybe a few, but for the most part, IT admins would just swap out a few parts, and move on. Dunno why IBM was thinking about buying this trash.
      jackbond
  • RE: The failure of McNealy's ponytail strategy

    No one is indispensible who would care if IBM went bust tomorrow? Least Sun can relate to its customers and is increasing its brand strength by this publicity.Whilst IBM is seen as a looser of the first round in this industry.A new buyer or proposition with a better fit is around the corner for Sun as long as Mcnealey sets his sail for the retirement yacht club with Bill gates.Cast off Mcnealey and move forward this week...
    The Management consultant
  • RE: The failure of McNealy's ponytail strategy

    I have trouble taking anybody seriously that doesn't know the difference between 'looser' and loser. Get remedial.
    cap1081