The End Of Sun?

[CougTek]

I didn't follow much the progression (or regression) of Sun in the past few years, so that came to me as a complete surprise :

In retrospect, the recent pronunciamento that Sun has no Linux strategy was their final admission of failure. Sun can't run at the lean profit margins that are all a commoditized Linux server market will support, their cost structure is all wrong for it. They got trapped in a classic innovator's dilemma and didn't cannibalize their own business while they had the investor confidence and maneuvering room to do so. Cuddling up to SCO didn't help, either.

And now it's too late[1]. Moody's has just about dropped Sun into the junk-bond basement. The stock closed at $3.31, 15% off for the day and falling in heavy trading. The recent product announcements have been duds, and the upcoming quarterlies are going to be a disaster. Wall street analysts are calling for drastic job cuts and speaking the code phrases that mean "run for the hills!" The smell of death is in the air.

Read the complete article or more bad financial news.

 

[Mercutio]

Sun has $6 billion in the bank. There will be a long downward spiral unless the whole world suddenly discovers another need for expensive non-commodity, high-I/O minicomputers.

It also has no sustainable markets anywhere but the high end, as far as I can see.

Sun is really the last of the proprietary system vendors. You really have to get back to mainframes and supercomputers before you start seeing non-open, standard equipment again. Sun has datacenter products, of course, and on that level I suppose open systems don't matter much, but everywhere below, they're seriously losing ground. How many SunFire15Ks can they sell in a year, anyway?

Sun also doesn't, as far as I know, have a next-generation chip on tap. They've got the UltraSparc III and a decent architecture that USED to outperform x86-type chips on I/O and floating point ops, but Itanium and Athlon FX both seem to be within a rounding error of overtaking it (Sun partisans point out that Sun scales to dozens of CPUs where x86 systems tend to fizzle at 4 or 8, but that's really the high end I'm talking about).

I don't think it's cheap to develop a next-gen CPU. Particularly for essentially proprietary hardware.

Sun has StarOffice, I guess. I've seen it used on more PCs than I have IBM's Lotus Suite in the last year, but it's certainly not a foundation for a business.

Ditto with Sun's other Application software (e.g. the server products they acquired from Netscape).

Sun's leadership on java seems to have been overtaken by IBM. IBM seems to support it best. IBM seems to have the best java development products and IMO the best VM as well.

Sun isn't particularly a service organization. IBM moved into consulting and network services and a billion other things. DEC was famous for service, possibly even more than it was for its computers. Not only that, but I can't think of an organization where Sun would have a big enough lever to move into other services anyway.

To me Linux and java seem like the only carrots Sun has, and frankly Sun looks lost in the woods on both. Sun has an on-again-off-again relationship with Linux as an operating system and as a product (see Coug's post). I have no idea where they stand with Java, but everything I've heard about it lately has come from IBM.

 

[e_dawg]

Heh, my former colleagues at HP are smiling at the fruits of their labour (making a big push to attack Sun while they were weak). They did their part, along with Dell and IBM of course.

 

[B4RSK]

Next target is HP though...

Dell will get them on the low end, and IBM will get them on the high end. Only a matter of time.

Ian

 

[Mercutio]

I really don't think Dell is bulletproof on the low end. Dell machines have IMO been going steadily downhill in terms of quality for the last couple of years at least, and their support at the moment is at an all-time low. It's bad. Really bad. Like "We only hire the Indians that have cleft palates and Tourette's Syndrome" bad.

I'd still rather have a Dell than an HP, but at this point I'm no longer happy to see a site with all Dell machines.

 

[Buck]

Indeed, low-end Dell machines are beginning to smell like Gateways.