Will Sun Ever Formulate a Strategy?
May 15, 2006 —
(Page 1 of 3)
Retired army generals, it appears, are not the only ones complaining about leadership at their former employer. John Shoemaker, who was formerly executive vice president of worldwide operations at Sun and later director of its server unit, recently published an extraordinary written indictment of what went wrong at Sun.
Shoemaker’s analysis, which I’ll get into in a moment, is not the mad ramblings of a blogger, but a lengthy essay in Business Horizons, the journal of the Kelley School of Business at Indiana University, where Shoemaker is a member of the Dean’s Advisory Council. So, you would think he knows what he’s talking about.
In the piece, which you can read at tinyurl.com/pjlo9, Shoemaker lists several factors he feels contributed to Sun’s rapid decline. He then explains why things cannot improve until there is a change in leadership. [As we went to press, Sun announced the resignation of its CEO, Scott McNealy. –Ed.]
Shoemaker argues—correctly, in my estimation—that Sun’s SPARC processor architecture has never been competitive. Rather than the chip, what enabled Sun to enjoy success was Solaris, its version of Unix. Specifically, the winner was Solaris’ ability to scale well.
When the Internet bubble came along, Sun was the system of choice because the anticipated traffic boom in those days—before clustered systems were common—required big, scalable, non-mainframe boxes. That is, huge Sun servers. And because Sun had always been a network-oriented company, the Sun/Solaris combo had many features that were particularly appealing to upstart Internet firms and telcos.
Then came the crash, which hit Sun doubly hard, says Shoemaker: Not only did Sun undergo the same contraction other vendors did, but because it had dominated the market segments that were now going bankrupt, there was a huge amount of fairly new Sun inventory available on the market at drastically reduced prices.
Here, in Shoemaker’s estimation, is where Sun’s leadership first really failed. Scott McNealy, the then and current chairman, would not accept the dire nature of the market change and did not cut headcount anywhere near as much as his competitors. Instead of a few dramatic reductions, Sun diminished headcount in a series of feckless moves that undercut morale for a protracted period—making it difficult for the company to get back on its feet.
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