The New Bounce in Sun’s Step
From its chip strategy to its datacenter-in-a-box initiative, Sun has been reinvigorated
Don’t look now, but Sun Microsystems Inc. has a new bounce in its step.
From its recent rapprochement with chipmaking rival and (64-bit antagonist) Intel Corp., to its own aggressively multicore UltraSPARC chip strategy; from its still-incubating datacenter-in-a-box initiative ("Project Blackbox"), to its fully-hatched virtualization strategy, Sun seems to have the rumble of a corporate engine that’s firing on all cylinders according to several industry watchers.
At its annual analyst summit, held last week in San Francisco, Sun executives seemed ready to rumble, too. "Self-congratulatory rhetoric permeates any number of IT industry analyst events, but the … mood at this week’s Sun Analyst Summit … was particularly festive," notes Charles King, a principal with consultancy Pund-IT, who attended the event.
"[A]t least some of the company’s buoyancy was deserved. The past half decade has been almost unrelentingly dreary for Sun, with a nadir in 2003 that found the company shedding customers and employees alike, with little hope for a break in the clouds."
King links the change in Sun’s fortunes to the ascent of "nerdy wunderkind" Jonathan Schwartz last April. With Schwartz at the helm, Sun announced Project BlackBox, expanded and enhanced its virtualization strategy, and patched things up with Intel. One upshot, King argues, has been Sun’s return to profitability.
On the plus side, King argues, there’s a lot to like in Sun 2.0. For starters, he says, there was Sun’s 2005 acquisition of the former Storage Technology Inc. (StorageTek), which helped round "out a dreadfully thin storage portfolio." In addition, says King, Sun’s partnerships with first Advanced Micro Devices Inc. and now Intel helped establish it as a credible contender in the x86 server space.
In this last respect, King and other industry watchers have cited Sun’s rapprochement with Intel, in particular, as a game-changing event (see http://esj.com/Case_Study/article.aspx?EditorialsID=2425). While the market significance and psychological importance of the Sun/Intel accord are undeniable, few in the analyst community think the deal portends a more significant degree of collaboration between the two vendors.
"[T]here just aren’t enough details to give any real credence to Sun’s and Intel’s claims that there’s more to this announcement than the surface facts," said Gordon Haff, a senior analyst with consultancy Illuminata. "I asked Pat Gelsinger, who heads Intel’s Digital Enterprise Group, what ‘optimizing for Java’ means exactly. Does it mean that Intel will be putting in silicon to make Java run faster? Well, not exactly. All Pat would cop to was a more generalized statement around the importance of managed code—like Java and .NET—and that Intel has already been working to optimize how they perform."
Ditto for Schwartz’s description of Sun’s new "multi-purpose" R&D strategy, which he says will make it easier for Sun to gain synergies, save money, and enhance product deliveries. "[It] looked interesting enough in PowerPoint but [I] expect it to be devilishly difficult to execute," King says. "Likewise, Sun’s plans to join its sales and services organizations to present a united face to customers sounds like a novel approach, but [I] expect Sun to encounter more than a few rough spots, ruts, potholes, and ‘bridge out’ warnings along the way."
Schwartz and CFO Michael Lehman also talked up the importance of Sun’s company-wide deployment of Oracle11i, which is slated to replace a heterogeneous mix of data sources. With completion of that project still some three years out, King notes, it can’t be considered an arrow in Sun’s quiver. Nevertheless, he concludes, if the mood that prevailed at Sun’s recent Analyst Summit is any indication, Schwartz and other executives seem to be brimming with confidence. The question, he says, is how much of it is hubris.
"Perhaps most notable … was the bellicose verbiage that Schwartz and some other executives indulged in, with jarring phrases including ‘brutal efficiency’ and ‘IT as a weapon’ coloring more conventional business and technical points," he says, comparing the reborn Sun to the incapacitated Black Knight of Monty Python fame.
"After nearly a year of close work with needle and thread, Sun appears ready to get back in the saddle. However, with only one quarter of profits under its belt, a touch less self-confidence and a bit more realistic caution might be in order if the company wishes to avoid future surgeries."