Sun Continues To FadeSun Continues To Fade

You know you're in trouble when you make the technology pages of the New York Times with a piece about how much money you're bleeding. Such is the case with Sun, which reported a $1.7 billion loss for the first quarter of 2008. And that's not the worst of it.

In theory, Sun should be doing great. With cloud computing and SaaS being the Next Big Things, its hardware ought to be flying off the shelves to power all of that. And it's not as if its hardware sales are dismal -- it is still able to sell its iron at a respectable pace -- but it's not the only way to power the cloud, and people understand that now. That's the first big problem, and it will continue to gnaw on them as everyone casts gloomy looks at their balance sheets and sits down for long, sad talks with their accountants.

The other big millstone around Sun's neck has turned out to be Solaris, which it has open-sourced in an attempt to get wider adoption for it, but has been greeted largely with indifference. That's not because Solaris is no good, but because the potential audience for OpenSolaris already has Linux. Turning Java into an open-source offering (however painful and drawn-out the process) has proven to be the better deal, because it's that much more portable, flexible, and genuinely useful. Solaris may be more adept than Linux at heavily multithreaded server environments, but I've gone blue in the face before talking about how IT history is littered with technically superior products that got eaten alive by more properly marketed competitors.

One of the options outlined in the above article is to sell off its legacy server business to Fujitsu. That might buy Sun some time -- literally and figuratively -- but at the possible cost of alienating more of its existing base. Who's to say its other customers won't effectively be sold off to the highest bidder as well?

Selling off pieces of the company doesn't address the underlying problem: Sun still thinks it's irreplaceable. Nobody else offers Solaris, or the types of servers it does -- ergo, someone will always want to come to it for what it has, right? Yes and no. The difference between someone like Sun and, say, Microsoft (another legacy proprietary-offerings company) is that even Microsoft realizes that it's not irreplaceable anymore. It has been pushed, hard, by the presence of Linux in particular and open source in general, and it has started to respond in ways that show it takes the whole thing seriously and isn't about to get elbowed out.

One other thing that comes to mind: if Sun is doomed -- or at the very least in major trouble -- what will come of the open source projects that have come under its umbrella, such as OpenOffice or MySQL? The former already has a second home in the form of IBM's rebranded Lotus Symphony -- and even if IBM doesn't pick up on it, there are tons of other possible candidates to continue the project. Ditto MySQL, although nobody's going to be thrilled about a possible loss of project continuity if Sun chokes.

Whatever Sun does, it had better be fast. Shareholders are harsh mistresses.

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