Our Q3


We announced the results of our third fiscal quarter (Q3) on Thursday last week, and the results weren’t what I, or any of us, wanted.



As you can read in the press release, we delivered $3.267 billion in revenue for Q3, roughly flat with a year ago. On that revenue, we delivered a GAAP loss of 4 cents (equal to the charge associated with the acquisition of MySQL, which closed within the quarter) – on that revenue, we generated around $320m in cash.


The low light of the quarter was revenue in the US – which declined year over year by nearly 10%, a big step down for a geography that typically contributes 40% of our total revenue. The highlight of the quarter was our India performance, up 30% year over year – and our chip multi-threading Niagara systems, which grew (billings) 110%.


We had growth in 12 of 16 geographies in which we sell, but a shortfall in the world’s largest economy (and the largest in Sun’s portfolio), is tough to make up elsewhere. So we showed no growth at the corporate level.


Despite a weak US economy, we still see growth and opportunity across the world. We are going to be making some changes as a result of the quarter, certainly, but not in our core vision or strategic direction – network infrastructure is being built out across the world, developers will continue to define its architecture and shape demand, and we will continue to position ourselves to drive and capture that market.


With that, I’ll go through a few questions:


What happened in the US?
Late in the quarter, we saw a fairly aggressive slowdown – among smaller customers, and for larger systems (like enterprise servers and large tape libraries). As you recall, we left Q2 with a healthy backlog, lots of momentum, and feedback from customers that we were totally on the right track, so we were as surprised as anyone that deals started stalling in early March.


Why did big systems slow?
It’s counterintuitive, but larger systems and purchase orders’s are easier to slow down than smaller purchases. When you sell the systems and storage behind a big buildout, it’s typically a long selling cycle, and a fairly long implementation process (systems aren’t powered up the day they arrive). So holding off for a few weeks, either because you’re spooked about the US mortgage crisis or because your CFO decided to put a pause on capital spending, is fairly straightforward.


And remember, our business is a portfolio – from high growth, low end blades and training services, to slower growth, high end enterprise systems an infrastructure software. There is no one system or product for all workloads, it’s a portfolio.


So how are you going to adjust going forward?
We’ll continue to diversify our business – geographically, and with the introduction of our Open Storage initiatives this past week and acquisitions like MySQL and Vaau, we’ll continue moving into adjacent markets.


We also announced a restructuring plan, through which we’ll be making targeted reductions in operating expenses. The net result will be the elimination of up to 2,500 jobs.


To be clear – we are taking assertive, and prudent steps to focus on growth opportunities, and to pull our cost structure in line with our business model. As we’ve done in years past, we’re doing both – making choices to invest and disinvest.


Evolving companies are never done making choices.


Where did you grow in the quarter?
In 12 of the 16 geographies we serve – including India (up 30%), Brazil (up 20%), up in China, Russia, the Middle East, Canada, to name a few places. In general, the world continues to look to technology as a source of growth, automation and efficiency. Even our Wall Street business was up this past quarter.


On the product front, our focus on energy efficiency continues to pay off, with Niagara systems grew (billings) 110% year over year, and our newest (AMD, Intel and SPARC) blade systems growing at an even higher clip. The MySQL team delivered a great growth quarter, and Service revenues were up 3% (a major portion of which are software related, of course). Disk storage billings were up 6%.


Deferred product revenues were again up nicely, more than 25% – these deferred revenues tend to be for higher end systems and more complex configurations, with gross margins above the corporate average. Deferred Services were down, attributable to the ERP transition I mentioned earlier (we expect to recover that in Q4).


What didn’t go well?
Enterprise systems, which were great growers in Q1 and Q2 (20% and 8% growth, respectively), were down in the quarter – and not specifically attributable to competition. We saw exceptional performance on our APL systems built with Fujitsu, and a strengthening partnership. Tape libraries were also down, although media sales were strong.


Given the size of both these line items, our higher volume lower end businesses were not yet at a sufficient scale to eclipse the slowdown on the lower volume, high end systems.


Why don’t you just stop giving your software away?


Because we prioritize developer adoption. Let me give an example.


Last week, we saw a very high profile media company raise a considerable sum of money. They had not otherwise been on our radar. I sent a note to the head of our global sales team, given the fundraising had cited a growing infrastructure buildout, and asked if we’d made contact.


He said no, but we were immediately reaching out – and it turns out they’re completely built around MySQL.


So before we arrived, before we were engaged, and before they began building out a large infrastructure, the MySQL team had scored a design win – ahead of the proprietary competition. What should we have charged them beforehand? No matter what it was, they wouldn’t have used the product – startups and developers don’t pay for software. But here’s a diffrent question: what would we have paid them to select MySQL over the proprietary alternatives before embarking on a massive expansion?


Right question. We didn’t pay them, the MySQL team earned their adoption.



Will they buy a license now? Maybe not, but we’ll be well positioned if and when they, like Facebook or Nokia or the New York Times, do. And in the interim, it costs us nothing for the reference. I was with a bunch of startups at our StartupCamp this morning, and asked how many folks in the audience *didn’t* use free software… no hands were raised. Why are we focused on startups? Because we’re focused on all developers, in big companies and small.


How do you feel about the competition?
Just fine, we looked at the deals slowing in the US, competition wasn’t our big issue – it’s not that someone else was getting the purchase order, it’s that no PO was being issued in the quarter. We’re more exposed to the US markets, and potentially more exposed to discretionary purchases (although I don’t really believe that servers are more discretionary than storage – they’re converging). Avnet, one of our big distributors, had a similar experience in the US.


Why didn’t you pre-announce the quarter?
We wanted to be sure, when we made our announcements, to have finalized our numbers and our plan to adjust our cost structure going forward. Given we’re in the midst of an ERP transition, we were still finalizing work late into April. Secondarily, we needed to review our FY 2009 restructuring plan with the board before going public. We announced as soon as we’d met, reviewed and approved the plan.


How did you lose money compared to a year ago profit?
Well, although we generated a lot of cash in the quarter (more than $320m from operating activities), we also incurred a number of charges which reduced our net income. These included non-cash items related to stock-based compensation and amortization of acquisition-related intangible assets as well as other acquisition-related charges – all of which added up to 20 cents worth of charges.


Are you repurchasing your own shares?
We don’t comment on buyback plans, but we’ll report any potential purchases at the end of the quarter.


When will the US recover? Will the malaise spread overseas?
We build network innovation at Sun, we don’t predict the global economy.


And with that, you’ve hopefully got a clearer sense of what we saw, and what we see. So I’ll end on a particuarly vexing question,


“Why does Sun’s CEO waste time writing that blog?”
Because I believe in providing clarity surrounding our strategy and operations – not just once a year in the Annual Report. I believe clarity behind our direction is useful for our shareholders, customers, partners and employees.


In good times, and in challenging ones.


________________


Safe Harbor Statement


Jonathan’s blog contains forward-looking statements regarding the future results and performance of Sun including statements with respect to the effects of our restructuring plan, and expectations for deferred revenue. These forward-looking statements involve risks and uncertainties and actual results could differ materially from those predicted in any such forward-looking statements. Factors that could cause actual results to differ materially from those contained in such forward-looking statements include: risks associated with developing, designing, manufacturing and distributing new products; lack of success in technological advancements; pricing pressures; lack of customer acceptance of new products; the possibility of errors or defects in new products; competition; adverse business conditions; failure to retain key employees; the cancellation or delay of projects; our reliance on single-source suppliers; risks associated with our ability to purchase a sufficient amount of components to meet demand; inventory risks; and delays in product development or customer acceptance and implementation of new products and technologies. Please also refer to Sun’s periodic reports that are filed from time to time with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2007 and its Quarterly Reports on Form 10-Q for the fiscal quarters ended September 30, 2007 and December 30, 2007. Sun assumes no obligation to, and does not currently intend to, update these forward-looking statements.

68 Comments

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68 responses to “Our Q3

  1. BuzzCut

    No one has ever proven there’s any value in a bunch of developers using your
    software. Or in small startup companies or third world nations without any money. Who cares about
    them, they’ll all go bankrupt anyways. Go focus on big oil companies and real
    proprietary products, get over the fascination with free, it just
    doesn’t matter to real businesses with real profits.

  2. Sean Neats

    "Why don’t you just stop giving your software away?
    Because we prioritize developer adoption. "
    You make it sound is if you have a choice between selling your software or giving it away, and you chose the latter. Let’s be real for a minute here: you tried to sell it, nobody wanted to buy it, so you don’t have any choice but giving it away.
    I applaud your attempt at transparency, but the spin shown in this non-answer makes me question how much we can really trust in anything you write here.

  3. HeySean

    i don’t think that’s what he’s saying at all. I think he’s saying there’s no reason to stop distributing the products, while they continue to sell them – that there’s value in having them widely adopted BEFORE they start selling commercial support to paying customers.

  4. Kevin Hutchinson

    Stay the course. There are investors like me who believe in what you’re doing. My only suggestion would be that you add a new measurement metric to the "Would you recommend Sun?" measure. My suggestion is a "How pleasurable was the experience?" measure – so you can start to get closer to that "Apple feeling" in all your services and products. For example, the Indiana OpenSolaris distribution will greatly increase this pleasure measure, but I bet you still don’t quite catch up with Ubuntu. In short, I still feel that Sun could improve simplicity and usability – and it would be good for you to measure your progress.

  5. Sun Whiteknight

    Dear Jonathan,
    First of all, thanks for writing the blog. Keep it up.
    Here are some suggestions:
    During this slowdown, focus on sectors which are still doing well.
    1. Being a doctor, I think SUN can make a huge impact in the healthcare sector using the Open Source model. Look at Radiology, Advanced robotics, personalized medicine and other models. How is SUN helping developers in the healthcare sector? A lot of new customers and developers in the pharmaceutical, insurance, biotechnology and hospitals would love open source using MySQL/PHP.
    2. Develop your own cloud running on Java, MySQL and other technologies you have.
    3. Develop PHP Open Source apps or developer samples because PHP and MySQL run well. Right now your website does not have some ready made samples of software which developers can use. This can help build the community
    3. Dont give up! Keep it up.
    Bye!

  6. Cool ..
    I bought 300 hundred JAVA at 12.50

  7. Glad to read your comments, Jonathan. Have been a long term Sun shareholder and bought more shares on the dip this past Friday.

  8. CJ

    I have been a SUNW/JAVA investors for at least 4 years. Each year I thought SUN will be back, but I lost more money on its stock. Enough is enough! I just lost 22% of my investment on last Friday. You can talk about all the strategies you want, but we only need a good result! Don’t you feel shame?

  9. The market does not reflect Sun’s potential. Thanks for keeping the community informed in good times and bad.

  10. Strategies –
    I do understand your strategies in order to rule the market. ‘In order to rule the world you have to have to generate a few losses’.
    Since the aim is to outstrip all, the little losses are nothing in comparison to the ultimate goal of achieving global domination.
    The science of numbers can be manipulated to do that which we want through executing well planned strategies.
    Some simply do not see the big picture.

  11. Patrick

    Thanks Jonathan. A Sun shareholder and true believer since ’94, I deeply appreciate your blog, and have every expectation that I will once again book a 100% ROI, assuming that a broad-based, US recovery does take root when paranoia subsides in financial services. That said, memo to Eric Wendelin: Never expect Wall Street to get out in front of the Sun story. Their ignorance and laziness re: tech is legendary, and getting worse. Without visible, easily understood, branded product in the consumer space, they run. Enterprise etc. is far too complicated for them. Still, when history repeats itself, and Sun starts posting blowout numbers on a global scale, they’ll be back. Count on it. (I for one am very encouraged by Sun’s performance in the BRIC economies. The growth trajectory in these markets is steep…).

  12. george

    Hey Jon, you are a good guy.. . keep blogging.. You have a good mind… suggestions needed by those who cant think themselves..
    may the force be with you!🙂

  13. foo

    Jonathan:
    Please understand one thing. Your lackeys won’t tell you this. JAVA (the language) is dead. I’ve been using it since 1995 and I though it was the best thing ever. But a gaggle of bozo design-by-committe decisions have ‘tarded up the language beyond the complexity of even C++, generics being the worst and now closures being the final nail in the coffin. It’s not fun to program in anymore AT ALL.

  14. Dear Jonathan,
    It took some courage to write this because perhaps you have much better design experts in your team, but, just as a graphic designer and SUNs brand fan since early 90’s (But never in contact with your products), I think SUN has an image problem, at least in its web site:
    1) It “looks” like a high tech, sophisticated company like Silicon Graphics in 90’s, a company that makes sophisticated, expensive and propriety equipment, very alienating, like today’s Oracle and EMC.
    2) From branding and positioning perspective, it “is” more of an open source “software” company with a legacy of huge hardware portfolio that is not very profitable.
    This contradiction in message and content that is very apparent in SUN’s website (Graphic intensive, “well designed, copy written, sorry, but full of cliché stock photography” and painfully complex) leads to alienating younger generation. The SUN image is an “Anti-Seducer”. It’s sophisticated like NASA but not friendly as it is. Please note I’m just talking about the “image”.
    In branding perspective, SUN technology portfolio is very complex and difficult to understand for an average user. The technology offerings (From an office suite to IDEs) are presented side by side, alas; OpenOffice definitely deserves a separate, end-user friendly web site, not a one that is currently “looking for speakers for OOoCon”.
    The other issue is that too many half-working technologies (Like project looking glass) get in the way of the developers while browsing your site. Better to put all these half-finished, half working projects into a section like “SUN’s developers lab”, just like what Adobe does. (Adobe betas seem more polished, limited in numbers, carefully selected, meaningful and useful, in comparison).
    SUN’s experimental software’s are presented almost side by side with Solaris and other serious projects, which is very damaging to the picture of the brand.
    Many technology fans just browse technology sites, they cannot buy anything or even join anything, but admire and promote your brand, and one day, as they grow, they might become real costumers.
    Good luck!

  15. Anonymous Coward

    It is cute to see that after 6 years of a stagnant Sun stock price, during which time we saw many supposedly revolutionary turnaround strategies, so many commenters believe in this latest of many visions that has no chance of leading to substantial revenues for Sun within the next few years. Let’s forget about past wonders like patented per employee pricing or a $1/cpu-hr utility computing that were going to change the planet.
    The real question is if Sun is serious about "Grow" and "Make Money." Will this latest round of layoffs (#5 by my count) be the one where the hard decisions are made to get out of areas that are neither strategic nor potential revenue generators? Or will it be another exercise of "let’s starve all products equally – focus is overrated."
    OK, it’s just a rhetorical question.

  16. Peter Firmstone

    Stick to your guns Jonathan, by offering customers a free market model, you offer them freedom of choice and freedom to innovate. Large Companies, having suffered IT vendor lock in for so long, while being able to conceptualize freedom to innovate, haven’t quite worked out how to cross the wall to freedom.
    Proprietary closed applications, perform most tasks required of Companies today, however their adaptability and extendability is limited by their old world closed model, leading to many company internal problems going unresolved, with massive hidden costs in internal business flow processes when the software customers have cannot cater for new requirements.
    While the majority of companies suffer the same problem, the competitive effect doesn’t harm them, however as more companies get the freedom / open software model, the more at risk those who remain with the old model will be. The IT industry was the first to be affected, just look at Google or YouTube for example, based on open software, you wouldn’t dare use proprietary software now, other industries will soon follow.
    Ironically innovation is well understood by manufacturing, construction and services professionals, many of whom have a limited understanding of IT. I think we’re at the point where enough of the old guard are either being replaced or revitalizing their thinking to include openness and freedom.
    As Sun continues its Global expansion (or should I say Universal), the impacts of local US market conditions will diminish.
    Furthermore, once Sun releases its new OpenSolaris distribution model, I believe there will be many new customers adopting the full open software / hardware stack, due to ease of software maintenance and upgrades, built in data integrity, predictive self healing and development opportunities. This will of course translate into new opportunities for Sun, the challenge for Sun of course, is to engage these customers in their service and sales departments as they have with their developers, if Sun doesn’t, someone else will, that’s the free market model, there is no vendor lock in.

  17. Keep up the good work. I’m looking forward to see what VirtualBox and openXVM will bring.

  18. A shareholder

    You strategy is right. Those people complaining poor Q3 number are too stupid to understand the whole picture.
    JAVA is a long term investment.
    Keep going JS ! good job !

  19. Your committment to developer adoption has just turned a corner, Sun is starting to gain real traction in this area due to a (relatively new) focus on open source and openness in general. I remember the Sun that predated your arrival, it was this massive, closed environment. No one at Sun was allowed to say or do anything without prior approval from the legal department. Keep up the blog.

  20. JD

    I think most of us by now understand the free-software advantage for Sun. Most of us understand that Java "is everywhere." That being said, perhaps it would now be a good time to start being more vocal to investors and customers concerning the product developments that will drive the bottom line and increase revenue growth. And can we please limit the touting of limited customer base products such as Blackbox and Constellation and start focusing on products that will really drive the company to profit? You frequently state that the ultimate indicator of how a company is doing is reflected in its stock price, and with a price that is down nearly 50 percent from it’s recent highs, it is obvious that something is not working. And please consider putting the company in the mirror instead of blaming the economy for profit woes. There are competitors that surviving, and it is my hope that Sun will take some of these lessons and not only survive, but thrive.

  21. Jonathan,
    Thanks for the blog, that is most appreciated.
    And keep up the good work. The pioneering work of Sun in network computing and delivering computational power via stateless devices is one of many models of growth that I really believe in.
    Bob

  22. Anantha

    First off, I’m not a current shareholder. I haven’t been one for well over 9 months when I finally resigned to the fact that Sun will never capitalize on its engineering prowess. I continue to be a fan of Sun products. I still shake my head at the massive miss you had in the just concluded quarter. It is obvious that Sun simply doesn’t know how to sell the product their engineers work so hard to produce. Management is out of touch with reality, at least the business kind. Look no farther than Oracle that prides itself in a strong sales organization to model your company. ‘Nuf of the Eco stuff (at least the tree hugging kind) and I’ll gag the next time one says Participation Age. Go make money NOW, if you don’t you won’t be around to reap your rewards on your open source investments. Good luck.

  23. As you may know I’m a long time Sun user, Solaris on SPARC fan, open source believer, and frequent Sun Ray advocate.
    That said, I believe that there are better options for you than laying off more staff or continuing to butt heads with the superficialities driving market perception.
    Specifically, I think there are two things you don’t do now that could help:
    First, I think you need a dedicated group committed to making the non PC desktop the American organizational standard within perhaps five years. That means committing people, doing national demo projects, building the MAJC super terminal, and providing a focal point for the emotional support of those willing the buck the PC desktop assumption.
    This won’t make money in the short term – but half what you paid for MySQL will get you there and, by the end of the period, it’ll be a major revenue driver.
    Second, selling a few x86 boxes via the web is cool, but your sales force is still largely focused on big sales and not just ignoring, but actually turning off, the mid market people – the companies whose needs could be met by one or two T2 class machines running mostly freeware but who now buy Windows on x86 because they have no clue how expensive cheap is and there’s really nobody to educate them.
    Put together an evangelical group focused on these people, selling services on an ebay community model (local people, paid by the service, rated by customers, dispatched by you) together with pre-integrated, network supported, gear comprising one or more T2s, some storage, network connectivity, terminals, and pre-installed, pre-tested, FOSS software.
    That would make money: probably in its second quarter of operation -and eventually a lot of the people who simply hate Sun as the enemy of all things good and wintel would be working for you.

  24. The trend I see in the US is a movement away from high technology, to low technology. This befuddles me somewhat. You start to question who makes these decisions and whether they are competent and merit the positions and have capacity for the positions that they hold.

  25. >No one has ever proven there’s any value in a
    >bunch of developers using your software.
    Hah! Tell that to Steve Ballmer.



    Also, consider MySQL. How many projects can you name where the developers were dead set on using Oracle or DB2, but their CIO forced them to use MySQL instead because it was cheaper?

  26. Fintas

    Jonathan: I’m a long term shareholder and supporter of you and Sun Microsystems. However there may be reasons but there are NO EXCUSES. You surprised many and in doing so have now cost yourself credibility and cost the shareholder near 24 percent in the sell off on Friday due to you and your teams to properly manage information and the share price. You recently stated that your performance should be judged by how you are increasing the value of Sun Microsystems. I’d say that at this moment in time you and your CFO get an F. Now I say that with full understanding of what you are attempting and implementing. Yet someone dropped the ball and you did not have control of the data. That someone either was distracted or wasn’t doing their job. Yet it is YOUR responsibility to KNOW or have someone close who does KNOW. It is also your responsbility to PERFORM. Now if you want to be a private company then take yourselves private after paying a fair price. However, if you are to continue to be a publically traded company…then enough with the glib remarks and make sure you PERFORM and when those who share that office do not..then REPLACE THEM with someone who can PERFORM. One of the things you did have going for you was consistancy. An investor could feel comfortable with what you were presenting. You lost that and now you will have to regain it at the INVESTORS expense. Again, your job is to perform. And as you hold others accountable for such, this investor holds you accountable. That means someone’s responsible for the miss and allowing you to lose credibility. Lastly, it’s about time Sun Microsystems lobby those in place to determine how many of those shares sold were real shares backed by a locate and how many were phantom or NAKED SHORT. A 24 percent drop on that announcement was ludicrous. So hopefully Sun Microsystems is ensuring thru the appropriate avenues that those required to deliver do so as per REG SHO. Again I’m a supporter but there may be reasons but there was NO excuse. Excuses are the leaning posts of losers. You are not a loser so lets get it together and SOON..

  27. John

    I’ve tried to bring this up through the regular channels, but it seems to go nowhere…
    As a sun customer, here are some ways Sun can save money and make the customer happy at the same time. Individually, these items are cheap (under $5 each), but when multiplied over the volume that sun does, it would have saved you about $30mil in hard costs this past quater.
    1) Power cords:
    Each time I order a server/array/whatever, I am required to order a country kit with it. For us US costomers, its 311L. These cost me $0. With it I get a box and a really thick power cord. Since all of the servers and arrays run 208V, we take the power cord and toss them in the trash (ok, we really put them in the recycling bin, but you get the idea). I dont want these, but we are required to include them on every order. A ‘no power cord’ option would save us time in having to deal with the extra boxes and save Sun money in the process.
    2) Upgrade packaging.
    Here is another fun one. We recently ordered memory upgrade kits for a T2000. 16 kits total. Along with it came 16 boxes, one for each "upgrade". These are nice 3 color glossy boxes with instructions on what to do with the return. I’m sure sun pays a few bucks for each one. A single envelop with the RMA number would have suficed. I dont need 16 boxes that are 4x larger than the memory kits themselves to do a return.
    As an extra added bonus, not only does sun save money, they also get to claim that they are bing green since they are actually preventing waste (which saves energy, the environment, bla, bla, bla). You are also making the customer happy by not having us deal with all of this extra stuff we dont need or want.
    As for the Q3 results….. Everybody knows that Wall St. only looks ahead 1 quater at a time. Folks who run their company with that sort of event horizon dont stay in buisiness for long.

  28. bill-tb

    The free open software is great, but why do you make me buy Dell to run it? For that matter, why do I have to buy Apple workstations? It’s not all big, there is a huge market in desk-sides, servers and workstations, hot boxes. Did Sun forget that? You can sell those.

  29. Shareholder777

    Johnathan,
    You just don’t get it. Your aim as a public company is to grow the stock price. You have not done that, please admit this. A public company is not on the planet for "open" revolutions, it’s all about the stock price.
    Cash flow ($340mm) will not affect the stock price at all. Please do something!!!

  30. Sun Shareholder

    I share the pain of losing the hard earned money. I have been Sun investor for the last 5 years and never sold Sun stocks. You can imagine how much i lost. I am not selling now also. I still have hope on this company. I am sure so many Sun Employees might have lost too. I am willing to take the risk by holding my Sun stock for next 2 to 10 years if you can assure i don’t lose my big money.
    Here are my comments:
    1. Build the company for the future (but have a time line). Open source business model takes time but worth moving in this direction. WMT didn’t become #1 in Fortune 500 in a day. WMT does well in the recession period. Because they wanted it that way.
    2. Diversify the business and become immune to economy. Come up with a business model which can delivery X% growth even in the recession. Don’t depend on one sector more than 10-20%. We all see whats happening in financial and real estate.
    3. The true leadership is shown only at bad times and not in good times.
    4. Don’t give up and Never give up. One quarter doesn’t define the destiny.
    5. Don’t lose money and don’t forget this rule – Warren Buffet.
    IMO, This even applies to corporations.
    I have complete faith on Sun under your leadership.

  31. Arjun Rathore

    Your primary responsibility is towards your employees and shareholders. This quarter has been real bad for both employees (eliminating 2500 jobs) and the shareholders, with stock price approaching pre reverse-split value. Again the reverse split seems to be a gimmick in light of new developments.
    Blaming the economy is not the solution. If it really is the economy and if you did not see it coming then you have to take the responsibility. In this economy your competitor IBM had a great quarter and blew away street estimates. You definitely have a long term vision which might or might not pay off. Hopefully opensource is the wave of future and your gamble will pay off.
    What about having some short term vision, contingency plans etc. ? You have to find ASAP a way to monetize your opensource initiative in the short term, either by having strong Professional Services or having commercial tools/software built to work on these opensource initiative. You do not have to wait for opensolaris to grain traction, Java has been here forever so please find a way to monetize it. IBM has strong professional services and provides a great revenue source. Learn something from them. Sun can not afford to show another dismal performance and the turnaround has to be quick and big not just a few cents of earnings with dismal growth opportunities. Sun has some of the best engineers working for them and the technology is not the issue, the business vision might be the problem.
    Please take this as a constructive criticism and find out ways to make your employees and shareholders happy again.

  32. M.B.

    Open Solaris, ZFS, MySQL on a real computer cloud (Amazon EC2), with premium support, speaks for itself… keep the vision going, smart man. BTW, GE makes great turbines but not airplanes, and that is just fine.

  33. A Srini

    Mind your P’s.. Profitability, People, Products, Patents. Let us start with Profitability. If you don’t have that, the others don’t matter. The current mode of operations at Sun Micro (free software for all) will lead to the other P – Private Equity going for Privatization of Sun Micro. Are we there yet?

  34. Barb

    It’s unfortunate that you did not announce 2 days earlier (29th vs. 1st), as participants in Sun’s ESPP were unfairly harmed. In the absence of guidance, the sting of the precipitous stock fall is painful, yet could have easily been avoided by announcing 2 days earlier.

  35. Barb

    Due to your timing of Sun’s earnings announcement, employees participating in the ESPP were unfairly harmed. Had you moved the announcement to Tuesday from Thursday, ESPP shares would not have borne the brunt of the sell-off. Poor planning.

  36. Satya Narain

    Jonathan,
    Shareholders value, stock price etc are just distractions. Please do not get discouraged by these materialistic things. Keep up the good work. You are doing wonderful.

  37. Peter Firmstone

    What Paul Murphy just suggested, please investigate. Sun has the puzzle pieces, it’s time to integrate those pieces, engage the much larger, stable market of small companies and make money!
    N.B. OpenSolaris has just debuted, congratulations Sun!

  38. Brian Miller

    You suck J.S.

  39. Andrew

    The "computing world" made Sun offer OpenSolaris; this same "computing world" was seduced by "price of initial outlay" (eg, "zero dollars") and did not take into account TCO ("total cost of ownership"). It’s taken that same computing-world 24 years to finally find that TCO and usability are enviable attributes in a company’s products (eg, Apple Computer). How many mission-critical applications at Fortune 500 companies are running on a non-[Open]Solaris OS ? Companies like Google get to have the "dream web app". Eg, a problem-domain that can be solved by implementing a replicated, *read-only* "data base". Google can "afford" to run Lintel systems and throw them away when FixCost is greater than PurchaseCost. OpenSolaris is the exemplar in terms of a multi-threaded, extensible, and industrial-strength OS. Sun was a disruptive force in the early 90’s by being contrarian: become economically successful and technologically relevant by creating Open standards (SPARC, SVR4 and binary compatibility, NFS, NEWs) …anyone remember Apollo Systems? DEC? SGI?. Sun is still the yardstick in terms of measuring one’s success/performance. The computing-world… and accordingly the non-computing world still has not understood Richard Stallman’s dualism of "Free" (eg, "gratis" vs. "libertas"). Linux does not have a non-zero cost (eg, it is *not* gratis; it can cost money Directly.. (eg, Red Hat) and it certainly has indirect costs: training, lost opportunity, support costs). Stallman wanted things to be "libertas"; Torvalds’ product had the *function* of being "libertas", but the *side-effect* of being perceived to be "gratis"… as it rode the 90’s tech boom. Humans do not want to pay a Price for something that was once gratis. However, even though the Price might be zero dollars, the Costs of a non-exemplar OS are non-trivial. So, OpenSolaris’s *price* is gratis but it engenders libertas in the sense that a customer knows that Sun will stand behind and support [Open]Solaris. Other freeware OS’s do not do that. What price does WidgetCompany put on the confidence in knowing that WidgetCompany can focus on the Widgets and Sun can focus on WidgetCompany’s computing infrastructure ? …it’s the age-old divide-and-conquer strategy that’s been used for a couple thousand years now. The Wall Street world’s congenital affliction of "quarter-itis" causes distracting flux. There aren’t many Silicon Valley companies who incorporated in 1982 that are still around… and even fewer who are the exemplars, the creators… the canons.

  40. <I>You just don’t get it. Your aim as a public company is to grow the stock price. You have not done that, please admit this. A public company is not on the planet for "open" revolutions, it’s all about the stock price.</I>
    Yes, because money makes the world go ’round, and when I use MySQL all I think is "the more I use this, the more the stock price will go up!" With every blog post I make, with every *free* video I post, every *free* user group meeting I host, I do it all for the stock price.
    I’m sorry, did I say that in my "out loud" voice?
    <I>Your primary responsibility is towards your employees and shareholders.</I>
    Actually, Jonathan, your primary responsibility is to be able to sleep at night. Your primary *work* responsibility is towards your employees and shareholders, and sometimes that means living on bread until you can ensure sugar and fruit and meat on a more consistent basis.
    Having money is nice. Really really nice. I won’t lie when I’d say I’d rather be able to pay all of my bills and have a little left over every month for some fun, than to not have enough and constantly struggle. It’s not fun getting food from a soup kitchen.
    Ultimately, a CEO must do what’s best for the company. And often — not sometimes, but often — there is a short-term sacrifice for a medium-to-long term gain. Oh sure, that’s no comfort to someone who gets a pink slip. However, though the US economy is in a downturn (not officially a recession yet), developers are still widely sought after.
    <I>You have to find ASAP a way to monetize your opensource initiative in the short term</I>
    Doing this would surely make more enemies than clients, and I believe Jonathan knows this. You can’t radically change your 5-year game plan because of 2 unexpected quarters.
    <I>Why don’t you just stop giving your software away?
    Because we prioritize developer adoption.</I>
    Right on the money. I’d be interested to see a projection of how much you’d have to charge for MySQL (or even Java or OpenOffice) to have similar financials. After all, if a small percentage of folks who use the software become paying customers, then it pays to have more people using the software. If you require payment, then sure, you get 100% of folks who use the software being paying customers — but you’d have far fewer.
    I believe in you, Jonathan; and I believe in Sun.

  41. X64

    Facts:
    – Opteron Barcelona quad core shipping on rack servers – today – you can go buy one right now.
    – Formidable Intel CPU portfolio – with much more on the way.
    – Windows shipping on multiple products.
    Surprised? These are the facts. Just the facts.

  42. One who cares about sun

    I think I should replace you as Sun CEO. If I were the CEO, I will charge everyone Java License Fee. Let IBM, Oracle or whoever using Java paying for it. Well, people might stop using java, but who cares, the chance for those don’t pay the license fee to pay subscription fee is not high anyway. Let them using Microsoft technology then. I don’t need to write a fancy blog, which won’t boost Java share price. And there are a lot of incompetent worker should be laid off as well (layoff those useless instead of those picked by manager).

  43. peter

    It is good idea to charge Java license fee. I do think it is not an issue to charge per Java installation $100 USD. Everyone will pay. You can get lot of money.

  44. davefromnewzealand

    Hi Jonathan, long time listener first time caller here – I feel it’s time to let you know my thoughts.
    I remember in one of your video presentations you mentioned how Apple were a "hot company", and that incorporating ZFS into it would boost awareness of Sun and its products. Well, that’s how I got my exposure to Sun – I am (or at least was to an extent now) a die-hard Mac fan. At the time of that announcement I was curious to see what ZFS was (or at least what it was an abbreviation for – anything starting with "z" has got to be worth a peek). Prior to that I really had no idea who Sun was or what they did.
    Reading the ZFS technical docs was pretty mind blowing, and while viewing Jeff Bonwick’s slideshow I began to see what a cool sort of company Sun was – I had a glimpse of the internal culture (bear in mind I’m not a programmer, nor a developer, nor an investor for that matter – yet). Then I discovered you had a personal blog (way cool), blogs for all your employees (waaay cool) and a ponytail; being a ponytailed IT guy myself, you can imagine how cool I thought this was!
    I then discovered Solaris was *freely* available ("what, free!?") – and, well, to cut a long story shorter I am now a total Sun convert. All I’ve ever known is MS and Apple, so Solaris is something totally new, and different. ZFS is revolutionary. To get my hands on the competitions’ products (none of which offer anything approaching of the power of Solaris), simply to learn about them, I would have had to spend some serious $$$, or, resort to illegal tactics – neither of which I would do. So you see I am sort of a case study for the direction I believe you are taking your company in. When I am in a position to make purchasing decisions for hardware/support, it will be Sun which will be my first choice.
    I’m totally jazzed about Opensolaris 2008.05 (downloaded this morning), Virtual Box is unbelievably cool, and I’m always filling my colleagues (tech support in University) in on all the cool stuff you guys are doing. Slowly, but surely, it’s sinking in to them.
    So yeah, six or so months ago I didn’t know who the heck Sun was – and this is where I am now. Stay the course, I think you’re totally on the right track.
    Oh, and if you could let me know where locals in NZ can get those "I love Solaris" tee shirts!

  45. The trend I see in the US is a movement away from high technology, to low technology. This befuddles me somewhat. You start to question who makes these decisions and whether they are competent and merit the positions and have capacity for the positions that they hold.

  46. What I don’t understand is this: We are a rapidly growing startup using MySQL. But the success of SUN depends on giant enterprises right? SUN never enters our hardware discussions…who calls on us? Do you have products we should be considering?
    And just as aside…having Guy on your small & medium sized business is a real turn off.
    Best,
    Chris Baggott
    CEO/Co-founder
    Compendium Blogware
    http://www.compendiumblogware.com

  47. Bill_W

    i sure do hope Sun bought "alot" of it’s shares back at $12.50 a share!!That’s $3.13 a share before the reverse split.Please tell me you did.

  48. Bill_W

    Jonathan,
    For the 3rd Qtr. Sun lost $380,000 a day for 90 days. Sun spent $15,000,000 a day for 90 days on R and D etc. i am not a math wiz,but i am a Sun (long)shareholder. Just think if we just spent only $14,620,000 on R&D each day. Yes i realize hindsight is a great thing!! Couldn’t we just spend alittle less on R&D a day?

  49. Implicate_Order

    Is there a conspiracy in Wall street against Sun?
    What seems to be an inevitable technology choice in the *NIX world gets blown to smithereens in the politics of things.
    I used to work for Giant Pharma company in the Midwest. They decided by some twist of logic that they should abandon their Sun technology and replace it all with Sun’s competitor (who hadn’t released an upgrade to their proprietary operating system in close to a decade and have a penchant for printing).
    There was not a single overwhelming reason for this decision from the cost-point. The decision was made in a mix of deals with this other vendor and the panic caused by Sun’s plummeting stock value.
    Sun and Apple seem to be the only two companies that are dedicated to technological innovation today. Given that fact, why is Sun’s performance not on the ascendant?
    BTW, I read your blogs regularly — great stuff!
    Sun should continue doing what you folks are doing…but perhaps market yourself a little more aggressively?

  50. Jon

    Dear Jonathan,
    Shouldn’t you, as an executive, give some kind of warning to indicate a softer earnings report?

  51. Ashish Nabira

    I am with Jonathan, It’s really necessary to build community and keep innovating, otherwise we will go the DEC way. 2nd biggest one time & nobody knows where it is. MySQL acquisition will take Sun in the center of Opensource Development. I have already given up LAMP which I was using from 4 years for SAMP.
    Just tested Single CD version of opensolaris, it rocks !!! Agree that right now It can’t compete the packaging to Ubuntu, but them Linux is not stable for production.Major adoption of Solaris is must to grow, otherwise Linux will take that market. There is nothing wrong in adopting opensource strategy which is working so good for all OSS companies.
    34 million loss is not what affecting people, it’s 22% down share price which is pinching. At this price Sun is undervalued…Keep buying "JAVA" for long term profits…
    All the best and keep up the good work( Blog ).

  52. Beijing Olympics

    Jonathan,
    I share your disappointment and am trying to think what has Sun done right in the past 8 years since the dot-com days… CMT is good, enlarging service offerings is good, embracing open source is good, bring in IBIS is good even at another blog, some call it "I Bet It’s Sxxt", sure you have heard this before… merging sales & services is good but has this really gotten rid of the silo mentality… does Sun really have a cohesive sales force united by the comp plan or that the plan is creating more silos than before? Is Sun still relying on financial services and telco as the 2 key verticals? What about extending coverage to other industry verticals? How is the execution coming along? And what about the billion $$$ bet that the China, India & Brazil will become billion $ countries in terms of revenue? Give us the absolute numbers because your base is small and easy to achieve high growth and that’s way it is more objective to compare with GDP and market share gain. Changing to the sell out model is good but what is the impact of no longer having the sell in buffer… guess IBIS is still not quite ready to track all the inventory and sell out…
    Wonder if you have read the book "Who moved my blackberry?". It is an interesting satire of senior exec full of big talks but no execution… not referring to you or Mike Lehman but what about the rest of Sun’s exec ranks… how many of them are out there not executing but still collecting their bonuses and stock grants… I’d imagine there are quite a few VPs globally doing exactly just that… how many directors are doing needless T&E to/from the US and back to their home countries… or simply looking busy when they are not really doing any revenue generating work… I can’t resist to draw a comparison at what Mark Hurd did at HP after Carly’s departure, he has this way of holding his top team accountable and HP’s numbers speak for itself… over the years at Sun, we keep hearing excuses and more excuses… where have IBM/HP done right and Sun hasn’t? Is there something you can learn from them?
    Understand that the FSI & Telco must have hurt the US revenue in a big way but please stop side-tracking the issue. Over the years, Sun has under-invested in the sales & services organisation outside of the US but relying on channel partners who control the critical customers’ relationship as well as the margin. The eco-system Sun built around the partners’ community has helped to create some very powerful/profitable partners who can push IBM, HP or Dell products depending on who gives a fatter margin which explains when you tighten up your margin control, you lose sales.
    Forget about the massive pie as in the potential revenue potential in the open source initiative, count the revenue generated by Sun’s products & services in the whole of the partners’ eco-system, how can Sun leverage more to increase your own top & bottom line?
    Referring to sales boost in the overseas territory as you have highlighted… how does the growth rate compare to the country GDP growth or relative market share to the competitors and let’s not talk UNIX segment only because Sun now claims to have a full x64 offering hence you can’t massage the data anymore… give us the harsh fact to see how Sun measures up against its competitors and not purely looking at Sun’s own perspective, it will not be a pretty sight but if you cannot accept the fact then how can you make improvements going forward???
    Despite your effort in closing down campuses… how many head-counts do you still have in the US? Is this in proportion to the revenue that the US is generating or would they be better utilised to have the headcount invested in your much acclaimed overseas market… not talking of your engineering centre headcount which I think is a smart move to offshore your R&D to cheaper overseas location but what about your sales & marketing resources in those critical high growth markets?
    OK now another round of redundancy, where is that going to be? I think this is a time you can take a critical look at where you can trim the fat but retain the muscle to maintain the edge. As for the US, you really need to take a long hard look at the sales operation to see where things are not going right. If your sales organisation is weak, then how can you make it stronger and make it less reliant on the resellers who are by default, a double edged sword and if Sun cannot effectively partner with them, you run the risk of being overwhelmed by this very community which Sun relies on so heavily for its own success or demise, if you will…

  53. Al

    I am a long time Sun stock holder, a great fan of your products and convinced of the long term success of your open source strategy.
    What I do not understand is this: I founded a small IT business which uses Suns products like Netbeans, MySql, Java and I am looking into OpenSolaris, but I cannot pay Sun back by buying its hardware. A Product that I would have loved to buy from Sun is a Notebook running a flavor of Linux or Solaris. Notebooks have overtaken Desktop/Workstation sales a long time ago and as a hardware company with such a great reputation and brand name I believe you are missing a lot of sales by not offering notebooks.
    Why do your employees run around with Apple notebooks in your JavaOne conference. What notebooks/desktops do your server customers buy? Why are these not Sun laptops and desktops? Why do you not partner with an existing notebook company and design a really nice line of well engineered business/developer notebooks with a complete choice of operating systems and great support for open source operating systems. I would be the first to buy one.
    Getting startups to use your open source software for free can only be one part of your strategy. IMO what you need to do more is get the same startups to buy your hardware right from the start. This means two things:
    1) You should offer entry level workstations and servers and offer your own line of laptops
    2) Make it easier to find and buy your products. Sun products are not available in brick and mortar stores and they are hardly available in the big online stores (germany, switzerland) like http://www.arp.com , http://www.alternate.de/ and http://www.amazon.de . Why are these companies offering hp and lenovo products and thereby taking a bite out of your sales? Why are your products not featured in important magazines like http://www.heise.de/ct/ ? Apples new PowerMac gets a full featured review while the new Sun Workstations are mentioned in a one liner. Why is your marketing department not taking care of this?
    When browsing the ads of IT magazines they are full of ads from companies like Lenovo, HP, IBM? Why are the ads of big vendors not featuring any Sun products? Marketing needs to greatly improve here. The little guys need to learn about your hardware products and there is much to do here.

  54. Fintas

    OK..Jon, it’s been apprx 132 hours since you dropped that bomb on Wall Street. A bomb that cost your loyal employees a significant drop in their share price. Loyal shareholders and employees a significant drop in share price and because one of a few didn’t do THEIR job. Your employees are as you constantly point out are doing a great job. And they are. The loyal committed shareholders stay focussed as you are implementing a change and new direction. BUT Jon as you have pointed out in one of your up close and personal. You survived a horrific moment. Many didn’t. You were given that gift to do something special. Special isn’t losing credibility and being compared to others with the…IF HIS LIPS ARE MOVING???? So it’s time to get your credibility back. THAT MOMENT began the MOMENT YOU KNEW you would miss and guide down and not deliver on what you and Lehman presented near TWO YEARS AGO. There are no pauses in progression. There are no TIME OUTS.and ahh let me try again. NO you have a moment to do what you are intended to do..or another will do such. As an investor I want to SEE ACTIONS not words. I want to SEE CONSISTANCY with those words and how closely aligned theya are with actions otherwise they are MEANINGLESS. So the clock is ticking Jon..Don’t waste time and quickly rebuild your CREDIBILITY. And while you are at it. ENSURE those who are paid to manage and monitor stock price are addressing thru the proper channels those who are implementing nefarious tactic re the share price are properly addressed. You have the ear and it’s a simple process to track and address. Unless of course it IS your intention to take this company private. IF so..then simply offer a fair price and don’t get tagged as a Yang. IF you do then you will NOT have used the gift you were given as intended. So no more glib sayings and simply PERFORM and earn the right to be CEO. INCREASE the VALUE of this STOCK..NOT get stupid and cause the stock to fall below from whence you became CEO. That my young CEO is under YOUR WATCH..NOT SCOTT..And both YOU and LEHMAN are held responsible. NOW get your credibility back and do it quickly.

  55. A Brazilian Java Developer

    Jonathan,
    I’m just an ordinary brazilian software developer who have been developing java based application for five years. Believe me or not, for five years we’ve being trying to contact Sun Microsystems Brazil in order to get a support contract or even presentations of new products and services(software related). For five years we’ve been frustrated trying that. For me, Sun Microsystems Brazil is a mith. I have it’s address, I’ve seen its building a lot of times but I don’t know whether there are people working in there… I don’t know wheter it really exists. Even the web site br.sun.com have Portuguese and English all mixed up confirming their lack of commitment to their users and costumers.
    Do Sun Microsystems Inc. needs money? Sun Microsystems Brazil could help a lot more then they are actually doing.

  56. Mayur Patel

    Where Sun’s products lack is ease of use. Things are changing, however not at the pace where other segments of market including competitors ivolve.
    Whether like it or not, simple fact is; in today’s world you can buy seriousness and commitment only if you reward stackholders with money and usability.
    I can see big challenge Sun is facing between Open Source/Free vs pay per use model while selling their own products and services.
    If you choose pay per use right away, you will loose loyal open source community who contributes great deal of new ideas everyday. If you continue to stick with "Free" (personally with Open Source, I don’t see any problem), soon Sun will be even in higher financial crunch.
    I would like to see your technologies thrive and organization grow and fortunately there are ways.

  57. This is a great post. it gives good idea about where the economy is heading towards. The back bone of us economy has always been technology thus it is fitting to use technology as scale to measure the economy. thanks for the post

  58. Thanks for the very good blog.
    i will look for another articles. The pioneering work of Sun in network computing and delivering computational power via stateless devices is one of many models of growth that I really believe in.

  59. As a Sun shareholder myself, I’m very, very disappointed with the company’s financial progress. In the face of global economic changes, it isn’t wholly surprising, though. Companies, particularly in the U.S., are holding back on purchases as economic forecasting/market results intensify nervousness. Bottom line (Business 101) – To make money, you have to spend money. Companies that aren’t geared towards growth and seizing opportunity are likely to get bruised by competitors that are. Obviously Sun has a number of clientele that are not geared towards growth. That’s not Sun’s fault; then again, it’s hurting Sun’s revenue streams.
    I am very concerned about the treatment of small/medium sized companies vs. large companies. While large accounts may yield substantial profits for Sun, I get the ongoing impression that Sun only focuses on two types of customers: Individuals (namely adopters and developers) and Fortune 100/500-sized companies.
    Sun needs to demonstrate a far more open approach to customers/companies. Your web pages are too engineering/high-end focused, rather than supporting the end user with post-sale resources. The Solaris adopter/end user doesn’t need to be convinced of getting Solaris. Instead, that person has to search around to pull together all of the resources, from OpenSolaris.org to Developer.Sun.com to BigAdmin. I’m tired of being shunted all over Sun.com to find things. Granted, Sun.com has great search functions, but little synergy between the various sites. Look at Ubuntu.com – I feel like I’m part of the community, not a brochure/sales catalog site.
    Sun makes incredible products, hopefully to someday rank with Apple’s consumer-focused uber-product design strategy. (Clean up Java Desktop System, Sun! Better icons, better "gloss/shine" to your desktop, please!) Sun will continue to rise. Start treating customers better, start retailoring your web properties to be a better resource than a pre-sales site. (Which doesn’t inspire me to buy many products, btw.)
    And Jonathan – stay the course. The open source paradigm shift at Sun IS saving the company. It is creating long-term salvation and growth. Wall $treet doesn’t get it, won’t get it. (So go private!!)
    Signed,
    Supportive of Sun’s efforts
    (who hopes for some sweeping changes)

  60. Reading through all these comments, I can’t help observing this: There seems to be one major gap. The service part, everyone is complining about the inaccessibility to support. This seems to be the common factor. Another thing I observed was that all are supportive of the open source. I am finding this so interesting it has been a few weeks since I read about this concept. I may be wrong but it seems there are minor pitfalls that are preventing the sun rise. Good luck, your cause is noble!

  61. deepan B. Patel

    Jonathan….you Rock!!…keep blogging…We all understand the meaning of "Selling innovation is not science….its an ART"….
    What is the cheapest SUN server/workstation cost in INDIA?? What if a startup customer wants to develop an application and certify it on SUN?? Answer will be use all the Sun’s tools like Java and MySql on competitors hardware. CRM is weak…hence your Open Standards initiatives don’t give proper returns…India is growing hence 30% increase in growth…But GM sales have become double in India…Can a n economist like Scott help answer the discrepancy…or shall we say we cant compare cars with IT….
    I have been an open source and open standards supporter and have liked your initiatives of taking on the competition by backing your ability to innovate….But innovation in business should be in all departments…
    As a fan SUN in numero uno in terms of products…as a customer SUN is the last hardware vendor one needs to approach/support….

  62. How to configure MySQL to run with Solaris Management Facility (SMF)

  63. Jonathan Weaver

    Jonathan, you are doing the right thing by your entire enterprise — from employees to shareholders. I speak as a major customer’s employee, a capitalist investor, and an ethical observer as well.
    It is facile and foolish to [pro]claim that no one cares about quarterly earnings. *Everyone* cares, shareholders especially, and me particularly <ouch dammit!>. But caring about fiscal quarters is not the same as caring about /strategy/; and smart investors do not stampede at the first suggestion of short-term loss.
    Although I am admittedly besotted with and entranced by the notion of open-ness in every component of [what Sun offers for] my personal choices for automated logical manipulation, I can also appreciate that not every solution vendor is able to sell open solutions. They can’t, because they have to guard against customers growing beyond their control. But — weirdly, and by design — Sun *can* develop, sell, and profit from open solutions. This phenomenon pertains specifically, and explicitly, because Sun embodies and exemplifies open-ness from top to bottom — from processor, to ISA, to OS, to include a tried and proven relational database (MySQL) and a full-power suite of ‘office’ apps (OpenOffice.org).
    There are plenty of software vendors who want to sell a solution to a well-defined problem. Sun not only wants to help organisations (for a fair price, with zero entry cost) solve the well-defined problems, but also those that are *poorly-defined*; all the while seeking explicitly to *free* the customer from enslavement to any particular file format or hardware platform. Sun wants to give solutions away free of charge, so as to capitalise only on what Sun does best. This is inspiring in more ways than one. (I’ve yet to sell any JAVA shares.)
    Your unexpected, albeit most welcome, attempt to explain the present quarterly figures is so well-intentioned that I feel a bit callous (shallow?) critiquing it. Nonetheless, I must follow your example and admit that to this blog’s audience, Sun Microsystems have fallen short of expectations. In your defence I call to mind the principles on which you have staked the enterprise. No feasible amount of ‘sweetener’ capital could have enticed every present user of OpenSolaris to employ it as their OS of choice. Not even Microsoft’s frighteningly enormous war chest could have coaxed every presence on the ‘net to use the MSOffice solution in preference to all others. OOXML will probably be a standard, but it will not be the /only/ standard. Clever programmers will figure out how to coax spectacular performance out of the T2 and T2+. No one will be able to claim general competency in Computer Science by sole virtue of Wintel expertise (even though it is apparently possible to gain employment as an OS expert despite disavowing any & all knowledge of the ARM and PPC ISAs, let alone AIX, HP-UX, OpenBSD, and GNU/linux).
    A hardware note: your decision to fully & openly specify the Niagara T2 has given those of us who use it a degree of confidence in the ISA that not even major governments can supply — let alone fab ‘giants’ who rise & fall at the historical rate of a dime a dozen. We (the presumed few{?} hardware customers of yours for whom I speak) are very happy to have you make the MPU, and keep making it better; but should you fail, we are also very happy that we can rapidly specify the exact same MPU with comparative facility. Whenever more than just a few million US$ depend on specific and repeatable computational results, I believe you will find the self-same degree of natural affiliation to MPU open-ness that can be submitted to rigorous analysis (or that which comes guaranteed from IBM).
    So: a very long post indeed, but worth while if I’ve managed to convince you to stay the course. Take only slight and reasoned counsel of your fears. Your vision for our community is generally right.
    And I salute your bravery.

  64. Marten Builder

    Your real problem is you are NOT listening to customers, who keep telling your salespeople and execs that they want GREAT SPARC WORKSTATIONS. Why aren’t you listening? No real businesses use open source, you’re just following a fad when you ought to be getting down to serious engineering. Why aren’t you listening????

  65. Jack

    Hi Jonathan, I’m a young Computer Science University student. Some months ago I received an offer for doing an internship in one of Sun’s European offices, but unfortunately, for personal reasons, and for a series of bad coincidences, I wasn’t able to accept it. I regret very much that moment, because each day I realize how much good Sun is, from the point of view of ethical responsibility, quality of products, and trasparency.
    I mean, what other big multinational company has a CEO that let employees do him a prank, and show it on the Internet? Not even Google, which is always regarded as a "forward thinking" company, has that…
    What other big multinational corporation releases so much of its products with Open Source licenses? Sure, IBM, HP, Google, Apple, they all support and finance the FSF, open-source initiatives, Linux, etc…But I still haven’t seen the code of z/OS, or of HP/UX, or of Google’s search engine…
    I think that Sun is unique in the world in the way it does things, and in its approach toward customers and communities. I really hope it doesn’t disappear or fails, because it’s probably the last company in the world which deserves this…
    I’m currently doing an internship in another "big multinational corporation", but for which IT is not the core business, and of course it’s not Sun…It’s more like darkness…I regret every day the moment I said "no".
    Continue on this road Jonathan, I’m sure it won’t be long before that numbers will turn up again…

  66. Sridhar Yerramreddy

    I strongly believe that Sun is positioned tremendously well especially with the market mindshare..
    I worked my entire career with software companies building solutions on good and not-so-good solutions..
    I strongly believe that Solaris + Glassfish + MySQL is a formidable combination. I cannot see how IBMs and Oracles of the world can even come close to this powerhouse.
    At the end of the day, it is the developer mindshare that builds solutions and not some jazzy marketing or sales material..
    way to go Jonathan… There is no defeat for innovation and mind power strategy.

  67. Joe

    As a long-time shareholder of Sun stock (since 1988), I need to stress the importance of keeping in mind the shareholders of the company when making decisions. I have never received a dividend from owning Sun stock. I have, however, lost substantial equity over the years due to the steady erosion of share price.
    What I am concerned about is each and every time a small profit is made, it seems that employees of Sun are rewarded with generous bonuses while the shareholders continue to see their investment and I might add ownership in the company lose value.
    I guess, one question I have for Jonathan is what is Sun’s objective? Most public companies that goal is to make money for the "owners" of the company and maximize shareholder value.
    I did not see this consistently during Scott McNealy’s tenure and I certainly am not seeing it now. The stock price will never recover until Sun takes tangible steps demonstrated to the investing community that it understands why investors own companies and what our expectations are. I am not looking for a quick buck, I have owned a significant portfolio for over 20 years, but I need to show appreciation and this has not occured.

  68. Shipsmoke

    In the last week or so between 50,000 and 100,000 people are dead or missing in Burma. At least a million more are at serious of disease and starvation and willful neglect by their own government.
    15,000 were killed by the earthquake in Sichuan and estimates are 25,000 are still trapped.
    Some folks on here are very lucky to be able to cry about losing money which they chose to invest. Boo hoo.

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