Sun's Schwartz and his Failsafe moment

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Sun Microsystems is on the ropes. The New York Times says so, the hallway conversation starts and ends with “too bad”, and the wagons appear to be circling around, or rather, behind Jonathan Schwartz, leaving him outside the fort as the gates are closed.

Much of this capitulation to a situation Sun has been in for some time could come from the lessons of this long struggle in our country’s political and economic systems, which have become inextricably intertwined to the point where it apparently matters not at all what either candidate does or proposes. Instead, the public intuition is that change in management is less risky then standing pat.

With all this pressure on Schwartz, perhaps the best way to view the situation is to determine a so-called Failsafe deadline, so described as the point in time beyond which nuclear bombers can not turn back from their missions. In Sun’s case, what difference would a change in leadership make, and at what point?

The technology business is in the throes of a transformation to the so-called cloud computing paradigm. Despite what Oracle’s Ellison has said, Microsoft’s Windows Azure guarantees that at some point in time cloud computing will cross over and accumulate more than 50% of enterprise resource allocation. Calibrating that date will either confirm or undermine the strategies of the major platform vendors.

When Jonathan Schwartz took over the company, Sun was perceived as a major platform vendor with challenges in monetizing its resources. His strategy of marshalling the company’s assets and harnessing the viral nature of open source dynamics has maintained Sun’s relationships with developers, but nowhere has there been the kind of disruptive messaging around the cloud computing paradigm that Schwartz employed to such good effect in marketing Sun in the Web 2.0 phase.

By contrast, even Apple jumped aggressively into the conversation with MobileMe; Google, Amazon, Rackspace, even Dell with a URL grab not only had a message but extended it with price cuts, acquisitions, and social media product announcements. Schwartz, who came to the job with a refreshing understanding of the power of blogging, Web services, and open source, projected confidence that these tools and communities could be intertwined with Sun’s leadership in disruptive hardware design and systems synergy.

The Schwartz version of a Jobsian reality distortion field went this way: If you understand the inevitability of small pieces loosely joined, you can build an interactive swarm-like community that will pool community resources to solve problems before other competitors even start to hear about them from top-down IT hierarchy. This must have been the rationale behind supporting community efforts such as Startup and other Camps. And it certainly was at the heart of the MySQL acquisition, which suggested the use of the open source database vendor as a sales channel through the entrepreneurial radar of the startup community and its open source DNA.

The media questioned where the rubber would meet the road, but as Google, Salesforce, and Facebook gathered incredible momentum and mindshare around Web architectures that spoke to the cool-running data center and virtualization innovations led by Sun, the fact that Sun wasn’t reaping concrete rewards didn’t mean they couldn’t over time.

That’s why Sun’s failure to keep the messaging ahead of the economic crisis is so damaging. Schwartz has always had the full support and partnership of his predecessor Scott McNealy, but the rumors that the board is looking for a replacement speak either to scapegoating or a capitulation to the realities of the marketplace. But why now?

Sun has the money to stay in business, and the portfolio to survive in the marketplace for some time to come. Why, then, is Schwartz’ scalp on the line? Perhaps it’s because, as we’ve seen in recent weeks in the McCain campaign, there’s a line forming to jump ship before the water reaches the band. Certainly the billion-plus loss just reported is enough cover, but more likely the lack of a cloud strategy that makes sense for Sun is at the root of the panic.

What then can Schwartz, or more accurately Sun do to change the dynamics of an increasingly dire situation. For starters, Schwartz has to do what few have done with the cloud computing discussion: answer the hard questions around security, compliance, and identity management with a disruptive view that speaks to Sun’s strengths. Sun has dogs in these hunts, and credibility with communities, particularly the beleaguered financial service which threaten Sun’s survival as they collapse and merge.

Schwartz can draw on a strength we’ve seen little of in recent months or perhaps years, the ability to assess where the marketplace and the conversation can go regardless of where the brass ring may end up. Part of the reason he ascended to the throne at Sun was as a Nixon going to China. Where McNealy baked antipathy for Microsoft into his personal and therefore corporate brand, Schwartz could manage rapprochement via CTO Greg Papadopoulos.

Now Schwartz needs to handicap the cloud wars and decide who the winners will be short, medium, and long term. He’s working with Amazon Web Services, but then so is Microsoft. Google and Apple seem unwilling to forge strategic alliances as App Engine builds out and MobileMe stabilizes without a corporate instantiation. That leaves Microsoft as the wild card with either the most or no chance of exploring mutual interests.

Strange bedfellows, indeed, but what other rabbit does Schwartz have up his sleeve? Either Oracle or IBM would be glad to pick over Sun’s bones and lift Java out of the remains. If Jonathan sits down and ponders Windows Azure, Mesh, and Live Services, does he see the enemy or the emergence of an open cross-platform RIA uber OS that could easily integrate Sun virtualization and middleware to leapfrog enterprise concerns about cloud computing now, as opposed to several years from now when these problems will have been solved through a combination of standards and political restructuring of requirements in the new Washington.

It’s a heady leap, but who better than Schwartz to paint a disruptive picture in a way that takes the pressure off the short term and gives Sun breathing room while other companies have the opportunity to screw up equally well. Schwartz has the opportunity and the bank roll to sell the enterprise on cloud computing across an open landscape not bound by the old political calculations but rather a nonpartisan approach that seems to be driving Obama into the White House. Besides, a decision has to be made before it’s too late to call the bombers home.

  • http://edwink.devhd.com Edwin Khodabakchian

    Steve. If you were the CTO of a company building a new application would you go with Azure, Salesforce.com or Amazon+OpenStack+MySQL?

    • http://cryharderfaggot.com MrCashyCash

      Bring back Vinod.

      • Puffy Imagination

        Bring him back to where. The greenhouse?

  • http://edwink.devhd.com Edwin Khodabakchian

    Steve. If you were the CTO of a company building a new application would you go with Azure, Salesforce.com or Amazon+OpenStack+MySQL?

    • http://cryharderfaggot.com MrCashyCash

      Bring back Vinod.

      • Puffy Imagination

        Bring him back to where. The greenhouse?

  • http://www.thread-pool.com Thread Pool

    The use of out of place political metaphors in this article was hilarious!

    Especially the following snippet:

    “Schwartz has the opportunity and the bank roll to sell the enterprise on cloud computing across an open landscape not bound by the old political calculations but rather a nonpartisan approach that seems to be driving Obama into the White House.”

    Huh?

    • Charlie Saltz

      I think that Steve means “change” — However, to say that what is driving the Messiah into the White House is a “non-partisan approach” is intensely stupid!
      Liberal socialism and “chaange” TO NOWHERE is actually “driving Obama” in his bid for the White House.
      It is like following someone who “looks different” with no track record or experience, coming out of nowhere… to jump off a cliff into “change”
      Of course, the “change” this lunatic is proposing is “wealth spreading,” hyper taxation, loss of individual freedom, a disastrous economy, poverty, civil unrest, and much more…
      Obama MUST NOT get elected to be the next US president!

      • Cameron

        @Charlie
        ““wealth spreading,” hyper taxation, loss of individual freedom, a disastrous economy, poverty, civil unrest” –You just described a socialist country! You are absolutely correct: Obama will “change” our country into an English speaking [not for long] Cuba…

    • Jennifer

      “but rather a nonpartisan approach that seems to be driving Obama into the White House” –MY GOSH… a “nonpartisan approach”???? What is this idiot smoking?

  • http://www.thread-pool.com Thread Pool

    The use of out of place political metaphors in this article was hilarious!

    Especially the following snippet:

    “Schwartz has the opportunity and the bank roll to sell the enterprise on cloud computing across an open landscape not bound by the old political calculations but rather a nonpartisan approach that seems to be driving Obama into the White House.”

    Huh?

    • Charlie Saltz

      I think that Steve means “change” — However, to say that what is driving the Messiah into the White House is a “non-partisan approach” is intensely stupid!
      Liberal socialism and “chaange” TO NOWHERE is actually “driving Obama” in his bid for the White House.
      It is like following someone who “looks different” with no track record or experience, coming out of nowhere… to jump off a cliff into “change”
      Of course, the “change” this lunatic is proposing is “wealth spreading,” hyper taxation, loss of individual freedom, a disastrous economy, poverty, civil unrest, and much more…
      Obama MUST NOT get elected to be the next US president!

      • Cameron

        @Charlie
        ““wealth spreading,” hyper taxation, loss of individual freedom, a disastrous economy, poverty, civil unrest” –You just described a socialist country! You are absolutely correct: Obama will “change” our country into an English speaking [not for long] Cuba…

    • Jennifer

      “but rather a nonpartisan approach that seems to be driving Obama into the White House” –MY GOSH… a “nonpartisan approach”???? What is this idiot smoking?

  • Steve Gillmor

    Edwin

    I’m talking about Sun’s survival here, not what that choice today would be. To answer your question, 3, 2, and then 1.

  • Steve Gillmor

    Edwin

    I’m talking about Sun’s survival here, not what that choice today would be. To answer your question, 3, 2, and then 1.

  • Steve Gillmor

    Thread Pool
    Out of place?

    Hahahahaha.

  • Steve Gillmor

    Thread Pool
    Out of place?

    Hahahahaha.

  • sam

    edwin…

    why the hell would you ask gilmore how to build anything. as far as i can tell, he’s never architected a live app that scales, or has scaled, in his life.

    steve, feel free to correct me if you have!!

    as far as sun’s near term/future prospects, sun has enough in the bank to survive in the short term. in the medium/long term, who knows. a number of sun’s clients where/are in the financial industry which is surely going to retrench somewhat. but i don’t see these guys simply going to the “cloud”!!

    in fact, the “cloud” is simply another spin on the whole hosting/outsourcing of hardware resources that has been going on for awhile.. as a critical business, you’re not going to reply solely on a single point of failure (ie, some single contact with a single outside data center). which isn’t to say that a business can’t/won’t offload non-critical systems in the short term, and maybe look to run more critical apps/systems over time.

    this kind of view would possibly put a pinch on sun, but who knows…

    botttom line, i wouldn’t buy stock in sun anytime soon.. but i also wouldn’t buy goog/msoft either….

    peace

  • sam

    edwin…

    why the hell would you ask gilmore how to build anything. as far as i can tell, he’s never architected a live app that scales, or has scaled, in his life.

    steve, feel free to correct me if you have!!

    as far as sun’s near term/future prospects, sun has enough in the bank to survive in the short term. in the medium/long term, who knows. a number of sun’s clients where/are in the financial industry which is surely going to retrench somewhat. but i don’t see these guys simply going to the “cloud”!!

    in fact, the “cloud” is simply another spin on the whole hosting/outsourcing of hardware resources that has been going on for awhile.. as a critical business, you’re not going to reply solely on a single point of failure (ie, some single contact with a single outside data center). which isn’t to say that a business can’t/won’t offload non-critical systems in the short term, and maybe look to run more critical apps/systems over time.

    this kind of view would possibly put a pinch on sun, but who knows…

    botttom line, i wouldn’t buy stock in sun anytime soon.. but i also wouldn’t buy goog/msoft either….

    peace

  • princetontiger

    Sun will get acquired… it has cash equal to its market cap… and no debt.

    • Puffy Imagination

      Sun is fucking toast. Asian manufacturers are rolling over Sun like a ten ton bulldozer. Java is way past it’s prime. Sun will be bought by HP within 18 months.

  • princetontiger

    Sun will get acquired… it has cash equal to its market cap… and no debt.

    • Puffy Imagination

      Sun is fucking toast. Asian manufacturers are rolling over Sun like a ten ton bulldozer. Java is way past it’s prime. Sun will be bought by HP within 18 months.

  • EH

    Sun just needs to weather this storm. Cloud computing won’t be as attractive once people realize they are infecting their business processes with the reliability and latency of the Internet.

    • http://meanbusiness.com smcnally

      if one-fifth the enterprise systems I’ve used – and developed – had the “reliability and latency of the internet,” I’d thank my stars. As it is, I’ve had more issues accessing less-redundant resources on a LAN or Metro Area Network than I have on “the Internet.”

      A single point of failure database server (even clustered) or impinged local pipe are things with which I’ve had direct experience on multiple occasions. Amazon or Google misbehaving sporadically has happened with far less frequency.

      The massive-redundancy seems only to be improving with time.

  • EH

    Sun just needs to weather this storm. Cloud computing won’t be as attractive once people realize they are infecting their business processes with the reliability and latency of the Internet.

    • http://meanbusiness.com smcnally

      if one-fifth the enterprise systems I’ve used – and developed – had the “reliability and latency of the internet,” I’d thank my stars. As it is, I’ve had more issues accessing less-redundant resources on a LAN or Metro Area Network than I have on “the Internet.”

      A single point of failure database server (even clustered) or impinged local pipe are things with which I’ve had direct experience on multiple occasions. Amazon or Google misbehaving sporadically has happened with far less frequency.

      The massive-redundancy seems only to be improving with time.

  • Marvin Troubles

    It seems there’s only one real issue at stake here, at least as I read Schwartz’s last blog. He has a really big mainframe business architected by the prior administration, and it’s declining. Recognizing the inevitability of that decent, he’s seeding the world with his new platforms so he’s got something to sell the new generation – and that business is growing reasonably well.

    The only question is if the curves cross in time for him to keep his scalp and his BBJ.

    but for all the skewering and ridiculing of the guy, I gotta admit, if I were in his shoes, even with a snappy cloud offering, I’m not sure I could do any better. Other than cut the place to ribbons to buy more time for the growth businesses to eclipse the corroding ones, and writing off anything that isn’t a part of the future.

  • Marvin Troubles

    It seems there’s only one real issue at stake here, at least as I read Schwartz’s last blog. He has a really big mainframe business architected by the prior administration, and it’s declining. Recognizing the inevitability of that decent, he’s seeding the world with his new platforms so he’s got something to sell the new generation – and that business is growing reasonably well.

    The only question is if the curves cross in time for him to keep his scalp and his BBJ.

    but for all the skewering and ridiculing of the guy, I gotta admit, if I were in his shoes, even with a snappy cloud offering, I’m not sure I could do any better. Other than cut the place to ribbons to buy more time for the growth businesses to eclipse the corroding ones, and writing off anything that isn’t a part of the future.

  • princetontiger

    You guys can buy some JAVA shares… you are basically paying cash, and getting the business for free…

    Think of all those billions of dollas destroyed, but now you can own a piece.

    And yes, cloud computing is “bogus”

    • Alan Brown

      Except that that they have $1.26 billion in debt.

  • princetontiger

    You guys can buy some JAVA shares… you are basically paying cash, and getting the business for free…

    Think of all those billions of dollas destroyed, but now you can own a piece.

    And yes, cloud computing is “bogus”

    • Alan Brown

      Except that that they have $1.26 billion in debt.

  • scott

    Sun is great at starting new projects but sucks at completing them. Maybe they should be acquired by a company that is better at creating products than creating technology solutions. Or maybe spin off a startup or two to run with some of their most promising ideas. For example, in the cloud computing space I think they should go with platform as a service approach using their J2EE portal and NetBeans as a hosted IDE. They could provide all of their cloud services within the context of OpenSocial developer communities built on scriptable (JavaScript, JPython, JRuby, etc.) portlets (JSR286/WSRP2.0).

  • scott

    Sun is great at starting new projects but sucks at completing them. Maybe they should be acquired by a company that is better at creating products than creating technology solutions. Or maybe spin off a startup or two to run with some of their most promising ideas. For example, in the cloud computing space I think they should go with platform as a service approach using their J2EE portal and NetBeans as a hosted IDE. They could provide all of their cloud services within the context of OpenSocial developer communities built on scriptable (JavaScript, JPython, JRuby, etc.) portlets (JSR286/WSRP2.0).

  • Uhh

    Sun is so freaking hot!

  • Uhh

    Sun is so freaking hot!

  • http://www.webscalesolutions.com Niraj J

    have you heard about Project Caroline from Sun – http://www.projectcaroline.net

  • http://www.webscalesolutions.com Niraj J

    have you heard about Project Caroline from Sun – http://www.projectcaroline.net

  • Alan Brown

    Sun could be revitalized if it truly decentralized decision making, risk and reward to those with the knowledge needed to properly address their market opportunities.

    Imagine an organization where each employee puts part of his salary at risk in every project he works on, with the rewards based on real world measures like sales and profits associated with the project’s deliverables.

    Imagine each project having shares that employees get as they work on the project, shares they can buy and sell in an internal marketplace. The share prices would tell everybody in the company what people really think about each projects potential.

    If each employee were free to decide which projects to work on in such an environment, the more promising projects would find it easier to get human and financial capital. And the most competent employees would have the easiest time finding a promising project.

    Bad ideas and employees would both have a hard time getting investment in such an environment. And that’s the way it should be. Both would have to get better to survive.

    A revitalized Sun might look more like a collection of startups than the typical enterprise under such an arrangement. And maybe that’s a good thing.

    After all, the real strength of a capitalist society over a centralized economy like the old Soviet Union is its decentralized decision making, with most information reduced to prices and people acting in their own self interest, but in such a way as to benefit the whole overall.

    Most companies are like the old Soviet Union. Apple is, but it has a very strong, high bandwidth dictator. Sun and IBM are more like really soft versions and that’s why they are drifting.

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