Sun To Shed Up To 2,500 Jobs In Strategic Move

It has been reported that 1,000 employees are going to be losing their jobs at Sun, with layoffs potentially reaching up to 2,500 employees. The losses are mostly within marketing and sales, and affect the main headquarters as well as the Menlo Park Campus and employees in Colorado. Sun stock is down 6% today to end the week at $9.11, down 64% on its 52-week high of $25.04.

Jonathan Schwartz took over as CEO from Scott McNealy in April of 2004, and has instituted a new philosophy and has attempted to rejuvenate the company. We listened to him speak recently at the Supernova conference, and the concensus amongst those in the audience was that Jonathan had, for the first time as CEO, delivered a concise and clear description of the new strategy at Sun.

His talk was about how Sun leverages open source by allowing its software (such as MySQL and ZFS) to float out and be downloaded for free, from where a small percentage of those users can be converted to customers. So through open source and free, Sun have the benefit of a free lead generation and marketing machine – especially with MySQL which is currently being downloaded over 70,000 times a day. At one point, Schwartz had a map of the world with a highlighted dot for each place where a copy of MySQL or ZFS had been downloaded – and it covered almost the whole world (including islands in the Pacific and Indian oceans). Schwartz pointed out that even though there were users of Sun products in those areas, it was accomplished without requiring Sun sales or Sun marketing in those countries or cities.

With reports that up to 2,500 positions will be made redundant at Sun, with up to 60-70% of marketing and sales to go, Schwartz is definitely practicing what he preaches and is doing away with expensive and traditional enterprise sales and marketing. Instead, he is substituting it with a strategy based on acquiring customers through open source and free.