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Ex-Sun CEO Warns Oracle of Death By Open Source 408

gearystwatcher writes "Former Sun CEO Scott McNealy talks to The Reg on where things went wrong, and acquisition by Oracle: 'We probably got a little too aggressive near the end and probably open sourced too much and tried too hard to appease the community and tried too hard to share,' McNealy said. 'You gotta take care of your shareholders or you end up very vulnerable like we got. We were a wonderful acquisition — we got stolen for a song at the bottom of the Dow.'"
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Ex-Sun CEO Warns Oracle of Death By Open Source

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  • by dkleinsc ( 563838 ) on Wednesday December 08, 2010 @09:21AM (#34485406) Homepage

    Sun's biggest problem was that its various flagship products were out-competed or unprofitable. On the high end hardware, IBM could build better mainframes. On the lower end hardware, Dell could build cheaper workstations and servers. On their Unix, Linux became as good as or better than Solaris. And Java, while nifty, had no way of turning a profit.

    By open-sourcing its software offerings, Sun ensured that while its business was screwed, its legacy lives on.

  • Re:Ayn Rand? (Score:5, Interesting)

    by dkleinsc ( 563838 ) on Wednesday December 08, 2010 @09:27AM (#34485444) Homepage

    That's hardly news, and McNealy is far from the most powerful guy who loves Ayn Rand. For instance, former Fed Chairman Alan Greenspan was a big fan of her as well.

    The reason, I think, is that Ayn Rand's philosophy is that people become rich and powerful because they're better and more valuable people than those who don't. Compare that to, say, Karl Marx, who would argue that people become rich and powerful because they're scum-sucking leeches who like to steal from everybody else. Now, if you're rich and powerful, which philosophy would make you feel better about yourself and what you did to get to where you are?

  • Re:Blame the summary (Score:5, Interesting)

    by Migala77 ( 1179151 ) on Wednesday December 08, 2010 @09:27AM (#34485452)

    Right, the only mistake Sun did was open-source too much. Like all the closed shop were doing wonderfully well too.

    The summary is incomplete. Somewhere else in the interview he mentions that one of his regrets is not open sourcing Solaris earlier, claiming it was better than, and could have beaten Linux. His point is that they didn't have a good business model and didn't make enough money from the open source, but he also clearly still believes open source can be profitable, and open source was the right direction for Sun.

  • by 140Mandak262Jamuna ( 970587 ) on Wednesday December 08, 2010 @09:32AM (#34485488) Journal
    When Microsoft was chewing into the market share of Sun's unix workstation, it fought a short sighted battle. OS vs OS. Server vs Server. But Microsoft had an unending money supply through its monopoly in the MS-Office franchise. Microsoft could simply wait it out in a slugfest. Then Linux got ported into intel. The server market was being chewed on both ends and it simply did not have any viable options left. He is just looking for scape goats in the form of open source and the community. It realized it very late and tried to use StarOffice but never had the strategic vision to use it effectively.

    Google is doing it right. Its google-docs does not do much, in terms of bells and whistles it pales when compared to Ms-Office. But it is well positioned based on a simple truth. 90% of the people need only 10% of the features of full fledged Ms-Office. Give that 10% free and effectively deny Ms-Office the mind-share of 90% of the people. Force Microsoft to interoperate with a significant part of this 90%. Give customers of Microsoft some ammunition in price negotiation. Anything that will make Microsoft play defense in the Office arena, is the resource it can not spend in fighting Google. It is ably helped by Microsoft that has promoted to leading positions people who won the corporate desktop market. Like Civil War generals fighting the war using Napoleonic tactics against machine guns, or the WW-I generals fighting that war using Civil War lessons, the management of Microsoft is fighting the consumer market war using corporate desktop war tactics.

    Coming back to Sun, it was effectively done in by amortization. The cost of development and research of intel chips was spread over so many more customers compared to the sparc chips. The same way cost of development of Windows was spread over a much larger number of customers. When there is an order of magnitude difference between you and your competitor in terms of potential for amortization of cost of R&D, you should have the vision to react early and react decisively. For all the high salaries paid to these MBA types, they did not see it coming.

    I'll grant you I am Monday-morning-quarter-backing. But I not getting Sunday-after-noon-quarterbacking salaries either. Scott McNealy got paid to see this coming. He failed. Miserably.

  • It seemed to me that Java was one of Sun's biggest problems. Sun managed Java badly, and that bad management was very bad public relations.
  • Commoditization (Score:5, Interesting)

    by antifoidulus ( 807088 ) on Wednesday December 08, 2010 @09:43AM (#34485594) Homepage Journal
    Sun succumbed to the same thing that felled SGI, namely the boom in commodity computing. Sun made some really great products, the problem was that they also that made products that were really expensive. Back in the day when the difference between the high end and commodity was significant enough that a lot of companies were willing to shell out the money for the primo shit. However so called "commodity" computing(both hardware and software) has eventually caught up and a lot of companies could no longer rationalize the difference between Sun's stuff and the much cheaper products.

    For instance 2 years ago we were looking for a new RAID and were considering Sun's ZFS storage appliance but the $10k for 2 tb was just waaaay to much money for the tiny extra bit of redundancy we could get. It was cheaper to just buy a much bigger raid, split it in 2, and do an rsync. Not the greatest situation in the world, but ultimately it saves a lot of money. Sun just could not compete for anything but a relatively tiny niche market while having massive amounts of capital tied up in labor and facilities.
  • by Doc Ruby ( 173196 ) on Wednesday December 08, 2010 @09:55AM (#34485698) Homepage Journal

    Red Hat does quite well giving away its open source OS and apps as fast as it can. That's not what devalued Sun.

    What devalued Sun was that its CEO, McNealy, was unable to run such a company. He kept proprietary products like Solaris propped up for years longer than they had a market among competitors like Windows and Linux, even as primary competitor IBM deprecated its proprietary OSes to embrace them both. Then McNealy punted on Solaris, opening its source only when there was no demand for it. Sun's Solaris business didn't get taken by competitors copying Solaris' source or anything like that. In fact, opening the source kept it going for years, even if it was too little, too late to save it. Especially with the CEO failing to actually embrace open source, but rather seeing it as a dumping ground for nonproductive assets instead of a hothouse to grow those assets into productive centers to be monetized.

    McNealy is like any failed CEO whose failure was trying to control something better developed by letting it go more: blame the "liberals" ("liberal" means "free from control"). If McNealy can blame open source for his own failures, he might find new income from the many other incompetent businesses that need a scapegoat like open source to hide their own failures. And in today's corporate world, especially America's, there is no higher demand for anything than for a scapegoat.

  • Re:Blame open-source (Score:5, Interesting)

    by thomst ( 1640045 ) on Wednesday December 08, 2010 @09:57AM (#34485712) Homepage

    The mistake they made was that they forgot (or didn't know how) to monetize the open source solutions they had.

    Absolutely wrong.

    The mistake McNealy made was in refusing to adapt Sun's business model of selling ridiculously-overpriced proprietary hardware with obscene profit margins in an increasingly-commodotized, increasingly-Intel/AMD CISC-centered marketplace for far longer than was sustainable. It's the classic Wang/DEC/WordPerfect business model error - stick your fingers in your ears, squeeze your eyelids shut, and go "Nah, nah, nah, nah, nah!" at the top of your voice, and just keep on keepin' on, while the dominant paradigm shifts around you.

  • Re:Blame the summary (Score:5, Interesting)

    by Doc Ruby ( 173196 ) on Wednesday December 08, 2010 @10:05AM (#34485772) Homepage Journal

    So when he said "We probably got a little too aggressive near the end and probably open sourced too much and tried too hard to appease the community and tried too hard to share" he was just lying like a weasel, as his contradictory hindsight also says he should have done more of what he did "too much".

    Open source wasn't the problem, as he freely admits. Doing it too late was the problem. By the time it was "near the end" it was too late to "take care of the shareholders" by doing anything different. Open source was the only thing keeping Sun relevant near the end, and therefore the only thing taking care of the shareholders.

    McNealy screwed up, as everyone watching Solaris sink could tell. He should have opened the Solaris source, ported it to Java running on every CPU but optimized for highest speed on Sparc - and then maybe Xeon. Should have made Java applets actually work on every CPU/OS/browser, the way Adobe did Flash, and bought Macromedia instead of Adobe getting it - or just competing with it. So many things he could have done if he'd managed for the 2000s instead of the early 1990s. Now he's just a whiner whose day is long gone.

  • by Moraelin ( 679338 ) on Wednesday December 08, 2010 @10:07AM (#34485778) Journal

    I don't think it's even about rich or non-rich. What Ayn Rand does isn't as much a defense of being rich, as a defense of psychopathy and of not giving a damn about the others or their well being.

    And while in her writing she does somewhat tone it down, in her diary she was going all fangirl over people like William Edward Hickman. That was her ideal of superman and she loved a quote from him saying "what is good for me is right."

    Just to make it clear, what William Edward Hickman was famous for was kidnapping a schoolgirl and mailing her father taunting ransom notes signed with names like "Fate" or "Death". Then when the father came with the money, and thought he saw his girl sleeping in the abductor's car, she got thrown out of the car... dead. Hickman had cut off her limbs -- by his own testimony, _alive_, as the blood was coming out in small spurts, i.e., the heart was still beating -- hollowed out her torso and strewn her inner organs all over town. Actually living out an earlier fantasy he had told a former accomplice about, to take someone apart and chuck bits of them all over town.

    Ayn Rand thought Hickman was some kind of dashing romantic adventurer whose only "crime" was rejecting the unreasonable conformism of society. (Like, you know, not taking live children apart.) She pretty much foamed at the mouth against those boring sheeples who dared so self-righteously criticize her hero. A bit later she blames society for basically not offering him anything better to do than gut and dismember a little girl. I mean what was the poor guy supposed to do? Get a boring job and a boring wife and all that? No, really. That's her justification for Hickman.

    And really, that's what her writing is about. Even the economic angle is Bullshit with a capital B. I mean, her utopia needs an infinite free energy source to even function. But she manages to do a heck of a job in lionizing the psychopaths who doesn't give a damn about anyone else, and calling those "statists" and "collectivists" names, and fantasizing about their destruction.

    Now consider that a large number of those at the top _are_ psychopaths. See, for example: Is Your Boss A Psychopaths? [fastcompany.com]

    If you were one, wouldn't you just _love_ a philosophy that says it's just normal to not give a damn about anyone else, and that it's an _objective_ (or Objectivist) fact that it's all about caring for number one?

  • by spydum ( 828400 ) on Wednesday December 08, 2010 @10:12AM (#34485840)

    I think this is best demonstrated by BEA/Oracle JRockit. Nobody every bought JRockit as a stand alone replacement for HotSpot. It pretty much only used when packaged with BEA/Oracle Weblogic. Doesn't matter that it had some really cool hooks into Mission Control, and JMX extensions (which java eventually caught up to).

  • IBM's success with Java pretty much proves that it was Sun's management of java rather than Java itself that was the problem. On the same note, IBM's success with Linux pretty much proves that McNealey's whole rant makes little sense.
  • by fuzzyfuzzyfungus ( 1223518 ) on Wednesday December 08, 2010 @10:22AM (#34485960) Journal
    Obviously I'm not Sun's ex-CEO; but in watching Sun over time, their problem seemed to be less with OSS and more with a complete lack of any clue as to how OSS fit in with their strategy.

    Clearly, you can't run a business with expenses and shareholders and stuff on puppies and altruism; but there are a good number of circumstances where investments in OSS fit within a larger profit-making strategy(generally when your core business is hardware or consulting, or where you are trying to spike a competitor's profitable software business so that they can't use the profits from it to crush you in your profit center).

    Sun, on the other hand, kind of tacked back and forth with no clear direction. One day, it'd be "Java will be open, to encourage even more mass adoption, and pricey SPARC gear will be the premiere architecture upon which to run JVMs!" The next day, "Thanks to OpenSolaris, our superior Solaris technology will roxxor your linux, even on commodity intel silicon, thus totally gutting our SPARC line that we were enthusiastic about yesterday!".

    It could also be that, when you come right down to it, OSS is mostly a nonissue in Sun's declining fortunes. The moment AMD introduced 64-bit X86 extensions to save themselves from Intel's IA64 squeeze plan, most of the remaining "custom UNIX on fancy architecture" vendors cried out in terror and were slowly suffocated. SGI was gutted and sold, Sun twisted around for a while and was gutted and sold, IBM remains strong in mainframes and consulting; but their x86s are nothing special and POWER is pretty niche(the workstations are dead, some servers still survive).

    Had Sun been less OSS friendly, they quite possibly could have wound down their operations into a smallish but profitable legacy/consulting/niche hardware outfit, rather than being sold off; but their real problem(and that of companies in a similar position) seems to have been Intel's massive capacity to fab cheap AMD64 chips on a very aggressive schedule, along with the existence of a "good enough and really cheap, unixlike OS". Even Chipzilla's own precious IA64 has been largely murdered by this development, and that is Intel's own baby...

    Sun might have extracted a bit more value had they realized earlier that marketshare may not be worth the price and done some gouging while they still could; but I'm not sure that minor changes vs. OSS could really have saved them...
  • by PORNorART ( 1949708 ) on Wednesday December 08, 2010 @10:38AM (#34486270) Homepage

    "Those "valuable assets" of the business are now worth nothing, better free alternatives exist."

    I use and like linux and I'm not trying to bash it but I like Solaris a lot more expecially since Solaris 10. In my tests it was faster and easier to manage for the things I needed to do and had features that helped it be that way before linux was able to catch up and in some areas, even so many years later the catch up features aren't quite there yet in linux.

    I'm going to miss OpenSolaris (and still am uncertain about the forks) but Solaris offers a lot of value in the data center.

    McNeally admits they made a big misstep when they partnered with AT&T for SRV4 and had to go closed source. He thinks that if Solaris kept with BSD only and didn't spaz on their x86 version there might not have been a Linux.

    I think he's right but I also think he might be remembering things a bit incorrectly.

  • by erroneus ( 253617 ) on Wednesday December 08, 2010 @10:53AM (#34486506) Homepage

    True that. It is hard for me to imagine a world where people would have jumped onto that bandwagon if it weren't free. Well, actually, yes I can. Sun needed a strategic partner from the earliest stages to adopt and build with Java some amazing products. (And give it to them free at the time, and at a price for everyone else.) And once one or more killer apps gained traction, others would naturally follow. I think Sun depended too heavily on the draw of "free" as a substitute for good marketing. Free is good in small doses. Free is also good if you already have a product that requires its use.

    Another thing is that the JVM and the Java language are rather closely related. While I am pretty sure there are compilers that will compile other languages into Java byte code, I suspect it isn't done all that frequently. This places a burden on everyone to "port" their code to run on the JVM rather than just compile existing code to run there. I am sure someone will point out that I don't know what I am talking about -- I don't exactly. This is just based on the outside of what I know. I know that I haven't heard anything about people running anything other than Java programs on a JVM even though I can easily imagine otherwise.

  • by interval1066 ( 668936 ) on Wednesday December 08, 2010 @11:35AM (#34487278) Homepage Journal
    Hah, McNealey's blaming FOSS for his own management shortcomings. The bad thing is people not in the industry (not in IT and more in Financials) will read this crap and come to the conclusion that FOSS == BAD for Business. I think its more a case of McNealy == BAD for business.
  • by ultranova ( 717540 ) on Wednesday December 08, 2010 @11:35AM (#34487292)

    The real problem with Java is that it allows some really crappy programs to actually work vs c where they would have long ago self destructed.

    Java has three huge problems:

    1. Garbage collection interacts very badly with swap. Once your Java program starts hitting the disk, it will stand still for minutes. Bigger memory sizes are solving this problem nowadays.
    2. Possibly relating to the above, Sun's JVM requires you to pass startup parameters that determine the maximum memory the program will be allowed to use. The defaults are too small for almost anything. As an icing of the cake, Sun's JVM also makes use of several different areas of memory, all requiring their own parameter, thus recreating the DOS experience with loving attention to detail. Who woulda guessed where Solaris developers hearts really lay ;).
    3. The Java class library is huge, complicated and odd. This is especially true of Swing, which has an Image class that supports several different colorspaces (and is just as efficient as that implies), yet lacks such newfangled things as OpenGL support.
  • by SplashMyBandit ( 1543257 ) on Wednesday December 08, 2010 @03:14PM (#34491056)

    Absolutely true. Wish I had mod points but I've already blown them.

    We tried to buy a little rack-mount server from Sun. The specs were great and the price awesome compared to its competitors. However, we needed it *now*. There was no on-line ordering process and since we were only ordering a single server we were a low priority. Sun insisted we go through one of their sales guys, but he took three days to get back to us. Too late, we bought a little Mac Mini instead and got it the same day.

    I think Sun thought that you would have a 'better experience' being attended to by one of their sales muppets. I'm sure the sales department was all for this (easier to get bonuses, since the sales guys would miss them for online sales). However, everyone else was removing people from the ordering process since it is so much more efficient if you know what you want (and tech folk know what they want - they often have better product knowledge than salesmen).

    Sun's demise wasn't anything due to Open Sourcing stuff. If anything, this made them relevant for longer (despite the spin other proprietary companies and journalists would like to put on it). They died cause they lacked sales. They lacked sales because buying their nice products was quite difficult relative to buying similar stuff from their competitors. I hope decision-makers learn from that (seems like they don't read Slashdot though).

  • by Moraelin ( 679338 ) on Wednesday December 08, 2010 @04:04PM (#34491852) Journal

    Instead of arguing the idea, find something about the person in their freakin diary and then argue that. This is what passes for debate these days.

    Except for the part where it's actually relevant to what she wrote. When we have a chick who lionized sociopaths in her novels, made rape a sort of declaration of love in The Fountainhead ("had she meant less to him, he would not have
    taken her as he did; had he meant less to her, she would not have fought so desperately
    ") in spite of her own describing the victim as in terror and pain between the reassurances that that's really what she wanted, made a whole pseudo-intellectual philosophy in defense of psychopathy, gave interviews in which she railed against any kind of altruism or conformity to social norms, and modelled at least one character after Hickman... maybe her rabid fascination with psychopaths is actually relevant. I mean, we're not talking the relevance of her favourite dish or brand of car to Objectivism, but that the chick preaching why you shouldn't give a damn about other's needs... actually went as far as their need to live in her views. Maybe, just maybe, it's all part of the same picture.

    If everyone looked out for the interests of themselves and their family properly and as their first priority, then society would be left with the truly needy that need charity. Charity would be more than able to take care of their needs. Her point is that need can be manufactured, learned, and lied about, thus the basis for forcing one person to support another because of this need is unjust.

    My mother can give me all her money, and now she can pass the "poor and needy test". She is now declared needy and society must care for her.

    My neighbor can choose to watch American Idol and every other piece of garbage on TV all night while I study, read and improve myself. When they get fired for incompetence they are now needy. That need was a result of choosing not to improve. He is now declared needy and society must care for him.

    My other neighbor can be on unemployment and paid for over a year and never look for a job, while I work 16 hours days in fear of being fired. He has been declared needy and society must care for him.

    Except that's what got me to dub Objectivism a cult of sociopathy before even knowing about Rand's fascination with murderers. It's that inability to conceive or discuss anyone else's problem than as some elaborate scam to rob them of their preciouss money. That old lady with a crap pension must be somehow hiding her money somewhere and only faking it. That guy fired in a downturn must have been just a leech anyway. That guy unemployed for a year -- never mind that a certain unemployment level is actually wanted and part of / tied to regulating inflation, via the Philips curve [wikipedia.org] -- must be not even looking for a job. Never mind that he wouldn't be even counting as unemployed if he didn't.

    Out of three people, you counted three who are just some kind of leeches and parasites, and at least two being scammers too. That's the kind of thing I'm talking about. That someone could actually have a problem, or really any kind of empathy, doesn't even get a passing nod as a possibility.

    That or some kind of extreme scenario, where the Objectivist jumps to some fictive totalitarian state where giving to all beggars is mandatory, and the Altruism Gestapo can kick their door in for not buying milk for the neighbour's kid. If a talk to an Objectivist doesn't degenerate in the above list of parasites conspiring to scam him of his money via the state, it degenerates in such a black and white situation where there are no shades in between not giving a fuck and being legally forced to give more fuck than they possibly can.

    The more normal modi operandi of an actual human society or community don't seem to even register as possibly existing anywhere.

  • by Mongoose Disciple ( 722373 ) on Wednesday December 08, 2010 @05:37PM (#34493280)

    Out of three people, you counted three who are just some kind of leeches and parasites, and at least two being scammers too. That's the kind of thing I'm talking about. That someone could actually have a problem, or really any kind of empathy, doesn't even get a passing nod as a possibility.


    The intelligent response to leeches, parasites, and loophole-exploiters is to reform the system to eliminate them, as best you can. You'll never get it to be 100% but you can almost always get it to be closer.

    The Rand (as viewed in her novels, at least) take is to instead assume that if there can be even one leech, parasite, or loophole-exploiter, everyone who benefits from the system must be one and the whole thing has to be thrown out with the bathwater.

    This kind of thinking isn't uncommon in modern America, and people can be very good at ignoring their friends and family when applying it. A few weeks ago at a dinner with some friends, one of the friends' fathers was present and spouting a very stereotypically Randian rant about leeches living off the system. The dude was living on freaking government disability and had Medicare! It never occured to him for a second that maybe, the other people taking government help might be more like him and less like the sloth-demons of his imagination.

  • by hey! ( 33014 ) on Wednesday December 08, 2010 @05:42PM (#34493358) Homepage Journal

    The interesting question that is begged is, what makes being focussed on self-interest and not valuing others "bad?" What makes being selfless and giving to others "good?"

    This is kind of a strawman version of thousands of years of philosophical thinking about ethics. Objectivist ethics is not particularly well informed about the ideas it criticizes or is based upon. It is supposedly founded *axiomatically* on two propositions: (1) Existence exists and (2) selfishness is good. Proponents of this position simply assert that people who disagree with them about something like economic policy deny their own existence, without actually providing any justification for that assertion. Of course there is no such proof. There couldn't be any rigorous proof of anything interesting drawn from such a weak set of axioms. The credibility of the assertion comes from elsewhere.

    We tend to agree that those are "good" and "bad" things in general, but what are the root criteria that we are basing that on?

    Well, let's go back to the thinker who created the field of "Ethics", even coining the name. Aristotle. In Nicomachean Ethics Aristotle introduces the concept of "eudaimonia" -- literally "good spirit", often translated as "happiness" or "flourishing". What he means, I think, is a desirable, rewarding life; one that a thinking person can enjoy and feel satisfaction living. That's not simple ethical egoism, which says that morality is pursuing one's own happiness exclusively, because that *really* begs the question of whether such a program is feasible. Aristotle realizes that human nature and society are complex things, and that the pursuit of personal happiness requires a balance between satisfying personal desires and disciplining them.

    Let's bring this back to the issue of CEOs and their philosophical views for a moment. One of the attractions of Nietzsche and Rand is that they give you a ready justification for your successes, to wit: I am a superman and deserve my wealth and status. They also provide you with an excuse for your failures: slave morality / collectivism is restraining my genius. This is not to say that really superior men are *never* held back by hordes of collectivists. Of course that happens. But for the vast majority of us, even CEOs, the question of whether collectivism is restraining our superhuman genius really does beg the question: are we really that much of a genius that this is the best explanation for our disappointments?

    And that I think is the crux of any *practical* ethical philosophy: how to reconcile our desires and disappointments with our actions. Life is full of disappointments, no matter how superior you may be. If you're a CEO, eventually the company you run will fail. The splashy actions you take today will eventually spread out into an imperceptible ripple in economic history. Nobody really wins immortal glory, nor does anybody get to enjoy the slender slice of posthumous glory they might earn.

    A satisfying life must be built in the here and now, with the tasks at hand, and most importantly the people around us. Finding satisfaction in the welfare of those around us may have no rigorously *formal* support in some axiomatic model of how the world should be. It just works. I have yet to see any philosophy which easily generates self-serving excuses for its adherents disappointments lead to any kind of life *I'd* want to lead, but your mileage may vary.

The party adjourned to a hot tub, yes. Fully clothed, I might add. -- IBM employee, testifying in California State Supreme Court