At 25, Sun struggles to reinvent itself

In a bid to shape its future, Sun Microsystems must look to its past

Developers by the thousands flocked to the International Convention Center in Hyderabad, India last week as Sun Microsystems kicked off the second leg of its world-spanning series of Tech Days conferences. The theme of the event was "shape your future" -- and indeed, no slogan could be more appropriate for Sun, its developers, and its partners.

Sun marks its 25th anniversary this week. To the outside observer, however, there may appear to be little to celebrate. Sun's stock price languishes in the single digits, not even matching its performance of five years ago. Although the company's product portfolio is brimming with innovative technologies, it seems unable capitalize on them. Sun stands poised at one of the most critical moments of its history, yet its ability to shape its own future seems doubtful.

And yet, Sun has been here before.

[See also a Slideshow: "25 years of Sun" | PDF: "Timeline of Sun's achievements"]

Like many Silicon Valley successes, the Sun Microsystems story began with a crazy idea. In an era when "serious" computing was still largely dominated by mainframes, Sun's founders sought to bring cutting-edge technology down from the ivory towers of academia, government, and the mega-corporations and make it available in the form of affordable workstations for midsized businesses.

They weren't alone. The so-called Workstation Wars of the 1980s were bitter. But when the dust finally cleared, Sun emerged as the dominant player, thanks to its secret weapon. Unlike its competitors, which shipped complex proprietary operating systems and networking stacks for their hardware, Sun instead focused on existing, known standards, such as Unix, TCP/IP, and Ethernet, that could easily interoperate with the academic and government networks of the day.

Reduced R&D meant lower prices. While their competitors hoarded homegrown technologies like precious jewels, Sun was practically giving away entire computing solutions (at least, by the standards of the time). And from that crazy idea, Sun grew into a $500 million business in five years.

Today, 25 years after it was founded, Sun's commitment to open standards seems stronger than ever, and it has added a new weapon to its arsenal: open source. Sun CEO Jonathan Schwartz has promised to release the code of the company's entire software portfolio, from the Solaris OS to the Java development platform and beyond. Meanwhile, Sun reps sit on countless standards bodies and work tirelessly to promote open formats, such as OpenDocument.

The IT community ranges from interested to ecstatic. Sun's shareholders, on the other hand, remain less enthusiastic. Naturally their concern is profitability: How do you harvest revenue from your market if you're busy giving away the farm? But when investors point to Sun's former glory of the late 1990s, they ignore the fact that those high-flying days actually coincided with Sun's greatest misstep.

By the time the dot-com bubble burst, Sun had grown addicted to selling big, purple, multi-processor Sparc servers running Sun's proprietary Solaris OS. They were powerful. They were sexy. They were expensive. And, for a time, they were so successful that they allowed Sun to grow complacent and even to forget its own history.

Had Sun stuck to its roots, it might still enjoy the dominant share of the Unix market today. Instead it succumbed to its own early tactics. A new OS appeared -- Linux -- built from scratch but based on open standards. It could only do a portion of what Solaris could do, but it cost nothing and ran on commodity x86 hardware. Meanwhile, the x86 platform itself was evolving and becoming more powerful, to the point that clusters of commodity servers could begin to compete with the fastest supercomputers. While Sun gloated, the value proposition of its hardware was dwindling before its very eyes. The value of its shares wasn't far behind.

Thomas L. Friedman might describe it as another manifestation of the flattening of the world. Over the span of a few years, computing resources once reserved for the elites of Boston became available to their counterparts in Bangalore for next to nothing. How fitting, then, that the first stop on Sun's 2007 world conference tour should be India.

During his keynote in Hyderabad, Sun executive vice president of software Rich Green told the audience, "Open source is the vehicle by which you grow your volume." In other words, teach a man to fish and you build a market for bait. But how is a company as big as Sun to thrive in a market where even the fishing rods are seemingly commoditized?

The answer, of course, is to go back to its roots: open standards and open source wherever possible and raw innovation where it counts. Where it counts, in Sun's case, is the hardware. And what's driving it, as in 1982, is a crazy idea.

The current generation of computers does what it does well -- so much so that the full potential of modern processors is largely unrealized. That's one reason why virtualization is becoming so popular: Customers yearn to double up their server workloads and recapture those unused cycles. But Sun execs foresee a moment when the power of mainstream hardware will reach a critical mass that ushers in a new era of enterprise computing, one that will be every bit as significant as the shift toward commodity computing of the last two decades.

Sun CTO Greg Papadopoulos refers to this moment as the "Redshift." It corresponds to an explosion of what he calls "massive-scale systems." As enterprises begin to realize the full potential of modern processors, he says, supercomputing applications like complex computation, data warehousing, and grid computing will become commonplace. Internet-distributed compute farms will eventually grow large and powerful enough to operate on a global scale, serving applications that are only glimmers in the eyes of today's software engineers.

Crazy? Stranger things have happened in Silicon Valley. Sun is already working hard to cater to the needs of a post-Redshift era. Its latest UltraSparc processors are designed specifically with the kind of multithreaded, parallel-computing applications that Papadopoulos has in mind. More recently, it has broadened its portfolio to include networking hardware, as well.

Still, it's a long road that connects Sun's grand vision with customer realities. It seems likely that a future that includes a Redshift will not be one that comes of its own accord, but one that Sun will have to shape.

There's no doubt that Sun has superior technology. In the real-world IT market, however, superior technology doesn't always win out. (Some of Sun's competitors in the Workstation Wars can testify to that.) But the other card Sun has in its hand, after all, is sheer staying power. And as it marches onward toward its thirties, let's not think of it as a company approaching middle age. Rather, it's simply growing into maturity. As long as it carries on the cause of open source and open standards -- both in name and in spirit -- there will always be a future for it in the market, no matter what its shape.

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