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A Change at Sun: From Exclude to Include. On Jonathan Schwartz as CEO

Jonathan Schwartz is his own man.

He may be similar to Scott McNealy in some respects, but he is certainly not taking the Sun Microsystems CEO job to become Scott McNealy’s puppet (which one reporter asked me).

Jonathan is a risk taker, an iconoclast. Much depends on his choice of chief operating officer. To paraphrase Lou Gerstner, the last thing Sun needs is another visionary. What Sun needs is someone working alongside Jonathan that is capable of relentless, remorseless execution. Frankly Scott McNealy should probably take a back seat, and work on his golf handicap.

McNealy deserves a huge amount of credit for moving upstairs at a time when Sun has already gone through the pain of an end to end product portfolio refresh. It has hot products in some growth areas. Rather than wait until sales kick into high gear, in order to milk the credit, McNealy is offering the opportunity to someone else. People think of Scott as egocentric, but in this case he is the very model of a company man. Providing he keeps his hands off the tiller this looks like a potentially model corporate handover. McNealy didn’t bail when the ship was becalmed; he waited until it had a light breeze in the sails.

An immediate share price lift was a pretty clear indicator of how a change at the helm of Sun is perceived by investors. Investors are an important constituency – with a low share price everyone asks whether Sun can survive, whether it will be acquired, whether or not it can sustain R&D investments. So if investors are more positive it helps Sun across the board-especially in perceptions of stability and its ability to make acquisitions. .

To bring the investor argument full circle McNealy also deserves credit for ignoring the investor community about cutting tens of thousands of jobs for its own sake. Please shut up Goldman Sachs.

McNealy evidently wanted to keep the people he hired in jobs, because they are good people, which is pretty unusual for a Fortune 500 company today and something to be rightly proud of. His long term perspective on the industry, and willingness to focus on human capital, rather than just addressing short-term interests, shows a surprisingly communitarian philosophy at work. Who would have guessed he was a left winger…

It could be that Jonathan, who actually does have a somewhat leftish tendency, now takes some tough decisions McNealy avoided. Ironic. There are plenty of similarities between the outgoing and incoming CEOs at Sun Microsystems, so I wanted to think about what the differences might be, and what that would mean for customers.

It seems to me that that one of the key differences in philosophy is in the question: how to approach Us vs Them?

Scott McNealy constantly defined himself, and his company, in opposition to other vendors.

"We’re not Microsoft".

"We’re not IBM Global Services, Its mankind against IGS".

But sometimes a more positive, less confrontational message is required in technology, go to market strategy, and marketing. Even very recently – at a time when Sun was supposedly finally playing nice with Microsoft- McNealy’s jibes against the Redmond giant continued. Customers would never have guessed that Sun offers technology and services for managing Windows environments if you listened to the CEO.

McNealy’s public statements set the tone for the company, sometimes making it seem weak in areas where it was strong, and vice-versa. Management by antipathy transmitted itself into the corporate culture. Sun though now has an opportunity to take a deep breath and redefine itself, in some important areas, as a more inclusive, more mature industry player.

Sun’s services business has been an Achilles heel for the company. Sun can now hopefully establish a more coherent message. Services capability is not an optional extra for enterprises in need of transformative approaches.

Sun could reach out to the StorageTek installed base, with a more nuanced message about the role of the mainframe in enterprise architectures. Scott was never able to accept that mainframes still have a role to play. But these shops are still mainframe customers for a reason.

Sun might also now choose to take some aggressive actions around Java. While Java is an important part of the enterprise landscape, it is not the be all and end all. Far from it. There is a lot of great intellectual property, and creativity in its personnel, that Sun could free up with stronger messaging for the "post Java, post McNealy era". Java isn’t dead, but it’s not the new new thing either. Sun could position itself as the company that can help enterprises get ready for Web 2.0… [hat tip to Vinnie]

Imagine how much more effective Tim Bray would be as an evangelist if he didn’t have to start every conversation with an apology or explanation?

Scott had a whole layer of people who would come to you after another of his pronouncements to explain "what he really meant". Privacy… say no more.

McNealy seemingly always wanted to exclude someone from the market, from the conversation. Its us against them.

But Schwartz is all about lowering the barriers to participation. Come join!

McNealy it seems to me, is ultimately a product of California Uber Alles thinking, one of the cadre of executives that evidently believe the rest of the world will fall into line with the US West Coast. The only real innovation happens in the USA. The only real innovation happens at Stanford… But the global economy is not a clone of California, Starbucks notwithstanding.

When the boat nearly sunk, Europe bailedl it out. Why replace Sun products partly for fashion reasons? Europeans are far less likely to throw out IT infrastructures because of what the chatterati are saying. That is what the aggressive conservatives at the major financial institutions on the US Eastern seaboard do…

Jonathan Schwartz has a chance to establish Sun as a more international player with a less parochial outlook. There is a world outside Silicon Valley, with real innovation, smart people and substantive market differences. Sun should help them to participate in its economic networks… and benefit in the process. Thus for example, two of Sun’s most important markets are Brazil and the Czech Republic, where the firm has had significant success both winning deals and investing in local open source development. That approach could be a model for future success.

As I argued above Sun definitely needs to find an execution maniac as his number two. Someone that lives breathes and sleeps operations and can work on a global scale. Maybe Sun could hire somone from GE?

One final concern  is Scott’s McNealy’s decision to remain as chairman. Will he be able to keep his hands off the helm? "Chief evangelist" seems to give him a lot of wiggle to make unhelpful public statements. It might have been better to make a completely clean break. The jury is therefore still out. We will know a lot more in the next 90 days as Jonathan Schwartz puts his stamp more firmly on the company.

Like I said, he is his own man.

Categories: Uncategorized.

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4 Responses

  1. Great stuff James. Not much we disagree with here at MWD (as Neil and I discuss here: http://mwd.libsyn.com/index.php?post_id=83955#). One point though: Schwartz has said he is not going to have a COO (http://news.com.com/McNealy+steps+down+at+Sun/2100-1014_3-6064499.html?tag=nl) which includes the following

    “Schwartz now is CEO and president, and the chief operating officer role has been phased out. “I have no intention of having a COO,” Schwartz said in an interview.”

    Cheers

    Neil

  2. And his try-and-buy free server idea was a real winner. I had ignored Solaris for years, but now I’m hooked again:
    http://blogs.sun.com/roller/page/jonathan?entry=niagara_benchmarks

    (And, as Tim Bray says, bloggers are taking over the world :)

  3. JS needs to sort out his disposition to Linux. Along your line of thinking, it need to be concieved and expressed in positive terms and omit the work ‘kill’.

  4. neil: thanks for the clarification i missed that…. i guess michael leman will play a somewhat operational role…

    richard: yes, solaris is back. i am at a MS event and i was impressed to see that they took the questoin seriouslyt when someone asked if MS would support Solaris in the virtual services.

    Sam: good good point. Linux is a fact of life.



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