Tag Archives: Sun Microsystems

Have Sun Microsystems got the will to survive? New Directors and new vision give them hope

The forever struggling Sun Microsystems is to have an injection of youthful exuberance to help calm the company’s death throes. Two new independent directors have stepped up to the plate, after the companies biggest investor stepped up its involvement in the company.

Sun and investment firm Southern Asset Management have reportedly entered an agreement that will strengthen the board with the two new recruits. The new directors will be given their new desks “as soon as reasonably practicable” according to a Sun press release.

The move comes after talks between the two companies on the ‘real’ value of Sun took place over a month ago. Southern Asset Management are currently Sun’s largest investor, owning 22 percent of the business, with 162 million shares worth $2.1 billion.

Sun recently announced planned redundancies of almost 7,000 of the worldwide workforce (20 percent of its 33,400) as part of a major restructuring that saw the company broken in to bite-sized chunks and spread across separate divisions. The job-cuts followed a $1.677bn net loss for the company’s first quarter, which was blamed on the state of the world’s economy.

Southern Asset Management is a company that is known for investing in struggling companies, that they feel can make money again. The company released a statement on the new board appointments: “With the appointment of two new directors, the recently announced restructuring, over $3bn in cash and a long history of cash generation, we are confident Sun is well positioned for long-term success.”

Whether Southern Asset Management have the ability to turn Suns fortunes around remains to be seen, however with $3 billion in spare cash floating around, they have given Sun a lifeline sorely needed.

Sun’s board currently consists of eleven directors, some of which have been with the company for nearly 30 years. Former CEO Scott McNealy and Jim Barksdale, the ex-president and CEO of Netscape Communication have been with the company since 1982 and 1999 respectively.

Fading Fast: Are Sun Microsystems doomed?

Struggling Sun Microsystems, the server and software innovator, is to make around 6,000 workers redundant next year – a massive 18 percent of the company’s workforce.

Sun’s announcement has come amid a crumbling economy with the resulting impact on the manufacturing and financial industries spreading to the technology industry.

Sun is to re-shuffle its software side of the business and plans to merge other departments together. As part of the tightening of belts, Rich Green, the company’s vice president for software, is set to leave the position he’s had since 2006.

Sun have said that the redundancies will save the company around $800 million a year, starting from the next quarter, however it costs a lot of money to lay-off so many staff, so Sun can expect to incur costs of around $600 million to do so.

Andrew Reichman, a senior analyst at Forrester Research, said: “it’s expensive to lay people off”. He say’s its unfortunate for the company, to “lay off that number of people”, and thinks that, “the severance packages will be for half a year to a year, just based on those numbers”.

Reichman noted that IT is suffering tough times at present, with Sun having a particularly rough time.

Sun reported massive losses compared to a year ago. In the quarter ending June 30th, the company reported a 74 percent loss in earnings from $329 million to $88 million. In the same period in 2007, Sun’s quarterly revenue fell 1.4 percent to $3.78 billion, down from $3.83 billion. Sun reportedly earned $403 billion in the fiscal year ending June 30th, down by almost 15 percent from the previous year.

Sun has struggled to compete with large server and software makers like IBM or Dell, and as Reichman said: “Sun has always competed based on performance – not cost.”

“There’s a lot of competition in the hardware space from vendors who can produce higher volumes at lower costs,” he added.

When it comes to software, Red Hat, a Linux server-software maker, are Sun’s biggest competitors.

“The bulk of the market is moving away from Unix and more towards Linux platforms,” Reichman said. “Sun made Solaris open source, and I think it is still figuring out the best way to demonstrate the value of open source Solaris compared to other options. Sun’s struggling to reinvent itself in a changing economy.”

Reichman believes that Sun has the better products, but lack the know how to bring those technologies to the marketplace effectively. However, rather than form a hardcore sales team, Reichman believes that Sun shouldn’t give up its tradition of innovation.

“The risk with so many layoffs, of course, is they could lose some innovation by letting go of this number of people at a time when they need it the most,” Reichman warned. “This is a key inflection point for Sun, and they need their best and brightest to get back on track.”

Like many other hardware and software companies, Sun have been effected by the credit crisis. The financial sector is siphoning money left, right and centre, and those are the customers of Silicon Valley.

“This isn’t a surprise, but it’s definitely a big deal,” Reichman said. “So far, Silicon Valley has not been hit as hard as Wall Street, but the two are very tightly linked. Companies that are related to banks and financial services are struggling. This is the biggest shockwave to hit the technology sector.”

Sun Microsystems Unveil Autumn Data Storage Line

This week Sun Microsystems, in an effort to give their financial situation a boost, have announced a new line of data storage systems, and the Californian based company hopes that they will establish them in the growing market.

Sun unveiled three “storage appliances”, which they say are industrial strength computers primarily designed for large corporations and other organisations that need to store and retrieve large amounts of data. These storage systems represent the first real use of the company’s open source software with solid state memory drives, as well as the more commonplace rotating disks.

The development and use of solid-state memory is a huge step forwarded for the storage industry, according to Gene Ruth, who is an analyst for the Burton Group, a technology advisory service.

Solid-state drives are quite simply a variation on the “flash” memory that you would find in mobile phones and MP3 players, and give the user more speed and flexibility, not to mention, using far less energy than standard mechanical disk drives. Sun claim that these characteristics, and the use of low-cost components rather than more advanced hardware, means that customers will be able to save money from purchasing the new products.

It is only recently that solid-state drives have used in large storage systems because in the past they were too expensive, and caused technical problems. However, analysts say that because the price of solid-state drives has dropped, and companies like Sun have optimised the software’s performance, they are becoming more popular.

Sun has named the new product line “Amber Road”, and it hopes that they will give the company a bigger foothold in the, now highly competitive, storage market. Estimates say that the market is already worth a huge $40bn in sales.

The traditional disk and tae storage products account for just 17 percent of Sun’s revenue, and the company has struggled to make money over the last few quarters, however, the company has seen one of its product lines, that uses its own open source software, grow significantly in the past year.

“The open-storage line is one of a number of product bright spots for us,” said Executive Vice President John Fowler.

Along with Sun, there are a few other companies that are developing systems that use solid-state technology, including IBM, Dell and EMC. Gene Ruth believes that Sun’s software that maximises its systems technology, will give them the edge over the competition.

John Webster, from the Illuminata consulting group agrees that Suns software “really adds value to the hardware.”

“The potential for the product is very good,” but he warned tat Sun will have a tough battle ahead when its competitors bring out their new products.

Sun Teaching Partners How to Sell

Sun Microsystems aren’t exactly salespeople, but the company is about to tell other people exactly how they can make money.

Today the company will begin to educate the members of its Partner Advantage Program about pre-sales, marketing, systems engineering and architecture – things that are part of Sun’s own training pack.

Partners are set to receive lessons on reference implementations for MySQL Server and web infrastructure, Service Orientated Architectures, identity management, Sun’s Xvm virtualization, the Sun virtual desktop, and open storage. In the meantime, Sun will allow members of its Open Access Program to sell Suns software portfolio to third distributors.

The training for Partners will be highly beneficial, as Sun’s years of experience lie in identity management software, virtual desktop, open storage and virtualization. Sun looks to be centring its focus around reference implementations and on deployment to the web. Sun wants people to suggest more reference implementations while its consulting practice will serve up more implementations based on successful customer engagements.

Service Orientated Architectures is the SeeBeyond code that Sun bought back in 2005 and since open sourced. Neither SeeBeyond nor MySQL has turned into a cash cow for the company.

MySQL was bought by Sun this year and has only a handful of staff in the company’s 40,000 strong employees. The staff are headed up by Marten Mickos, who has said he has been in a lot of meetings with potential Sun customers.

Bill Cate, Sun’s senior director of global channel marketing sad that the company wants partners to succeed, and need to hire “some talented people” like software architects if they want to benefit from the teachings.

The company’s director of software marketing said that Sun’s hardware partners had requested training on how to sell MySQL.