Feeds

So what will happen to Sun?

The new Silicon Valley parlour game

Designing a Defense for Mobile Applications

Comment Silicon Valley has a new parlour game: what's going to happen to Sun after the cuts? Rumours suggest it will merge with EMC, that HP or IBM will take it over, that Fujitsu will buy its hardware business, or even that the StorageTek storage business unit will be spun off. Do Sun's leaders want to be redeemed or to retire?

The company has bit the downsizing bullet and announced up to 6000 job losses following on from a $1.7bn quarterly loss.

Its made its big open storage announcement and there are server announcements coming too. But investors have seemingly discounted these moves as the company's share price is at $3.17 with its market capitalisation at $2.34bn, about the same as its cash pile and so effectively rendering the company worthless. This is lower than the $3.62 stock price before the cuts were announced, and before a raft of technology and product announcements like the open storage one.

Jonathan Schwartz

Investors have seen these announcements and reckoned that nothing substantial has changed in the company's fortunes. The company, led by CEO Jonathan Schwartz (right), has already downsized, is downsizing some more and is still following its strategy of promoting open source system software products and commodity HW-based server and storage sales alongside its higher-priced and proprietary SPARC server business.

It bought StorageTek (high-end and mid-range tape and disk storage products) for around $4bn a few years ago and MySQL (open source database software) for a billion earlier this year. So far neither acquisition has prevented Sun's sales revenue slump. Nor has its open source system software strategy, aimed at developers with consequent hardware and service sales dragged along in their wake. It's a classic product transition problem with revenue from new and lower-priced products not rising fast enough to offset declines in older products.

It's not helped by the indirect way Sun is hoping for new product sales to follow in the wake of developer take-up of its open source products. There is no good indication of how many developers and how much time is needed for such sales, no rule of thumb such as 100,000 developers over two years equals $10,000 of product sales and 200,000 over the same period equals $20,000. Sun simply doesn't know, and like some Las Vegas fruit machine addict keeps on going back to the one-arm bandit with a fresh bag of coins hoping for the jackpot.

It hasn't come yet and investors and analysts are asking what happens if it takes another couple of years or, worse, the sales level now is as good as its going to get and there is no more to come.

The Power of One eBook: Top reasons to choose HP BladeSystem

Next page: Decline and fall

More from The Register

next story
Apple fanbois SCREAM as update BRICKS their Macbook Airs
Ragegasm spills over as firmware upgrade kills machines
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
Attack of the clones: Oracle's latest Red Hat Linux lookalike arrives
Oracle's Linux boss says Larry's Linux isn't just for Oracle apps anymore
THUD! WD plonks down SIX TERABYTE 'consumer NAS' fatboy
Now that's a LOT of porn or pirated movies. Or, you know, other consumer stuff
EU's top data cops to meet Google, Microsoft et al over 'right to be forgotten'
Plan to hammer out 'coherent' guidelines. Good luck chaps!
US judge: YES, cops or feds so can slurp an ENTIRE Gmail account
Crooks don't have folders labelled 'drug records', opines NY beak
Manic malware Mayhem spreads through Linux, FreeBSD web servers
And how Google could cripple infection rate in a second
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.