Former Sun exec eviscerates McNealy

A former Sun Microsystems executive has dug into Sun Microsystems's leadership with an unrelenting critique of both CEO Scott McNealy and President Jonathan Schwartz.

Retired server chief John Shoemaker let loose on Sun management in a piece written for Indiana University's business school magazine Business Horizons. The lengthy Sun attack regurgitates many of the complaints put forth by Wall Street over the years, including criticism of Sun's reluctance to cut costs by firing thousands of staff. Shoemaker, however, is the highest ranking former executive to insist that Sun needs to oust McNealy moving forward.

"Key executives at Sun met our greatest challenge when we were unable to convince our top decision maker to take quick action to implement a massive headcount reduction," Shoemaker wrote. "In the fall of 2000, Silicon Valley experienced the greatest number of layoffs in its history. While other large technology firms like Cisco and Intel bit the bullet to save what they had and to protect the investments of shareholders, Sun's reduction-in-force actions were too little, too late."

Later, he adds,"In spite of all that has happened, I still believe Sun Microsystems has been extremely fortunate in having one of the best and brightest cadres of employee talent anywhere. However, the bottom line is that it's all about quality leadership. Perhaps there will still come a time when the leadership problem at Sun will be effectively and decisively addressed."

Much of Shoemaker's argument against McNealy centers around the size of the workforce. While being a painful move, Sun should have fired a lot of workers as soon as it gauged the scope of the downturn, the former exec said. In so doing, Sun would be in better position today and more able to serve existing employees and investors. Sun's management has long maintained that axing staff will not help it turnaround the company in the long-term.

Shoemaker presents some rather sweeping statements throughout the article. For example, he declares at one point that, "SPARC was never competitive," even though the chip powered a multi-billion dollar business for Sun. Later, however, Shoemaker clarifies this point by saying that a single SPARC processor did not perform well against other chips but that SPARC servers as a whole did compete well against gear from IBM, HP and Dell.

The former server chief is also quick to chide Sun management for not mimicking other companies during the downturn, despite noting that the bust was a unique situation at Sun.

"Due to Sun's dramatic success winning Internet based applications, the downturn hit us much harder than our competitors who had not been growing as rapidly and had a stable long-term base of traditional customers," he wrote. "For example, we lost 30,000 servers at Exodus alone. Thousands of Sun's new system units were suddenly being sold at fire sale prices on the gray market."

A similar situation occurred after the bust when customers moved to more powerful Linux on Intel servers that could handle many tasks by being grouped together to replicate the performance of larger, more expensive Sun servers.

"In a flash, this small-box market went from a $2 billion (at most) add-on business to being the major ball game," Shoemaker wrote. "Up to this point, all of Sun's R&D focus and inherent competitive advantage was in big systems and the vertical enterprise systems business."

Shoemaker doesn't disclose how he advised management during these times despite being in charge of Sun's largest business. Instead, he turns all of the failings back on McNealy and Schwartz.

"You have to hand it to leaders, such as Steve Jobs at Apple and John Chambers at Cisco, who acted fast and made the tough decisions to turn the negative technology outlook into a positive competitive position for their companies," he wrote. "The lack of like decisions at Sun led to a major impact on morale, a loss of competitiveness, and a brain drain."

And then Shoemaker closes out by growing nostalgic for former COO and Prez Ed Zander who left Sun and took the CEO post at Motorola.

"I look at Motorola's rising stock price and can't help but think of what might have been for Sun. When Ed left Sun, an already low morale hit bottom. Sun lost an opportunity to go outside the company and bring in a proven, senior, high-profile replacement for Ed. Instead, they brought in a junior, unproven, internal person to the COO position."

Shoemaker clearly does not believe in the power of the Schwartz.

You'll find Shoemaker's full Sun dissection (in PDF) here. ®