Why Sun Microsystems Failed
Former CEO Scott McNealy's allegiance to Sun's hardware culture shortchanged its software initiatives, and ultimately doomed the company.
Scott McNealy believes the best preparation for business is to play hockey. The teamwork, the individual risk taking, not to mention the bone-jarring collisions, are the closest analogy he knows to what is needed to function as the CEO of a technology company. In other words, he could never have taken Sun Microsystems in the direction it needed to go: Sun needed to become a software company.
Software is amorphous, invisible, full of promise that may or may not be fulfilled. Used car salesmen, with their goods at least visible to the naked eye, are paragons of virtue compared to software salesmen. How could Sun, a young and innovative hardware firm, make the switch to this tricky to manage, less tangible entity, a software company? In a word, it couldn't or at least it didn't, which doomed Sun.
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And why couldn't it? Go back to exhibit A, Scott McNealy. He thinks the best training for business is hockey. The intangibles of software, where a human presence and commitment has to substitute for tangible goods, where an ability to think abstractly about a roadmap, shared with customers through a finely calibrated sense of mile markers, has to substitute for discrete products -- how likely are these subtleties to come from a hockey player? That's doubtless an insult to many hockey players. But it's still fair to say about Sun.
A software company is a very different thing from a hardware company. Sun developed excellent software in NFS, Solaris, Java, and many other examples. It had a thriving software engineering force. But that software talent was always dominated by and made to serve the purposes of its hardware rulers.
A hardware maker has to compete head to head, beat the competition on defined metrics and produce a reliable product on a definite schedule. When Sun's software culture produced Solaris and Java, it gave a hardware company an unusual opportunity to launch a software business with assets that were valuable if less precisely defined. A more mature Sun might have understood this and become a two-business entity, still thriving today. Instead Sun lost 80% of its value between November 2007 and November 2008, and was swallowed up in an April 2009 fire sale to Oracle. With both Java and Solaris, the hardware culture appropriated the initiatives of the software culture, to Sun's detriment.
McNealy came as close as I've ever seen to recognizing this in his talk Feb. 24th at the Churchill Club in Santa Clara, Calif. He said of Solaris: "The mistake we made was putting it on our own hardware. If we hadn't metal-wrapped it, it would have been more widely adopted. If we had put Solaris early on an Intel box, Linux never would have never happened."
To do what's described above at the right time would have required an assertive software leadership inside Sun, someone willing to stand up to the hardware culture and say Solaris was going to run on multiple chip architectures, including Intel's, because that's where Solaris' opportunity lay. For any Sun executive to take such a stand, however, meant he would incur the wrath of powers greater than himself and he would hang by a thread, dependent on the inclinations of his CEO.
McNealy, the one figure who could have given the nod to such an initiative, was himself imbued with the hardware culture, where you collided with your competitors, overwhelmed them with your strength and bested them at the goal. What the software side of Sun was saying was that it needed to cooperate with competitors, make Solaris more understandable to the outside world and more portable to other architectures. Without empowered software leaders, and with the CEO having no vision of what a software company must be, how was that to happen?