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Sun's Scott McNealy Recalls Triumphs, Near Misses

The former Sun Microsystems CEO recollects brilliant innovations, hiring Bill Joy, and almost acquiring Apple, but talks little about missteps in a conversation with former Sun president Ed Zander at Silicon Valley's Churchill Club.

Sun Microsystems invented open source code, cloud computing, the Java language and the best open system ever: Solaris. It made the network the computer and it put the dot in Its greatness can be measured by how close it came once to buying Apple. If Sun had played its cards a little differently, it could have blanked out Linux.

Why it failed, however, remained a mystery Thursday night to the two men who presided over Sun in its prime, former president Ed Zander and former chairman and CEO Scott McNealy.

Zander and McNealy took the stage Thursday at a meeting of the Churchill Club of Santa Clara, Calif., in the heart of the Silicon Valley. The evening was billed as "an intimate conversation on the legacy of Sun" on what would have been Sun's 29th anniversary. That goal faded somewhat behind a progression of memories and feel good recollections as the evening progressed. Sun was a place that innovated frequently, a place of "hard work, having fun, and sharing," said McNealy in a reflective moment. No one ever explained why a culture that had worked for over two decades for some reason ceased to work.

The audience included many former Sun employees, who had paid $74 as members or $174 as non-members to get in and were glad to see the pair upfront again. From the Q&A, they were clearly in agreement that they missed Sun's free-wheeling ways.

At one point, McNealy disputed the notion that Sun had been on brink of failure when acquired by Oracle on Jan. 27, 2010. "I'm not sure getting acquired for $7.4 billion is a failure. If 29 years ago, someone had asked me would I be willing to sell for $7.4 billion, I probably would have said, 'Yeah, I'd take that,'" McNealy said. As Oracle's offer was announced April 20, 2009, stock analysts said it was a relief to Sun shareholders, who now knew that Sun wouldn't go bankrupt. Earlier in the evening, Zander and McNealy recalled that Sun at its peak enjoyed a market capitalization of $200 billion.

Zander asked McNealy, "Was there any time when you knew you would be big?"

McNealy responded: "No, it just kept happening." After a moment of reflection, he added: "The thing that really launched Sun was Java." The programming language became widely adopted for enterprise applications, and Sun's status as Java’s inventor helped it sell servers and related products in the enterprise and as the boom unfolded. Sun never seemed to recover its footing when the bust came.

"I wish it had turned out a little differently. I wish I had set it up on a better trajectory, when I stepped down" as CEO, McNealy said. At another point, he added, "I just think it's a tough business. Capitalism is supposed to be driving everybody to produce products at the cost of capital." It was as close as he came to expressing any regrets.

In McNealy's view, Solaris could have outshone Linux. Sun made all the right moves in creating a good operating system, but seemed to be plagued by unexpected market trends and bad luck on timing. The Solaris operating system had its roots in Berkeley BSD Unix, which was one of the first true forms of open source code. Bill Joy, a future Sun employee, sent out copies on tape to other universities at no charge as it was being developed.

So Sun was "one of the first open source companies," creating the NFS networked file system and allowing other companies to use it. But it never established its open source credentials as effectively as, say, Linux vendor Red Hat, McNealy admitted.

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