What's going to happen to Sun?

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Joe Landman has a pointer to and commentary on an article at The Register on the future of Sun. Following its recent layoffs (6,000 — or about 15% of the workforce — right before SC) it now finds itself with a market cap close to cash on hand, which says the employees and hard assets are worth: nothing. To Wall Street, anyway. Note that its valuation continued to slide after all the strategy announcements around SC, and despite the layoffs.

From The Register article

Sun logo[Sun] 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.

What to do? The Register speculates

We can say that the main parts of Sun’s business are StorageTek tape and disk storage, X86 servers and server-based storage, SPARC servers, software, and services. EMC is a storage and virtual server company and thinks Open Source is as attractive as giving your eyes an acid bath. It might be interested in the StorageTek tape business, giving it a stronger entry into mainframe shops. And it might be interested in the server/storage hybrid products such as the X4500 (Thumper). The servers though, both SPARC and X86? I can’t see it. The open source software? Don’t think so – selling it off to Red Hat or Novell might be possible. So an EMC takeover or merger would be followed by dismemberment of Sun.

And the speculation continues in the article. The Register closes with the point that Sun has to make a call, and decide whether its in or out, and then decide that if it wants to live what parts of it have to die. Joe makes the same points more articulately than I could

Sun is in this position. It has multiple albatross’ or anchors. It doesn’t want to admit it. Sun execs, if this article ever gets to you, don’t make the same mistakes as SGI made here, choosing comfort over need. That obviously did not work out well for them, and it won’t for you either. Part of the job is recognizing what battles are still winnable, and closing down the battles that aren’t.

Recommend you read both articles.