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Scott McNealy Lays Down His Sword

A late British politician, Enoch Powell, once wryly observed that all political careers end in failure. As Scott McNealy, CEO of Sun Microsystems and bona fide industry legend, steps down this week, we might be tempted to say something similar about most executive careers not belonging to guys named Gates or Ballmer. While it would be harsh to call McNealy -- with his incredible 22 years as head of Sun -- a failure, there is no doubt that his company has been flailing ever since the famous dot-com bubble burst right around 2001.

In fact, 2001 was Sun's last profitable year, and the company that once looked like a real threat to Microsoft is now struggling just to be relevant. Competitors IBM and Hewlett-Packard have had their ups and downs over the last five years, but their executives have methodically made the budget cuts, strategic changes and overall painful decisions that have allowed them to get back to turning a profit.

McNealy hasn't. His company is bloated in terms of both headcount and products, and he has been more than reluctant to make the cuts Sun needs to get back on its feet again. Everybody -- especially in the financial community -- seems to know this, except maybe for the guy taking McNealy's place, Sun President Jonathan Schwartz. Schwartz isn't talking about making cuts or realigning the company strategically. In fact, he doesn't seem to want to change much at all. Wall Street has reacted with understandable skittishness.

Still, if McNealy, who will still serve as chairman of the board, has ultimately failed, it wasn't for lack of vision. He was giving speeches about the networked lifestyle almost 10 years ago, back when Microsoft was stumbling around with Windows 98 and long before Bill Gates was talking about digital decades or the digital lifestyle. In fact, some of what Gates says now sounds awfully familiar, at least conceptually. It wasn't for lack of innovation, either. The Solaris operating system -- arguably hit as much by the development of Linux as by the hegemony of Windows -- drew raves, and Java and Javascript are now household terms. What McNealy couldn't -- or wouldn't -- do was execute, at least not in the way his company needed him to when times got tough.

McNealy was always a fighter, a warrior who sometimes jousted at windmills but never gave up in what he thought was the heat of battle. He was also a survivor, as his two decades as head of the company he helped found demonstrated. He famously disliked Microsoft and poked fun at Redmond 's technology as often as he could, and he had a certain charm and charisma that his rival from up the Pacific coast lacked. His speeches drew rave reviews, and the press had a brief love affair with him. And, for a while, back in the late ‘90s, when Microsoft was grappling with lawsuits and (really) buggy software, it looked as though Sun might just stand in the way of Gates' company ruling the world.

But, in 2006, Gates is an industry juggernaut, a hero to many, the cover boy of Time magazine (for positive reasons, not negative) and a renowned humanitarian. McNealy leaves the mixed legacy of a battered rival who captured a lot of hearts but not quite enough dollars to keep pace. If his successor isn't willing to make some tough changes, we might eventually see the total eclipse of Sun after all.

Read more about McNealy riding off into the Sun-set (you had to know that was coming) here.

A Little Less of a Free-for-All
Speaking of Linux, last week somebody -- namely, the Free Standards Group, a group of major Linux distributors (which includes Sun) -- finally decided that Linux needs a little structure and a few standards in order to complete with Windows on the corporate level. You think?

Linux has been the subject of industry buzz for years, but it's still pretty useless for large-scale corporate implementations in which reliability and predictability are paramount. Maybe this is the start of the long and rocky road toward making Linux a viable competitor to Windows in the enterprise space, but Microsoft has a heck of a head start, and the loosely organized Linux folks don't seem to be moving at light speed to get their offering up to snuff.

Learn more about another step in the evolution of Linux here.

Keep and Eye on BI
Following on the heels of its purchase of business intelligence vendor ProClarity Corp. and its OEM deal with NexVue Analytics Corp., Microsoft came out with another BI announcement this week. Microsoft and Hyperion plan to integrate SQL Server 2005 technologies with Hyperion's System 9 BI+ application.

Watch this space. BI, which lets users, often executives, easily view and use critical company metrics without having to have IT people run complicated SQL reports, is a very hot market, and Microsoft is methodically making moves to strengthen its position in the space and get serious BI capability into its Dynamics line of enterprise resource planning applications. Business Objects and Cognos are among the big players in the BI market, but there are many others (including Hyperion), and it'll be interesting to see how Microsoft attacks the market. Will these nickel-and-dime deals lead to Redmond creating a full-blown BI solution of its own to match those of the big players and integrating into the forthcoming single-platform Dynamics offering, or will Microsoft eventually try to snap up a big developer? Stay tuned…

Not as Famous as Ken Lay, But Still Guilty
Sanjay Kumar, former chief executive of CA, will plead guilty to financial fraud charges. Maybe we'll get to see him hauled out of the courthouse in chains. Nothing beats a good executive perp walk.

Posted by Lee Pender on April 26, 2006 at 11:53 AM


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