Wednesday, January 31, 2007

The comeback story of Sun

Many in the tech world including myself had written Sun off as a real player. They were a dieing company selling ever decreasing number of expensive boxes to people that still had to because they were locked in. Java, a distribution success, never contributed financially to Sun's bottom line in any meaningful way.

Over the last 2 years, things seem to have changed slowly and now we may be getting close to the Tipping Point- as Jonathan Schwartz points out on his blog. The increasing stock price, still low from 5 years ago has shown some strength lately. But it is the re-appearance of Sun into the dialog on future of computing especially for the customers with large infrastructure that has me most optimistic. In addition, the company has embraced open source, perhaps out of necessity, but has finally open sourced key components such as Solaris and Java. The hardware business is still the meat and potatoes of Sun, and it is not yet clear if their software strategy will work.

On the plus side, Jonathan Schwarz's blog is probably the best CEO blog in town toay. He is not just marketing the latest widget (Blackbox!) but actually talks about substantiative issues facing the company and its customers.

I think we may be seeing another Apple like comeback story here. The focus on identifying big trends (hosted computing, power issues) and focusing the vast resources of a tech giant will result in some very interesting products over the next many quarters and years. And the fact that Sun already has revenue exceeding $13 billion would make it a very compelling turnaround when it tips over. The fact that KKR has invested $700 million is perhaps an indication that the good times are close. The large cash balance and the additional cash raised certainly makes one think that Jonathan may be looking to make some big acquistion moves. This is surely an interesting time to follow Sun- a company I had given up as dead many years ago.

Welcome back, Sun.

What do you think about Sun's comeback? Is it real? Do you think they will buy other companies?


Jeff Nolan said...

I visited Sun's website the other day, after Dan Farber mentioned it, and was really surprised to find a lot of things they are doing that I wanted to get more details on. I'm not convinced it's a full fledged comeback but it definitely shows movement in the right direction.

Unknown said...

Yes, it is the beginning of a comeback and the next year or two will be crucial. At the same time, it is a big change from being given up for dead a few years back by most people.