Sun Switches Gears

5:50 PM -- After Sun announced a net loss of $217 million in its third-quarter results last night, founder Scott McNealy handed over the CEO's reins to Jonathan Schwartz, the firm's chief software architect. (See Sun Reports Q3 Results, and Sun's McNealy Steps Down.)

The 40-year-old Schwartz, with his ponytail, spectacles, and obsessive blogging, seems an altogether less excitable, more easy-going character than the brash, hockey-playing McNealy. Could it be that the pen really is mightier than the sword?

Speaking on a conference call last night, though, the 51-year-old McNealy sought to downplay any suggestion that he's been usurped by a man in glasses. "This was my decision that was supported by the board," he explained, adding the bombshell that he has been thinking about stepping down for the last six or seven years.

Now that the dust has started to settle, it's time to explore whether the changing of the guard signifies a change in direction for Sun. On last night's call, the new CEO denied there will be a major strategy shift. His tack was to simply chant Sun's "The network is the computer" mantra like a Silicon Valley lama.

Schwartz, however, is a shrewd operator who may need to make big changes to steady a Sun ship that is only just emerging from the choppy waters of the dotcom bust. (See Is Sun Setting?) One of the major criticisms leveled against Sun over the last few years is that the vendor has not always delivered a coherent message about its technology. Whereas archrival IBM has managed to convince users that it is a services, software, and hardware vendor, the same cannot really be said of Sun.To make matters worse, Sun has also had to contend with the rise of Linux, which poses an ongoing challenge to the vendor's extensive portfolio of Unix-based hardware. (See Users Ponder Linux Tradeoffs.) Schwartz, however, led the effort to counter this threat by opensourcing Sun's Solaris operating system, so he is clearly not afraid of taking radical steps. (See Sun Hits the Source.)

Then there's the issue of style. McNealy had a PhD in name-calling. This reporter will miss his well-rounded belligerence and eagerness to abuse rival vendors. Schwartz, on the other hand, has been at the forefront of the Liberty Alliance, a cross-industry effort to drive secure identity standards for networks. Could this be the man to forge the partnerships that Sun needs to tie its disparate product lines together?

Servers and storage could be the cornerstones of this effort. The technologies acquired from StorageTek last year, for example, along with Sun's x86 servers, contributed 21 percent revenue growth in Q3.

There's hope for the new CEO, for sure. But getting users to think of Sun as a one-stop shop for all these different technologies is a challenge few in the industry would envy.

James Rogers, Senior Editor, Byte and SwitchOrganizations mentioned in this article: