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Sun's McNealy Steps Down as CEO: "This Isn't About Me"

Hands Leadership Over to Jonathan Schwartz

Sun Microsystems Chairman Scott McNealy (pictured back in the days when the business was fun) relinquished his long-held CEO position, announcing it at the end of a conference call just as an official press release about the transition hit the wires. Sun's stock was up in after-hours trading.

These are the two operative facts about what has transpired. McNealy finally agreed to let someone else take the top spot after 22 years on this job, and the seriously languishing price of a share of Sun stock is the encapsulation of why he acceded to the change.

"This isn't about me," he said as he announced that he was stepping down as CEO during an earnings conference call, preferring instead to have the spotlight shine on new CEO Jonathan Schwartz.

But for a moment, let's make this about Scott.

Scott McNealy has never really indicated that he gives a damn about what Wall Street thinks, or what New York's big business press or stock analysts think. This was true long before the dramatic build-up and terrifying fall of the company's valuation during and after the dot-com era.

He was uniformly pugnacious in public, once remarking that he was sure his child was better looking than Bill Gates's child, as if his continuous insults about, and seeming obsession with, Microsoft seemed to knock the entire company off kilter.

As a personal note, I was once publisher of SunWorld magazine (now morphed into an online publication at one of those other media companies), but knew it was going to be a difficult slog when the chairman of my company claimed with a straight face that Sun was poised to challenge Microsoft as a serious competitor in the overall desktop computing market. Apparently my chairman had been talking too much to Sun's chairman!

This was in the early 90s, at a time when Sun had vanquished all comers (notably DEC, HP, and IBM) in the technical workstation market, and was starting to hurt these companies in the big-iron markets as well. McNealy use to refer to the IBM mainframe  "hairball" that many companies had to contend with on a daily basis, even as Sun itself found it difficult to move completely off of its own internal mainframe systems.

More seriously, the idea that Unix-based Solaris was some day going to blow away Windows took on full bloom with the launch of Windows NT, which threatened Sun's traditional markets. But it didn't seem enough to react to the enterprise threat posed by NT. Instead, all of Microsoft became the target of McNealy's unrelenting and withering fire, lead many people to dream that yes, maybe the dragon of Redmond could be slain--head, tail, the whole damn thing--after all.

McNealy testified before Congress against Microsoft in the days of the Clinton administration's pursuit of monopolistic anti-trust charges against Redomond, providing more public expression to anyone who was watching that Sun and Microsoft were big-time direct competitors.

By the late 90s, the dot-com era was upon us, and Sun quickly changed its long-time "The Network is the Computer" mantra to "We're the Dot in Dot-Com," most directly expressed in a grim commercial that seemed to show Sun eletrocuting its customers.

Then the dot-com bubble popped, Linux happened, and Sun's stock began its horrific plunge. This had little, if anything, to do with Microsoft, yet Sun remain doggedly committed to semi-insane notions such as that of considering StarOffice as a legitimate competitor to Microsoft Office, or noting as if it meant something that its homegrown browser was "number three" in a market dominated at the time by Explorer and Navigator.

The obsession seemed to cause the entire company to lose its way. As early Sun employee John A. Barry pointed out today, "Scott was originally an operations guy, remember. Then he put a great operations guy, Ed Zander in charge, and ironically, or coincidentally, operations have suffered since Zander left (for Motorola a few years ago.) Scott as CEO isn't, unfortunately, the operations guy he was in the early days." (Barry was co-author of a book, "Sunburst," that chronicled the first 10 years of the company's meteoric rise.)

Give credit where credit is due, though, and note that Sun's re-positioning of the Java programming language from a simple set-top box OS to a cornerstone of an emerging Web-based economy demonstrated flexibility and smarts. As Scott noted frankly once, "hey, we were surprised to see Java take off like it did, but we just attached our grappling hook to this rocket because it was good for business." Java developers have been frequently and vociferously critical of Sun over the years, but this was a case where Redmond needed to be curbed--and it was--and where a lesser company might have given up control of an essentially revenueless product line and thereby let it potentially be diluted to death in a more open marketplace.

Back to the original point: Scott didn't publicly seem to care about Sun's stock price when it languished in the 20s for what seemed to be an eternity in the 80s and 90s. He never crowed about the rise of the stock during the dot-com era, because he genuinely seemed to care a lot more about the company's employees than its investors.

Sun, as anyone who visited the company at any time from its earliest days to the present time, has as diverse a workforce as any company in the world. It has always offered a first-class work environment. What seemed to most of the world to be unusual job sharing arrangements were widespread within Sun from the early days. It has always encouraged innovation. It has always encouraged noisy debate among managers.

The company's Friday afternoon beer busts offered heroic demonstrations of the boss's ability to quaff a few right along with all the regulars. The company's internal April Fools' Day pranks were even more legendary. Through it all, McNealy's Puckish sense of humor oftentimes cut through the day-to-day stress of the thousands of people engaged int building a world-class company.

Although its PR and marketing departments have seemed to evolve over the years from a group of smart, independent free thinkers into rigid, humorless leviathans populated by spinmeisters and obstructionists worthy of the Pentagon, hey, nobody's perfect. Scott McNealy has ultimately decided to step down because he simply could not take out his metaphorical machete and cut away the very large percentage of employees that Wall Street is demanding he cut away.

The stock price ticked up during after-hours training. But the question, of course, is will former heir apparent and now-CEO Jonathan Schwartz a.) take out a machete, b.) find some ingenious way to revitalize the company sans machete, or c.) make no difference whatsoever? Will he care more about The Street than McNealy ever did? And if he does, what chance is there that Sun will keep all that has been good about it under McNealy's stewardship all these years?

More Stories By Roger Strukhoff

Roger Strukhoff (@IoT2040) is Executive Director of the Tau Institute for Global ICT Research, with offices in Illinois and Manila. He is Conference Chair of @CloudExpo & @ThingsExpo, and Editor of SYS-CON Media's CloudComputing BigData & IoT Journals. He holds a BA from Knox College & conducted MBA studies at CSU-East Bay.

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Most Recent Comments
Donald Hsu 04/29/06 03:53:50 PM EDT

I believe it is good for the Sun Microsystems. As I wrote on May 10, 2005,, you needed a new leadership. It finally happened after I predicted this one year ago. The better choice is to sell Sun to Oracle or IBM as I said before. But I think J. Schwartz can prove me wrong. I shall give him one year to prove it. If it works, then Sun remains a great company. Long live Java....

Joel 04/28/06 02:55:33 PM EDT

Are the JDJ articles / newsletters going to start talking about the actual language of javain the near future, or are you going to keep focusing on java politics from here on out? I originaly subscribed to the magizine in order to get some new or different ideas on new or different java technologies. I really don't care about the politics of what one of the the original creators of java said about language x or whether or not the CEO of sun is calling BG's kid ugly and saying they are going to control the blender market and most importantly I don't care how anyone over at sys-con feels about said politics. I want information about java, for your subscribers sake, attempt to stick to the language.

JDJ News Desk 04/24/06 07:52:10 PM EDT

Sun Microsystems Chairman Scott McNealy relinquished his long-held CEO position, announcing it at the end of a conference call just as an official press release about the transition hit the wires. Sun's stock was up in after-hours trading.