Sun's bright future according to McNealy
Published: 27 Jun 2005 12:05 BST
For Scott McNealy, fixing Sun Microsystems' problems is personal. The chief executive has been working for years to put the server and software company back on an even keel after a period of explosive growth during the dot-com spending frenzy in the late 1990s. Although the server market is once again expanding, Sun's share of its sales continues to shrink, and the company's own revenue growth remains elusive.
But the 50-year-old McNealy said his Midwestern values require him not to leave the recovery to someone else. "I feel a huge sense of duty and loyalty," McNealy said. And though he's testy at times, he insists he enjoys the work: "It ain't a bad job."
In McNealy's opinion, much of Sun's problem is merely perception -- compounded by flawed Generally Accepted Accounting Principles (GAAP) that draw attention away from the company's track record of cash generation.
To try to restore its position, Sun has many irons in the fire -- among them, a newly open source operating system, servers using Advanced Micro Devices' Opteron processors and a marketing campaign boasting of Sun's 'sharing' values. McNealy discussed his views in a meeting on Wednesday.
Q: What would you say is Sun's biggest problem today and its biggest strength?
I just came back from an executive advisory committee meeting with all our top ISVs (independent software vendors) and partners. If you listen to them, their biggest beef coming in was they didn't know what our strategy was. The biggest beef coming out was, 'Why don't you tell somebody?' When you're making money, you get to position yourself. When you're losing money, your competitors position you. So nobody knows our story. We've got to do it directly and on our own.
We have one of the two, maybe three operating systems that are going to survive: Windows, Solaris and maybe Red Hat. I'll be happy to compare Solaris vs. Red Hat. It doesn't help that GAAP is a random walk through irrelevancy right now and that the media's primary guideline for quoting financials is GAAP, when we're 16 straight years of cash-flow positive from operations. We cannot have lost billions of dollars in GAAP and somehow magically ended up with $7.5bn (£4.12bn) in cash and no SEC investigations. We didn't cheat. We didn't steal that money. People actually felt very good about paying for the invoices we gave them. There's something wrong with the deferred tax asset impairments and all the rest of it, but because it's a GAAP profitability issue, we haven't been able to position ourselves.
What are our assets? We're one of three processor architectures -- Intel-AMD being one, Sun and Fujitsu's Sparc being another and Power being another -- that are going to survive. We have one of the two, maybe three operating systems that are going to survive: Windows, Solaris and maybe Red Hat. I'll be happy to compare Solaris vs. Red Hat.
We'd love to hear what your strategy is.
I'll start with the vision. We believe we're moving out of the Ice Age, the Iron Age, the Industrial Age, the Information Age, to the participation age. You get on the Net and you do stuff. You IM (instant message), you blog, you take pictures, you publish, you podcast, you transact, you distance learn, you telemedicine. You are participating on the Internet, not just viewing stuff. We build the infrastructure that goes in the data centre that facilitates the participation age. We build that big friggin' Webtone switch. It has security, directory, identity, privacy, storage, compute, the whole Web services stack. We build that infrastructure piece.
We have a mission, and that's make money and grow. That allows us to realise our cause, and that is to eliminate the digital divide. We believe our strategy, way more than a PC on everybody's desk or a mainframe everywhere, is the way to make that happen.
We have a strategy that's very different from everybody else's, and it's community development. The way we say that is with the S curve in all our new literature. It's not for Scott, it's not for Sun, it's for 'share'. We're grabbing that word and saying, of anybody, we own the word 'share'. We own that space.
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