Sun's troubles have been mounting for a while. Founder Bill Joy's departure was an ominous recent symbol, but the substance of their problem is that their hugh-margin server business is being eroded from the low end by PCs running Linux at a rate that doesn't leave it much of a future.
Nobody should cheer the prospect of Sun's demise. Sun screwed up some major decisions very badly, from wrecking Unix standardization efforts in the 1980s to throttling the dream of Java ubiquity by keeping the language proprietary. But nobody should forget that Sun was founded by Unix hackers for Unix hackers. For most of its lifespan Sun remained the archetype of an engineering-driven company. Sun was, mostly, among the good guys; to hackers and geeks, disputing with Sun was almost a family quarrel.
But inside Sun, I hear that talent is bailing out of the company because they just don't believe the Solaris-will-prevail story management is peddling. Most of Sun's techies are running Linux on their PCs at home. They can see the handwriting on the wall.
In retrospect, the recent pronunciamento that Sun has no Linux strategy was their final admission of failure. Sun can't run at the lean profit margins that are all a commoditized Linux server market will support, their cost structure is all wrong for it. They got trapped in a classic innovator's dilemma and didn't cannibalize their own business while they had the investor confidence and maneuvering room to do so. Cuddling up to SCO didn't help, either.
And now it's too late. Moody's has just about dropped Sun into the junk-bond basement. The stock closed at $3.31, 15% off for the day and falling in heavy trading. The recent product announcements have been duds, and the upcoming quarterlies are going to be a disaster. Wall street analysts are calling for drastic job cuts and speaking the code phrases that mean "run for the hills!" The smell of death is in the air.
Any of Sun's people and tangible assets that don't scatter to the four winds will probably wind up in the hands of IBM, HP, and Dell -- three companies that have shown they do know how to play the commodity-computing game. The SCO lawsuit probably won't be affected. Sun was the lesser-known of of SCO's sugar daddies along with Microsoft, but Redmond can pick up Sun's share of funding the lawsuit out of petty cash -- and it undoubtedly will.
The real question is twofold: can OpenOffice.org survive without Sun, and where will Java land? Probably not at Microsoft; with C# in the picture, it is unlikely that Microsoft even wants to own Java any more. I have to guess that IBM is the most likely to shoulder both technologies, simply because nobody else is really positioned to do it. But that, of course, raises other worries -- is it really good for us if IBM has a lead position in everything?