It has been reported that 1,000 employees are going to be losing their jobs at Sun, with layoffs potentially reaching up to 2,500 employees. The losses are mostly within marketing and sales, and affect the main headquarters as well as the Menlo Park Campus and employees in Colorado. Sun stock is down 6% today to end the week at $9.11, down 64% on its 52-week high of $25.04.
Jonathan Schwartz took over as CEO from Scott McNealy in April of 2004, and has instituted a new philosophy and has attempted to rejuvenate the company. We listened to him speak recently at the Supernova conference, and the concensus amongst those in the audience was that Jonathan had, for the first time as CEO, delivered a concise and clear description of the new strategy at Sun.
His talk was about how Sun leverages open source by allowing its software (such as MySQL and ZFS) to float out and be downloaded for free, from where a small percentage of those users can be converted to customers. So through open source and free, Sun have the benefit of a free lead generation and marketing machine – especially with MySQL which is currently being downloaded over 70,000 times a day. At one point, Schwartz had a map of the world with a highlighted dot for each place where a copy of MySQL or ZFS had been downloaded – and it covered almost the whole world (including islands in the Pacific and Indian oceans). Schwartz pointed out that even though there were users of Sun products in those areas, it was accomplished without requiring Sun sales or Sun marketing in those countries or cities.
With reports that up to 2,500 positions will be made redundant at Sun, with up to 60-70% of marketing and sales to go, Schwartz is definitely practicing what he preaches and is doing away with expensive and traditional enterprise sales and marketing. Instead, he is substituting it with a strategy based on acquiring customers through open source and free.
2500 is definitely a huge number, however there is one thing for sure, if done properly Sun can leverage the power of open source and get customers for their business.
Strategic? Hrm, I guess throwing the baby out with the bathwater while preparing for bankruptcy is strategic. Sun’s day came, and sun’s day wet. We just didn’t see it setting because their Zenith was so high above us.
Hey Michael, what would you do differently?
Michael: I think trimming down on heavy sales+marketing and focusing on free+OS as leadgen is a lot smarter. A co that charges $14k for a DB cant have the same sales structure as another co that can charge millions
McNealy and Schwartz have destroyed Sun. McNealy didn’t make real cuts after the dot bomb implosion. Schwartz seems to think a download generates revenue for Sun. Here’s news for Pony: It doesn’t!
Downloads may not = revenue, but I don’t know a single company running Oracle today. Everyone I know runs MySQL. If you were Sun, which would you rather sell into – and what’s that level of pervasive adoption worth?