I was in Boston last week meeting customers. One of them, a senior IT executive at a large financial services company, asked me about Sun. "Matt, I know you're into open source. I'm a long-time Sun customer. Do you think Sun's open-source strategy will work? Should I be worried about my Sun investment?"
I then proceeded to explain open source's role in rejuvenating Novell's fortunes, but that it took several years. It also helped that Novell wasn't dealing with as big a gap as Sun has between existing (but declining) proprietary revenue and new (and increasing) open-source revenue.
In other words, I equivocated. The question for me is not whether Sun's new strategy is "Right," but whether Sun will have time to prove it out.
Sun clearly has a tough slog ahead of it, as Techcrunch points out. But I find it hard to read Sun CEO Jonathan Schwartz's review of Sun's terrible Q1 without feeling some cause for optimism:
The biggest highlights were the performance of our Solaris based, chip multi-threading (CMT) systems, which again grew a whopping 80%, year over year....Simultaneously, our Open Storage systems also delivered a great quarter, up 150+% year over year. These systems, known by many as Thumpers, are amplified by the awareness of our open source ZFS file system, a technology at the heart of Sun's storage business....
And finally, most of our software business grew - including MySQL, Java, alongside Solaris, management and our virtualization products. As we've been saying, open source is a great distribution model - and it feeds a great revenue model.
That's the good news. The bad news is that Sun's traditional business is in disarray, in large part because it depends on financial services buyers and, well, they're not buying.
Unlike Novell, which had to stem declines in NetWare, for example, which was shedding 11 percent of its revenue each year and was worth a few hundred million, Sun must grapple with billions of dollars in problems. When you're talking about billions, it's hard to make that money back in the short term by giving software away.
I believe Sun needs to hyper-charge its MySQL business, as just one solution, by creating more differentiation between MySQL Community and MySQL Enterprise. There must be a clear, credible, and immediate reason for someone to buy Enterprise. Because of community pressure, today there is not.
Marten Mickos and team have been trying to augment this differentiation for over a year. Reading through Schwartz's post, it's clear that Mickos is having an effect on his thinking: Schwartz talks about spending money to save time, which is right out of Mickos' book of quotations. It's time to let Mickos have an even greater say: bring back the product-level differentiation that Mickos was hoping to introduce last year.
Will it save Sun in the short term? No. But it will help Sun sell more software and associated systems, thereby helping to stanch declines by ramping new revenue faster than old revenue declines.