January 12, 2006 1:07 PM PST

McNealy's cold feet and other tales of Sun

A correction was made to this story. Read below for details.
MOUNTAIN VIEW, Calif.--Sun Microsystems CEO Scott McNealy had to be wined and dined at a Silicon Valley McDonald's before he gave up his reluctance to help launch the workstation maker in 1982, according to one of many tales the company co-founders recounted on Wednesday.

McNealy joined Sun's other co-founders, Vinod Khosla, Andy Bechtolsheim and Bill Joy, at a panel discussion at the Computer History Museum here to reminisce about the server specialist's past and prognosticate about the future.

Khosla said the McDonald's meal took place just after he and McNealy met with venture capitalists and got Sun's first funding commitment. "We went out and sat in the parking lot. Scott said to me, 'I don't know if I really want to do it.' So I took him to an upscale dinner at McDonald's on Page Mill Road" in Palo Alto, Calif., he said, where he put the screws on McNealy to resign from his $40,000-a-year job at Onyx Systems.

Sun's cofounders

"Vinod asked me, 'When are you quitting?'" McNealy recounted. When McNealy balked, Khosla countered, saying: "'You can't back out on me now. You're a founder.' "I said, 'Oh, OK.' It was that quick," McNealy said.

Khosla left Sun in 1986 to become a general partner at venture capitalist firm Kleiner Perkins Caufield & Byers, and Joy followed suit in 2005. Bechtolsheim left Sun in 1995 to found gigabit Ethernet start-up Granite Systems, later acquired by Cisco Systems. But he rejoined the company in 2004, when Sun bought his next start-up, Kealia, to provide the foundation of its new "Galaxy" line of x86 servers.

The Apple connection
It's no secret that Sun once tried to acquire Apple Computer, but Joy noted that it wasn't the only near-union between the Silicon Valley companies. "We almost merged with Apple two other times," he said.

There were other alliances with Apple that fell through, Joy added: an attempt with Microsoft and the Mac maker to create a common file protocol; an attempt with Apple to create a merged user interface; and an attempt to persuade Apple, when it was moving away from Motorola's 680x0 processor family, to switch to Sun's Sparc processors rather than the PowerPC chips it ultimately chose (and began abandoning this week with Intel-based Macs).

"We got very close to having Apple use Sparc. That almost happened," Joy said.

In total, "there were six very, very close encounters" with Apple, he noted. That none of them worked out was a "personal disappointment" said Joy, who spent years as Sun's chief technology officer.

"The tip toward the public space being much less private is one that's hard to fight."
--Sun co-founder Bill Joy

McNealy added that he went to Steve Jobs' house to try to hammer out the user interface agreement. The Apple co-founder and CEO was "sitting under a tree, reading 'How to Make a Nuclear Bomb,'" with bare feet and wearing jeans with holes torn in the knees, McNealy said. The interface work, though, "never went anywhere," he said.

Khosla also lavished praise on Jobs, who he said was a role model, along with Oracle CEO Larry Ellison and Intel's former CEO Andy Grove. Jobs is the kind of person "who passionately, religiously believes his own ideas. No matter what anybody else says, he's going to push them through," and that determination and self-confidence is in large part why he succeeds in doing so, Khosla said.

McNealy has praised Jobs on occasion, but he acknowledged on Wednesday that he doesn't have time to listen to his own iPod and forecasted doom for the popular digital music player. The right place to store music is on the network, where it can be accessed by many devices, he said, much like the right place to store voice mail is on a central server.

"Your iPod is like your home answering machine. It's a temporary thing," McNealy said. "It's going to be hard to sell a lot of iPods five years from now, when every cell phone is going to be able to automatically access your library wherever you are."


Correction: This story misreported the amount of money Sun takes in every year. The company's annual revenue is approximately $11 billion.

CONTINUED: April Fool's Day joke with Apple…
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Sun earns roughly $13 billion ...
Not even close. Do you guys even bother to fact check your articles? Sun doesn't earn any money, they lose money. If you were confusing revenue with earnings, you are still off. In the latest quarter, Sun's revenue totaled $2.6B.
Posted by inkadinka12 (1 comment )
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Fixed the revenue citation
You're right - we wrote "earns" by mistake when we what we were referring to was revenue. But it was an annual figure we were citing, not quarterly. The story has been fixed.
Posted by Jon Skillings (249 comments )
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Music on the server?
Hello Sun?

The music IS on the server. The server is your PC running iTunes. The iPod client connects to that server when it needs a music update.

Explains why Sun is spiraling in.
Posted by open-mind (1027 comments )
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Barriers to Entry? I don't think so.
>"Barriers to entry in our business are big,
>because it takes a lot of capital to do what we
>do...(Hewlett-Packard) kind of checked out, in
>that they don't do microprocessors, operating
>systems, the software stack. At some point, you
>no longer are a car company, you are a car
>dealer," he said. "The major research and
>development is being done by (Advanced Micro
>Devices) and Intel, Microsoft, Sun and IBM," he

Microsoft and Sun aren't doing any research and
development, unless reverse-engineering a copy of
the latest hot startup's product counts as "R&D".

The biggest server manufacturer today is Google,
and that's where the threat to Sun in coming
from. Almost anybody can put together an x86
cluster to perform semi-specialized functions,
such as search farm, web server, verilog farm,
compute cluster, etc. As long as x86 machines
provide a 2-3 price/performance advantage over
SPARC, Sun is doomed. If Sun goes to the x86
hardware, then they're just another Linux box maker.

For the time being, Sun's business advantages are
its sales force, its installed base, its brand,
and its customer's sunk costs (custom software).
From a technological point of view, there are no
meaningful barriers to entry.

The reason why we don't see a large number of
startups making Linux-cluster servers to take
away Sun's core business is. . . . . . . . . . .

there's no money in it.
Posted by (139 comments )
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