Category Archives: business

The Sun Also Sets

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Sun Microsystems has always intrigued me. For a number of years, it seemed as if the company could do no wrong. During the early 1990’s, Sun occupied the top position in high performance computer workstations, a category of computing that has since virtually disappeared thanks to advances in PC hardware. Despite desperate attempts to unseat it from its leadership position by worthy competitors like HP, DEC, and IBM, Sun was able to prevail.

If you had purchased Sun stock in May of 1994, you’d have seen it skyrocket to nearly 100 times its value by August of 2000, just 6 years later. Had you kept it at the historical high price of $253/share, you’d have seen your investment lose more than 98% of its value when it came back down to just $3.17 a share by October 2008.

SUNW/JAVA stock price meteoric rise and fall

SUNW/JAVA stock price meteoric 100x rise and fall


Sun has always been a leader and innovator. As the workstation market was overtaken by PCs running Windows, Sun became an exceptionally strong competitor in the server market. In 1999, Sun was riding high and looked to be unstoppable. The company was getting lots of positive press about its new language called Java which sought to be the long awaited ‘write once, run anywhere’ computer language. Presumably, it would be the last computer language that a developer would ever need to learn.

Java had an incredible amount of hype surrounding it. Something that would relegate the Microsoft Windows operating system into a well-deserved irrelevance had finally arrived. No longer would all the popular desktop programs be forced to use Microsoft’s proprietary OS. Instead, applications could be written in Java and run equally well on a Mac, a PC, or any number of Unix-derived operating systems. It was a simple matter of providing a run time environment for each computing platform. That run time environment became known as the Java Virtual Machine (JVM). If you have an orange coffee cup in your systray that always seems to be begging for an update, then that is an indication that you have a Java Virtual Machine on your PC.

The JVM looking for an update

The JVM looking for an update

For a while, many websites required the JVM to work properly, but lately I’ve noticed it has become much less necessary. And very few commercial desktop programs require a JVM. Whenever I install a new Windows OS, I can sometimes go for months before realizing I haven’t downloaded Sun’s JVM.

The Java programming language should not to be confused with JavaScript which is a completely different language used primarily in web browsers which was developed independently of the Java programming language. JavaScript was developed by Netscape and was originally called LiveScript. When the folks at Netscape saw the positive response Java was enjoying back in 1996, they made a cross-marketing agreement with Sun to rename LiveScript to JavaScript to tap into Java’s significant cachet. Netscape agreed to promote the Java language in exchange.

Despite all the hopes and dreams of Sun and enthusiastic Java developers, this ‘write once, run anywhere’ promise never achieved its potential. Today it looks even less likely that Java will unseat Windows from its hegemony on the PC. Apple has only recently managed to make some progress on the Windows desktop monopoly by finally breaking through single digit market share of installed base. Apple is now at 10% market share vs. Windows at 88.7% share according to a ComputerWorld report. But when it comes to desktop apps, Apple still relies on Microsoft to deliver the goods in the form of Office applications even for its Mac OS. I guess we’ll see if Google will have better luck than Apple in unseating Microsoft on the desktop with Google’s upcoming desktop OS and cloud computing approach to applications.

After Sun developed Java, it appeared to change directions. Sun seemed to be intoxicated with Java’s assured future success. This infatuation with a language that had failed to achieve its mission in any significant way 12 years after being introduced reached its zenith when Sun changed its stock symbol from SUNW to JAVA in 2007. I think it was Sun’s way of turning its back on its hardware roots in exchange for the promised fortunes of free software. For Sun’s market cap, the downhill slide continued despite the new stock symbol.

I had worked with Sun back in the late 1990’s and found that if you emailed Sun a Microsoft Word document it would be rejected along with a request that you to re-submit it in HTML format. I thought this was rather odd, since Microsoft’s Word was emerging as a defacto standard and surely someone at Sun should have been able to convert it to HTML. But then I found out that Sun employees didn’t have Windows computers and weren’t allowed to buy them. This was around the time that laptops running Windows were becoming indispensable business tools. Sun had acquired an insane hatred for all that emanated from Microsoft to the point where the use of its products was prohibited. In essence, Sun’s management had constructed a reality distortion field for itself and the rest of the company.

Sun acquired StarOffice in 1999. It later offered the software as a free open source “almost-compatible” alternative to Windows Office applications and called it OpenOffice. I’ve used OpenOffice which is the free version of StarOffice, but have found the applications lacking true compatibility. It feels like a product that was built without any apparent business model in mind, unless you consider a quixotic attempt to marginalize your archenemy’s revenue source to be a business model.

Sun had always been vertically integrated, supplying not only its own operating system, but also its own computing hardware all the way down to its Sparc CPU. Sun made some early tentative steps to get its Solaris OS to run on x86 CPUs, but the early efforts never really gained much traction, likely an indication that they were conflicted about making it work. Instead of figuring it out, Sun abandoned those efforts and continued to promote its Sparc architecture, and continues to offer Sparc-based hardware to this day. I believe it was this decision to try to do battle with not just Microsoft, but also with Intel, that furthered Sun’s problems. Sun entered into an alliance with AMD in 2004, but AMD has problems of its own, namely that it has to compete with Intel too. Finally, in 2007, Sun began working with Intel by adopting Xeon CPUs for its high-end servers. But I think it was too late at that point.

In 2004 Sun arrived at a legal settlement with Microsoft, claiming the company was exercising its monopoly position to ruin Java, earning it $1.95 B for its years of legal wrangling. However, I think the damage done to the relationship between the two companies was beyond repair. By the time of the settlement, Sun was hemorrhaging. Giving an ailing company that much cash is like giving it to a crack addict. They’ll only use it to go on a binge and, based on the sort of acquisitions made after that point in time, that’s exactly what happened.

Sun spent $1 billion to acquire MySQL in 2008, an open source database project that was no doubt starting to give Oracle and its competitors cause for concern because it was encroaching on the highly profitable database business. This acquisition did little to boost Sun’s prospects because MySQL really didn’t seem to fit in anywhere at Sun, and it’s hard to imagine there was any potential for revenue since MySQL was already open source and freely downloadable. Only about 1% of MySQL customers were paying for it. That sort of genie cannot be stuffed back in a bottle. To make matters worse, Sun was determined to move it upstream by improving its performance, furthering its threat to database companies who were still charging for their software.

By early 2009, Sun, having lost nearly 98% of its market value and suffering from years of losses or break-even results, was looking to be put out of its misery by being acquired by a rival. IBM appeared to be the front runner but in a surprise bid, Oracle came in and made an offer that Sun accepted instead. The deal is still pending some regulatory approvals.

What Oracle expects to achieve with Sun is anyone’s guess, but I think Oracle made the deal to get its hands on MySQL and to make sure it never becomes a competitive threat to its primary source of revenue. Despite claims to the contrary, Oracle has no need for Sun’s hardware business because it is no longer sufficiently differentiated from the competition. Sun’s software businesses have never made any money when one considers the cost of developing, supporting, and defending them. It’s just mystifying to me what Oracle’s Larry Ellison thinks he’s getting for $7.5 billion. I suppose if the company can be parted out, Ellison will be able to derail further development of MySQL, keep Sun’s $3 billion in cash, and sell off the rest of the company in an effort to recoup the remaining $4.5 billion. Oracle probably won’t risk entering the hardware business and thus alienating key allies like HP, Dell, and IBM when it comes to offering its database server on their hardware. My guess is that once the deal is approved and things quiet down, a fire sale for what’s left of Sun’s assets will ensue.

Sun was a formidable company in its heyday, and I’m sure there are still a lot of smart people there despite Bill Joy’s proclamation to the contrary, now known as Joy’s Law, that ‘most of the smartest people work for someone else’. That statement comes across with such a demoralizing thud that it’s hard to wrap one’s mind around its true meaning. Scott McNealy, Sun’s former President and CEO, known primarily for his sarcastic sound bites about Sun’s competitors and his periodic resurrections, has somehow been silenced. I don’t think he’ll be making a reappearance because Ellison is not the type of person who likes to be upstaged, as can be seen from the YouTube video below where he amuses the audience with his take on Cloud Computing.

Despite the multitudes of really smart people at Sun, its decline, fall, and consumption shows that no amount of technical brilliance can overcome bad decisions on the part of management.

Business Relationships vs. Hostage Situations

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I’ve been working with computers for a very long time, dating back to the time when you needed to use punched cards to program them. After graduating with several engineering degrees from Penn State, I went on to design computer peripherals for a major computer firm for many years. Because of my computer experience, my friends, most of whom are not computer experts, often use me as their first line of defense when they have a computer problem. And these days, “business is a boomin’.”

Part of the reason people have trouble with their PCs is because of the aggressive nature of companies trying to shove services down the throat of anyone who gets on the Internet. Not content to festoon what might otherwise be useful information with blinking banner ads, the new target of choice is the browser’s toolbar.

Last night I was helping my auto mechanic friend with his computer because it had lost his user profile, and Windows would let him log in but wouldn’t remember any of his desktop icons or save any of his browser’s bookmarks. He needs his computer to do his job as a mechanic since GM has moved all of its documentation on-line and without a computer, you just can’t function as an auto mechanic anymore. I know that sounds unbelievable but it’s true.

While I was adding a new user and copying his data over from his prior user’s settings, which seems to be the only way to fix a broken user profile on Windows, I noticed that his browser real estate had shrunk considerably since I first helped him to set up the computer. Why? It was because numerous toolbars had somehow managed to install themselves without my friend’s help. I suppose he may have helped a little but I can assure you it wasn’t intentional. I know this because his smile brightened more each time I managed to make one of them disappear. So in addition to fixing the main problem, namely the lost Windows profile, I also spent a lot of time cleaning up the computer.

Not only did I remove the offending toolbars, but I also removed all the miscellaneous links HP had included in his browser before he even set up the computer. He was too afraid to delete these items for fear he might break something. I call this stuff ‘crapware’, because it usually induces a customer to try crippled versions of programs or services which seek to get him to sign up for a perpetual subscription to an unnecessary service. And I should mention that the computer crawled along at a snail’s pace because of its heavy-handed virus protection software which his employer requires him to use, at his expense, of course.

I might have forgotten about this travesty and you’d not be reading it here, but then I got spammed by Sun today. I’ve been constructing an article in my head about Sun Microsystems which I will publish soon about how this once proud and capable company is now engaging in a desperate attempt to monetize the un-monetizable, namely Java, by using Java’s persistent need for updates as a trojan horse. I made sure to visit Sun’s CEO blog, written by the pony-tailed Jonathan Schwartz himself, just to make sure that was their plan. Sure enough, it was.

In my haste to quiet that little Java coffee cup by saying ‘yes’ to the update, it installed Carbonite’s crapware on my PC. Now, I’m no fan of on-line backup services and had previously written a critical review of what I think of them. Part of my view is colored by an image that I will now convey to you. Hang on, because I think you’ll like it. In any event, I can guarantee you won’t forget it.

A few years ago I witnessed a sales pitch for a service to provide on-line backup. I won’t mention the perpetrator, and you’ll never guess who it was because this idea was pitched by at least a million companies over the past few years and it’s one of those bad ideas that simply will not die. But during the presentation, the presenter took several opportunities to indoctrinate us, much like he was reciting a mantra, with this phrase:

“When you hold the customer’s data, you hold the customer.”

Along with this mantra, delivered with pregnant pauses both before and after, he used a hand gesture. Imagine holding an invisible tennis ball out in front of you at approximately waist level, palm pointed upward. The image is that of grasping and squeezing a person’s unmentionables. Wow! I think I knew where he was going with this. It wasn’t a business relationship he was proposing, it was a hostage situation.

Thanks, but no thanks. I’d prefer not to get involved in that kind of thing.

Yet it is precisely this kind of desperate business model that gets investors all worked up these days. No longer can you propose to provide a useful and valuable service for which people are willing to pay. Instead you must trick them into accepting something (often something offered for ‘free’) and then force them to become some sort of stooge, paying you perpetually for your right to continually abuse them.

I can only hope that this nonsense fades into oblivion, because I don’t want to live in a world where every business relationship requires duplicity and, eventually, larceny.

The next time someone is proposing to give you something that sounds like it’s for free, grab your wallet and anything else you’d like to hang on to and run in the opposite direction, because if you don’t, your valuables will soon be in the possession of someone who may not treat them with the same respect that you have for them.

Cool Surge Scam Artists at it Again

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Last year I wrote a blog article about a Miracle Amish Heater that generated a ton of traffic. I was even interviewed by the New York Times as a result of that article. Well, the company that brought us the Amish Heat Surge is at it again, and this time they are doing something even more despicable. They are misleading customers in their ads about a new cooler that uses ‘96% less energy than a window air conditioner’. There’s good reason it uses so much less energy than a window air conditioner, and that’s because it only has about 7% of the cooling capacity of a typical window air conditioner.

The $300 product is called the ‘Cool Surge‘ and it uses ‘glacier packs’ that you freeze and then load into the device so that a fan can blow air over the packs and presumably cool the room. Well, there’s only one problem with that approach and that is that device will actually make your house hotter, not cooler! Why? Because the energy it takes to freeze the ice packs comes from your refrigerator which exhausts the heat it removes from the water into your home. They conveniently forgot to mention this in their advertising. In fact, they say that the unit can’t be measured with a BTU rating. That is complete nonsense.

The BTU rating of this so-called cooler is absolutely minuscule compared with even a small window air conditioner. A small 5000 BTU/hr window air conditioner produces the equivalent cooling to melting about 35 lbs. of ice per hour. This cooler holds 12 lbs. of ice total. That’s about 1.5 gallons. Think about the volume of 1.5 gallons of water. You’ll be using a large portion of the space in your freezer to continually re-freeze these glacier packs. Assuming you swapped out these packs every 4 to 6 hours, which is how long they last according to the website, this device would have only about 7% of the capacity to cool a room as a window air conditioner. And, don’t forget, freezing the packs simultaneously puts all the heat removed from the water (and then some) into your home. There’s a good reason that air conditioners need to be vented to the outdoors. It’s because they need a place to dump the heat that they remove from inside your house. You cannot cool a house with a closed system like this.

I wish I could talk with the engineers who dream up these scam products just to see what they are thinking. I cannot imagine how they sleep at night because they are swindling their customers and the worst part is they must know it.

A Whole New Mind – book review

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An associate recently gave a very strong recommendation for a book entitled, ‘A Whole New Mind’ by Daniel H. Pink. Whenever I have someone recommend a book in an enthusiastic manner, I immediately run out and get it. In this case, I found it at my local library. Since I’ll be returning it soon, I thought I’d do a short review so I’d better remember it and to share what I learned from it with readers who might enjoy the material covered in the book.

The book focuses on what will be necessary to have a valued skill set in the future. When I was growing up, the advice was usually to stay in school, get good grades, and then study a profession like medicine, law, or engineering. I chose engineering. But there are reasons to believe that this advice is outdated due to several phenomena that have occurred in the past few decades. The author uses the alliterative effect of the words ‘Abundance, Asia, and Automation,’ to help describe these phenomena. Abundance is the recognition that over the years, most material needs have been satisfied with the abundance of high quality consumer goods that are more affordable than ever before. To be successful in this market of abundance, products need to be distinguished from each other by virtue of their transcendental qualities, not just their features and price. The word ‘Asia’ is related to globalization and how any job that can be done cheaper in India or China will likely be done there in the future, so if you find yourself in one of those professions whose jobs seem to be exiting stage left, you’ll have to retool your career to find a way to make yourself useful in this new economy. ‘Automation’ refers to the skills that used to require the ability to concentrate on fine details for hours now being done in seconds by a computer. Again, if your major skill is something that can be done faster and cheaper with a computer, you’ll need to figure out how you can add value some other way in the future.

I graduated from college at a time where an engineering degree meant a lifetime of job security combined with above average pay, so these phenomena all sounded very familiar to me, since that is no longer the case in the U.S.. I’ve seen many jobs that had been done here in my lifetime disappear into Asia seemingly overnight. Automation is a subject I studied in college, and I have always had a fascination with it. I recall asking a professor what would happen to the manual laborers who were replaced by robots. He responded that I was an engineer and shouldn’t be asking that kind of question, a response which I found more amusing than enlightening. It turns out that I didn’t need to worry so much about robots taking manual labor jobs. They were taken by lower cost workers in other countries. Similarly, I am a beneficiary of the low cost, high volume products that are significantly less expensive today in inflation-adjusted dollars than they were when I was a child. But I am also a victim of it because the engineering on many of these consumer and durable goods is increasingly being done in Asia, which reduces demand for the engineering to be done here in the U.S..

Is there a silver lining in this cloudy job forecast? The answer is not to change careers to become a doctor or lawyer, since some of that work is already being off-shored and taken over by technology as well. One way to become more aligned with the times is to re-activate the right side of our minds. Much of the work involved in writing software and doing engineering analysis is left brained, but the things that really differentiate products are less about the technology and more about the artistic side of product development. I can attest to the fact that much of the work I did on the last several products I designed had much more to do with Industrial Design, that is, the design of the user interfaces, colors, shapes, and textures than it ever had in the early days of my career. Back then, we could just put a product in a rectangular enclosure and paint it the standard corporate color and sell it. In the more recent products, we developed at least a half dozen artist renderings, ran them through customer testing and only then did we choose the shape and colors. Then we came up with full scale 3D models and solicited feedback on those as well. The appearance of the product these days is as important as what it does. The hardest part was trying to figure out a way to make everything fit inside of the design that was eventually chosen. So I can agree that when it comes to product design, the aesthetics definitely matter more today than they did 20 years ago.

It’s these right-brained values that are becoming more important in differentiating products than just price points and feature sets. It may account for why Apple has made such headway in the computer business after nearly losing it all a decade ago. That company definitely marches to its own drummer from a design standpoint and they’ve carved out a very profitable and ever growing slice of the pie as a result.

The book goes on to talk about how the right and left lobes of the brain interact and is full of examples which help to drive the point home. It covers exercises to help better utilize both sides of your brain. The second half of the book goes on to explain a sequence of the six senses of the coming Conceptual Age, namely, Design, Story, Symphony, Empathy, Play, and Meaning. You will not find these terms in any old-school engineering texts.

In the case of my associate who recommended the book, it was a result of an educational product we’re advising a company about and we were trying to relate how the product could be used to improve test scores, yet this book questions the validity of test scores in relation to success in one’s chosen career. It’s true that they may help you select a career and perhaps get you into a better school, but there are many other ‘soft’ skills determined by the right brain that may be a bigger determinant of one’s career success than shear IQ points or aptitude test scores. These soft skills are not easily measured with standardized tests. Good test scores will still be necessary, but not necessarily sufficient, when it comes to demonstrating marketable skills in the future.

I found the book to be a fast and enjoyable read with lots of great pointers to other resources. I would highly recommend the book, particularly if you’re contemplating how you might spend the rest of your career after seeing jobs like yours disappear to other lower cost economies.