McNealy's bittersweet memo bids good-bye to Sun
Scott McNealy, the smack-talking co-founder and long-running leader of Sun Microsystems, has bid adieu to his company in a memo that mixes nostalgia with a rallying cry for employees about to become part of Oracle.
Context & Ripple Effects
McNealy's memo closes a chapter that began unraveling publicly in April 2009, when Larry Ellison announced Oracle's acquisition of Sun and Jonathan tried to reassure his troops by email the same day. The deal then spent months in limbo: Sun traded 16% below Oracle's $9.50-a-share, $7.4 billion offer through November as investors feared European regulators would derail it, until Oracle made public commitments to MySQL customers and developers in December and worked through its antitrust concerns with the European Commission.
The farewell also bookends a longer decline critics had charted for years — from Nicholas Carr's 2005 take on Sun's data center meltdown to the company retiring the SUNW ticker in 2007 as Java outshone the hardware business. A co-founder signing off as the company is folded into Oracle marks the formal end of Sun as an independent systems vendor.
First-order effects
- Sun's workforce becomes Oracle's overnight, with McNealy exiting while Jonathan Schwartz remains chief executive during the integration — the second leadership transition message employees have received since the April 2009 announcement.
- MySQL users and developers move under Oracle's stewardship, putting the commitments Oracle made to the European Commission in December directly to the test.
Second-order effects
- Oracle inherits Sun's full stack — servers, storage, Solaris, Java, MySQL — giving it leverage to bundle database and hardware pricing in ways HP, IBM and Dell must answer in their own enterprise accounts.
- Customers who bought Sun hardware as a counterweight to IBM and HP now face a vendor whose incentives run toward selling Oracle software on Oracle iron, reopening procurement decisions frozen since the deal was announced.
Third-order effects
- If the integration holds, the pattern points toward independent systems makers being absorbed into vertically integrated software giants, leaving fewer standalone hardware vendors for enterprises to play against each other.
- The European Commission's willingness to extract open-source commitments before approving a vertical merger sets a template regulators elsewhere can apply to future hardware-plus-software combinations.
The trend: Independent enterprise-systems vendors are being consolidated into vertically integrated software companies, with antitrust authorities conditioning approval on open-source and interoperability promises.