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Sun sets on Scott McNealy’s reign

Cliff Saran

Scott McNealy stepped down as chief executive of Sun Microsystems last week, after the latest in a succession of quarterly losses at the company cast further doubt over the long-term viability of its business model.

Sun's recent policy has been to discount software to sell more hardware. Existing users have benefited from the availability of software such as Sun's Java Composite Application Platform Suite, a low cost version of the high-end Seebeyond Integrated Composite Application Network middleware.

However, attractive licensing has failed to bolster server sales, and analyst firm Gartner has estimated that Sun has just 4.2% market share.

McNealy stepped aside as the firm posted third-quarter losses of £120m. His replacement is Jonathan Schwartz, who was previously chief operating officer.

David Mitchell, software practice leader at analyst firm Ovum, said, "Sun's entire software portfolio needs a significant overhaul that has to involve a good deal of divestment."

According to Gartner, Sun has been losing market share. Prelimary findings for the first quarter of 2006 show the global server market grew 13.7% year on year, with shipments of nearly two million units.

Hewlett-Packard maintained its position as market leader, followed by Dell and IBM. However, Sun only grew 6%.

Phil Dawson, vice-president of enterprise systems at Gartner, welcomed Sun's strategy to give away software, but questioned whether the strategy was working. "It is a novel licensing scheme but Sun must deliver volume sales," he said.


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