The Sun Sets On Scott

Surely, the unceremonious changing of the guard at Sun came as no surprise to those who have been watching the beleaguered computer company. Without much fanfare, but with mumbling so loud it shook Silicon Valley, Sun's longtime leader Scott McNealy handed the reins to Jonathan Schwartz, effectively removing himself from power--at least in the vendor's day-to-day operations.

For the record, former Sun president and CEO McNealy remains chairman of the company and will focus on the global public-sector and academic markets. But for someone as intelligent and charismatic as McNealy, passing the torch should have been a different experience. Instead of exiting on a high note, bathed in accolades and the promise of fruitful things to come, he faces a rather uncertain future. As for Sun, its stock price hovers around $5 a share (ouch), and its channel partners are wondering why they should continue to support the organization.

The 40-year-old Schwartz started raising eyebrows in 1998, when he was overseeing product marketing for JavaSoft. He remained in the limelight while pushing Sun's software strategy.

While you VARs are selling Sun hardware and software for measly margins, Schwartz will be taking home $1 million a year, with a potential bonus of $2 million (kind of like a hot-dog vendor--the channel--serving Donald Trump--Schwartz--his lunch on the streets of New York). He also has options to purchase 2 million Sun shares, in addition to 2.3 million restricted stock units, and access to the corporate jet. What's more, Sun will pick up the tab for Schwartz's personal security. Not a bad payday. But Schwartz is going to earn every penny.

So, just what did you channel folk get in the deal? In a word, hope--that Sun will find a way to leverage the channel much more effectively. The top three items on Schwartz's to-do list: 1) Meet with hardware solution providers; 2) Meet with software solution providers; 3) Develop a clear message for the entire solution-provider community.

If Schwartz does nothing else but those three things in his first 100 days in office, his reign will be wildly successful. It's no secret that partners never considered McNealy a believer in the channel, and his actions year after year supported that point of view. It's a wonder, in fact, that they still sell Sun product, despite pressure from the server and storage groups of IBM and Hewlett-Packard.

Many of those partners have been wondering if Sun will continue to exist independently, or if the $12 billion company (with a market cap of some $17 billion) will be sold. Either way, Sun's future is unclear as far as solution providers are concerned. Schwartz has a chance to change that, and to distance himself from McNealy's outdated view of the channel. There isn't a single CEO left, except for Michael Dell, who doesn't wholly embrace the indirect business model.

What drove us nuts about the former chief was how progressive he was in his technical and creative thinking but how backward he was in his channel point of view. I was convinced he wanted only as many solution providers as he had fingers and toes. What Schwartz needs to do is to apply his ample creativity and intellect to inspiring and motivating VARs.

Cushioning Schwartz's arrival is the fact that the partner community, as a whole, wants alternatives and is desperate to attach itself to vendors that can show top-line growth. One way for Sun to achieve that growth is to unify VARs around its servers, software, storage and services. Right now, the vendor's channel strategy is fragmented and misunderstood.

In all fairness to McNealy, though, Sun today has one of the best product portfolios in its history. Let's hope Schwartz can change the company's channel fortunes.

Ready For My Next Trivia Question?: Which devices first used Sun's Java programming language? The winner of the April 17 contest is Martin J. Tepe of Covington, Ky.-based Exclusive Software Services, who answered correctly that Digital Equipment Corp.'s Intel-based PC was the non-IBM-compatible Rainbow. Congrats, Martin. Your prize is on its way.

Questions? Comments? Answers to trivia question? E-mail me at rdemarzo@cmp.com.

Robert C. Demarzo (rdemarzo@cmp.com) is vice president/publisher of VARBusiness and GovernmentVAR magazines.