Sun Microsystems in the Twilight Zone

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Case Details:

Case Code : BSTA103
Case Length : 13 Pages
Period : 1982 - 2004
Organization : Sun Microsystems
Pub Date : 2004
Teaching Note :Not Available
Countries : Global, USA
Industry : Information Technology

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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For years, corporate buyers bought from Sun in part because it seemed to know where tech was heading. Now many believe Sun spent several crucial years with its head in the sand.¹

Introduction

Sun Microsystems (Sun), a leading manufacturer of workstation computers, had traditionally pursued a unique, vertically integrated business model. Unlike most computer hardware vendors, Sun made its own chips (SPARC) and operating system (Solaris). Its software portfolio included application server, office productivity, and network management applications. Sun had also developed Java, a programming language for creating software that ran unchanged on any kind of computer. Once a shining star amongst the tech companies, Sun had slowly but steadily lost its sheen. Its stock price, which hit $60 by the end of 2000, had fallen to about $3 by August 2004 (See Exhibit VII). For the fiscal year ended June 2004, revenues declined by 2% from the year before to $11.19 billion.

Business Strategy | Case Study in Management, Operations, Strategies, Business Strategy, Case Studies

In mid-2004, Sun seemed beset by various problems. Low cost computers based on Intel chips and Linux software were posing a major threat. The company's cost structure had become bloated...

Excerpts >>

1] Kerstetter, Jim; Burrows, Peter. "Sun, A CEO's Last Stand," Business Week, 26th July 2004, Issue 3893, pp.64-70.

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