Venture Partners of Menlo Park, California. Although Sun's market has since expanded upward to corporate information managers, the company has never lost its devotion to being a technological leader with its products, rather than being merely an integrator or solutions provider using technology from elsewhere. Ask any of the other top executives at Sun to define the company, and they will describe it first and foremost as a products company that controls its own intellectual property.
In addition, they expected to "manage company growth to produce break-even cash flow by the end of the first year. Despite its reputation for zaniness on other fronts, Sun has always been a tightly managed company that meets its financial objectives. Read more about this in Chapter 5. No hardware or software vendor, no matter how big or powerful, survives without this web of external support. The web includes customers whose needs define how a technology evolves, and software developers who write programs for it.
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By targeting technical computer users first, Sun gained entree to sophisticated, independent buyers who generally made their own decisions about technology. This was not a new strategy: competitors Apollo, Digital Equipment, and Hewlett-Packard had all used it; Sun, however, would take it to the extreme, becoming a company of engineers selling to other engineers. Sun thus achieved a camaraderie with its customers, who propelled sales with enthusiastic reports. This early model gave the company a solid base upon which to expand. Khosla thought of a friend he knew from Stanford, someone who was running operations at another Unix start-up, Onyx Systems, in San Jose.
This was Scott McNealy, who had grown up in a wealthy Detroit suburb, courtesy of his father's executive position at American Motors, and developed a reputation at college as a party-going jock. Though he attended Harvard and Stanford, McNealy was hardly known for academic excellence. Even today, he'll tell you he majored in "beer and golf. Khosla said to his friend, "So when are you quitting your job?
Then McNealy, who had the natural jokester's knack for timing, told Khosla: "I will take the job. Broyles had recruited McNealy there at the suggestion of a mutual friend, Bill Raduchel, who had known McNealy at Harvard and now worked for a customer of Onyx. Within a couple of weeks, Scott had the year-old manufacturing guy's respect and they were working as a team. Scott went out on the line and talked to people. The trio of Khosla, Bechtolsheim, 'and McNealy worked feverishly over the next three months to develop a prototype of the first product, the Sun-1 workstation, but they weren't completely happy with the Unix variant they were using as the operating system.
The team went over to woo him. Joy is a bushy-haired, bespectacled genius who still delights in dressing in the psychedelic colors of Berkeley in the s and s. When he's discussing technology, he usually goes off into the stratosphere, way over everybody's head. But Bechtolsheim, who has the same knowledge of hardware that Joy does with software, hit it off instantly with the prospective recruit.
He was impressed when Joy walked over to the Digital VAX minicomputer that he was using and casually turned it off.
High noon : the inside story of Scott McNealy and the rise of Sun Microsystems
Joy was about the same age as the other three, so he shared the optimism of youth. He was also getting fed up with fighting for space and resources at Berkeley. After dinner with the trio, during which he spent most of the time talking shop with fellow tech-head Bechtolsheim, Joy signed on as the fourth cofounder.
As the driving force, Khosla had grandiose ambitions for what was now called Sun Microsystems Incorporated. The first name, SUN Workstation, was discarded as too narrow. Sun was a zero-billion-dollar company. In contrast to Khosla's intensity, McNealy was more lighthearted, joking that Sun "will be the biggest belly flop.
Joy and Bechtolsheim kept their heads down and concentrated on technology. But, what Sun lacked was someone to sell the product that Joy and Bechtolsheim were avidly designing. Joy turned to an older, more experienced friend of his at Berkeley, John Gage, then doing consulting for cable companies. Gage, today a grizzled visionary whose eyes still light up over the prospects that technology offers, is another noteworthy character in the company menagerie.
His sprawling house, located in an older section of the city of Berkeley, is plastered with old protest posters. He's a bright man who majored in mathematics, but whose real genius lies in his ability to assimilate information from diverse spheres and bring it together.
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Several years older than the founding team, he brought real-life experience to the table. He was in a different zone," a description of the enigmatic Gage that rings true today. Now a chief scientist at Sun, Gage "basically sold every machine in ," Joy says. He remembers how Gage would divide up the phone messages piled on his desk into various time zones. Gage "would start with Europe in the morning and, as the day progressed, he would move on to different time zones. Once in a while he shoveled everything back into a pile because he didn't have enough time.
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Gage took orders, and Sun built the machines and shipped them. Sun was typical of many start-ups, chaotic and unstructured, but out of these early days constructs emerged that would solidify and guide the company's evolution. The first was that the company ran lean and mean, and employees worked long hours, usually with far fewer resources than their competitors.
Then I'd show up at 4 A. Khosla and McNealy were both frugal, particularly Khosla. He figured out how many engineers he needed by looking at the smallest viable player next to Sun in the market, which he identified as Hewlett-Packard. The second construct was that non-product-related functions, such as marketing and customer support, were dealt with on a rather ad hoc basis. They were afterthoughts to the engineering-driven technical aspects of the product. As it moved up-channel, Sun would be forced to revise these priorities, but they held for a good chunk of the company's history.
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The third construct was that McNealy was the one who talked to employees and dealt with morale issues, which meant that he was emerging as the de facto leader, even though he was vice president of manufacturing and Khosla was the CEO. But Khosla was too driven, and Joy and Bechtolsheim too buried in technology, to relate well to personnel and cultural needs.
The Sun-1 was essentially a prototype. The Sun-2 incorporated elements that the engineering market was looking for: it ran Joy's Berkeley Unix, which was considered the coolest, hippest operating system of its day, on top of Bechtolsheim's sleek hardware design. So, it was fast, for its time, and relatively easy to use because most engineers are proficient in Unix. The best way to instill customer confidence "is to design products around accepted industrywide standards at all the interfaces where one technology will need to talk to another," McNealy explained in a viewpoint article in the December 16, , issue of Computerworld.
Unix "is one example of such a standard that can be shared by all the classes of computer equipment from supercomputer to desktop The trouble was that the Sun-2's new monitor, obtained from an outside supplier, emitted so much static electricity that it could short out the whole system.
Dave Cardinal, an early hire at Sun in product support, remembers the problem well. At the Comdex trade show, he was assigned to get nine Sun-2 machines set up for product demonstrations at Sun's booth. Because the failure rate was so high, Sun had to offer an extended warranty promising replacement of monitors to reassure customers. That same year Sun recruited Bernie Lacroute, a year veteran from Digital and a French immigrant, to head engineering.
One of his first tasks was to fix the monitor problem.
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He discovered that the monitor would discharge electricity through the connecting cables and zap the machine. If we couldn't ship we were dead. The Sun-2 eventually became a relative success for Sun, selling in the thousands of units and paving the way for the next-generation workstation, which would propel the company to billion-dollar status. Despite its problems, the Sun-2 enabled Sun to develop a manufacturing strategy of building machines quickly to meet specific customer demand.
Ship at all costs became the motto, which meant the four founders and everyone else in the company would congregate on the manufacturing floor the last day of a quarter to assemble machines for shipping. Finally, the Sun-2 was the product that Sun used to make a critical deal, one which forced the leading workstation vendors to sit up and take notice of the little upstart in California.
In late , Computervision set off a free-for-all among workstation companies by announcing that it would shift its reliance on minicomputers to the cheaper workstations, which were now powerful enough to meet the demands of CAD. The choice came down to the new kid on the block, Sun, and the established vendor, Apollo, which had the additional advantage of being in Computervision's backyard. Sun bid with its new Sun-2 workstations, which were lauded by Computervision's engineers, but Apollo landed the contract. Khosla got the bad news in a phone call from a Computervision purchasing agent.
In a move that has achieved legendary status among Sun old-timers, Khosla and McNealy grabbed a red-eye flight from San Francisco to Boston and showed up uninvited at Computervision. This moment was vividly captured in Sunburst , a book about Sun's early years. The two young Sun cofounders "planted themselves in the plush lobby of Computervision's headquarters.luconecheare.cf
From there they called everyone they knew inside Computervision, asking for another chance, demanding an opportunity to revise their bid. Apollo and Computervision figured they had a deal; Computervision staff members tried to shoo Khosla and McNealy out of the lobby. Nothing doing. Finally, a Computervision vice president cut a deal with Khosla and McNealy: Get out of the lobby and Computervision President James Barret will call you at the local sales office.
According to Sunburst : "When the call came, Khosla knew it was his last opportunity to sell Sun. So he sold hard. Winning Computervision Khosla sprang for a celebration cruise on the San Francisco Bay for the entire company, which consisted of 40 people. The essence of the deal was not the price Computervision paid for the workstations, Khosla emphasizes, but the fact that it would also manufacture and resell them. That meant Sun captured a portion of the gross margin on Computervision's sales with no manufacturing costs on its part.
Todd Basche, who would later join Sun as a director of desktop systems, was an engineer at Apollo when the Computervision deal was sealed.