I have been ruminating on Sun for a while, ever since Savio Rodriques' blog on Sun's software earnings last month. Last quarter, Sun's Java licensing generated $67M and MySQL generated $81M. Not even taking into account the 50% growth rates that these products are seeing, that is a $600M annual run rate.
As Matt Asay pointed out, Red Hat and Sun had virtually the same market cap for a bit, although Red Hat has since dropped. If you account for the cash that Sun has, Red Hat is actually worth a couple of billion more. Red Hat had $500M in revenue last year.
Contrary to Matt, I don't think these numbers are as exciting for Red Hat as they are for Sun. What is interesting is that if you look at the numbers only, Sun is now a software company. If Sun consisted only of its Java and MySQL groups, it would be a $600M/year commercial open source company that is worth, at the same multiple as Red Hat, $2.5B. When you take into account Sun's cash position, that is more than Sun is worth right now!
So yes, I was quoted in Forbes saying that Sun should jettison its Java group, and I have to take a mea culpa on that one now that I see that Sun is making over $300M/yr off of Java.
Sun is now a modern, open source software business, and a layer up above Red Hat at that. The hardware at this point is a channel for the software and will soon be rentable as a cloud offering. I imagine that Sun will continue to climb up the software stack and roll up SugarCRM, Alfresco, Jasper, and others.
Kudos to Jonathan Schwartz. It took a long time to redirect the lumbering ship, but he has done it. I think that soon enough the market will recognize this new, rising Sun as a counterbalance to Oracle's proprietary solutions. Congratulations!
- Peter Yared
- Peter Yared is the CTO/CIO of CBS Interactive, a top ten Internet destination, and was previously the founder and CEO of four enterprise infrastructure companies that were acquired by Sun, VMware, Webtrends and TigerLogic. Peter's software has powered brands from Fidelity to Home Depot to Lady Gaga. At Sun, Peter was the CTO of the Application Server Division and the CTO of the Liberty federated identity consortium. Peter is the inventor of several patents on core Internet infrastructure including federated single sign on and dynamic data requests. Peter began programming games and utilities at age 10, and started his career developing systems for government agencies. Peter regularly writes about technology trends for CNET and has also written for the Wall Street Journal, BusinessWeek, VentureBeat and AdWeek.
Many thanks to Bob Pulgino, Dave Prue, Steve Zocchi and Jean-Louis Gassée for mentoring me over the years.