McNealy Out as Sun CEO, Schwartz In

Scott McNealy, one of Sun Microsystems’ co-founders and CEO for 22 years, is stepping down from the company’s top position, being replaced by current President and Chief Operating Officer Jonathan Schwartz.

McNealy made the announcement April 24 at the end of the Santa Clara, Calif., company’s quarterly earnings call.

He said that Sun, which grew rapidly during the 1990s but has struggled over the past five-plus years during the economic downturn, appeared to be moving in the right direction again, and that now was the time to make the change.

“The time is right,” McNealy said. “Our product line is fixed … our customers are probably happier with us then they have been in years.”

President and COO Jonathan Schwartz speaks on his agenda for Sun. Click here to read more.

McNealy will remain chairman of the board of directors, and will focus on expanding Sun’s presence around the world, concentrating on such areas as the company’s open-source initiatives.

McNealy also will take the role of chairman of McLean, Va., technology company Sun Federal, which works only with the U.S. government.

In addition to becoming CEO, Schwartz will also keep the title of president.

McNealy credited Schwartz, who came to Sun in 1996, with driving the turnaround at Sun, which for years stuck stubbornly with its legacy SPARC/Solaris platform even as industry demand shifted to the x86 architecture powered by Intel processors and running Windows, and in the face of the rise of the Linux operating system.

Over the past few years, Sun has embraced the open-source movement, kicking off initiatives to open-source such Sun technologies as Solaris and the new UltraSPARC T1 chip, formerly code-named Niagara, which launched in fall of 2005.

Rumors of McNealy’s departure were rife before the announcement. What were some of the factors behind the decision? Click here to read more.

At the same time, the company has undertaken a drastic revamping of its server product line, adopting Advanced Micro Devices’ 64-bit Opteron processor as the tool with which to push its way into the competitive x86 market. During the earnings call, Schwartz said the company was experiencing “outstanding” growth in its Opteron-based Galaxy systems, with an annual run rate of about $400 million.

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