Dawn of the Dead

Road show 2.0: In Minneapolis, David Douglas, Sun’s vice president for “eco-responsibility,” shows off Project Blackbox, a new plug-and-play data center in a shipping container.

Chipper: Greg Papadopoulos persuaded Sun in 2002 to abandon a chip that the company had already spent $500 million on in favor of a radical design that promised to be faster and more energy efficient.

Related Stories

• A Timeline of Sun Microsystems
  After going public in 1987, Sun became the computer maker of choice for many technologically sophisticated customers, then rode the dotcom wave—and crashed with it. Will the company rise again?

Schwartz is trying to reinvent Sun as a new kind of computer company. When he took over, he ignored Wall Street analysts' calls for massive layoffs. Sun's resurgence has to come from creativity, he insists, not just cost cutting. "We're not in business to save money," he says. "We're in business to ship innovations."

Whether Project Blackbox will be more than a niche product is an open question. Jim Burton, an analyst at Ideas International, an information-technology research firm, says that "Sun has carefully studied the problems that keep IT management up at night, then created a product to address those problems. The Blackbox is a simple and elegant solution being introduced at exactly the right time." Others are more skeptical. David Mathog, who runs a computing facility at Caltech and is precisely the sort of person Sun hopes to target, raised some practical issues on an IT discussion group: Would it meet building codes? Could staff move around inside?

"There is enough room for people to comfortably work," responds Sun spokesman Shawn Dainas, adding, "we've had an overwhelmingly positive response from customers who have gone to see the Blackbox in the U.S. tour."

The Blackbox, at a minimum, is a very smart way of capturing people's attention and imagination--and it might even help sell more servers. "While the idea behind Project Blackbox is ingenious," blogged software developer Scott Yang, "it is no more than a strategy for Sun to sell more boxes." The Sun Web site claims that 250 Niagara servers in a Blackbox will support four times as many users at five times the energy efficiency of similarly configured servers from, say, Dell.

"The single highest-impact blog I wrote in the past year was when I apologized to a customer who had a hard time trying to buy from Sun," says CEO Schwartz.

Schwartz rejects the conventional wisdom that computers have become commodities, a necessary cost rather than a potent weapon. Instead, he proposes that more and more companies will be like Google, which has an insatiable appetite for computing and uses it for strategic advantage. And the Blackbox is symbolic of that vision. "This is not just a new kind of package," says legendary computer designer Danny Hillis of Applied Minds, who consulted on the project. "It's a new idea of what a computer company's product should be."

Wall Street's confidence in Schwartz's approach wavered momentarily in early April after Bernstein Research analyst Tony Sacconaghi downgraded the stock, noting that its 50% pop had made it expensive compared to rivals IBM, HP, and Dell, all of which have lower price-sales ratios. But the dip was brief, and both Merrill Lynch analyst Richard Farmer and UBS analyst Benjamin Reitzes have reiterated that Sun is, as Reitzes put it, "in the midst of a classic turnaround."

Of course, the Street is notoriously fickle and will swing back and forth based on rumor and sentiment--until the numbers come in. And that's where Sun and Schwartz and the Blackbox have to show their muscle. Schwartz is doing what he can: He's wooing rapidly growing startups like the hot social-networking site Twitter with discounts of up to 70%. He'll happily sell a Blackbox loaded with rivals' servers, if that's what a customer wants. And he's mending fences. "The single highest-impact blog I wrote in the past year was when I apologized to a customer who had a hard time trying to buy from Sun," he says. "We need to authentically engage with the community if we want them to trust us, or they won't buy from us."

Feedback: deutschman@fastcompany.com