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Sun Switches Gears

5:50 PM -- After Sun announced a net loss of $217 million in its third-quarter results last night, founder Scott McNealy handed over the CEO's reins to Jonathan Schwartz, the firm's chief software architect. (See Sun Reports Q3 Results, and Sun's McNealy Steps Down.)

The 40-year-old Schwartz, with his ponytail, spectacles, and obsessive blogging, seems an altogether less excitable, more easy-going character than the brash, hockey-playing McNealy. Could it be that the pen really is mightier than the sword?

Speaking on a conference call last night, though, the 51-year-old McNealy sought to downplay any suggestion that he's been usurped by a man in glasses. "This was my decision that was supported by the board," he explained, adding the bombshell that he has been thinking about stepping down for the last six or seven years.

Now that the dust has started to settle, it's time to explore whether the changing of the guard signifies a change in direction for Sun. On last night's call, the new CEO denied there will be a major strategy shift. His tack was to simply chant Sun's "The network is the computer" mantra like a Silicon Valley lama.

Schwartz, however, is a shrewd operator who may need to make big changes to steady a Sun ship that is only just emerging from the choppy waters of the dotcom bust. (See Is Sun Setting?) One of the major criticisms leveled against Sun over the last few years is that the vendor has not always delivered a coherent message about its technology. Whereas archrival IBM has managed to convince users that it is a services, software, and hardware vendor, the same cannot really be said of Sun.

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