Sun Microsystems defined the internet — then Linux made its hardware obsolete

Sun Microsystems was founded in February 1982 by Scott McNealy, Vinod Khosla, Andy Bechtolsheim, and Bill Joy — the name stood for Stanford University Network. Its first product was Bechtolsheim's Sun-1 workstation, designed in a Stanford grad project. The company went public in 1986 and became the defining technology company of the dot-com era. It created Java, the SPARC processor, Solaris Unix, NFS, and NIS — technologies that shaped the modern internet.

At the dot-com peak in 2000, Sun's stock reached $250 per share and its market capitalization exceeded $200 billion. Revenue peaked at roughly $18 billion. The company had 38,600 employees. Sun servers were the backbone of the internet — Wall Street, telecoms, and dot-com startups all ran on Sun hardware with Solaris and Java.

The dot-com crash hit Sun hardest. Its customers' servers were auctioned off; Sun's hardware sales went into freefall. The stock dropped below $10 by late 2002. Sun never recovered. The rise of Linux on commodity Intel servers — led by Dell, IBM, and Red Hat — destroyed Sun's competitive advantage. Companies could now run web applications on cheap x86 servers instead of expensive SPARC machines. Sun's response was too slow and too weak. It began including Linux in 2002, but could not escape its own proprietary hardware dependency.

Multiple restructuring rounds followed: 1,000 layoffs in 2003, hundreds in 2005, 5,000–6,000 (15–18% of the workforce) in 2008. By November 2008 Sun's market cap had fallen to $3 billion — a 98.5% loss from its peak. On April 20, 2009 Oracle announced it would acquire Sun for $7.4 billion ($5.6 billion net of Sun's cash). The deal closed on January 27, 2010. Oracle absorbed Sun's technologies — Java, Solaris, SPARC — laid off most of the staff, and sold Sun's 1-million-square-foot Menlo Park campus to Facebook. The campus sign was left with the Sun logo on the reverse side.