McNealy--an engineer's witty patron

The technology industry just became less interesting.

Scott McNealy, one of the longest-serving and best-known CEOs of Silicon Valley, announced Monday that he was stepping down as chief executive of Sun Microsystems. McNealy, 51, will stay on as company chairman and a full-time employee dedicated to government sales.

Scott McNealy

If McNealy should really step out of the limelight he's held for more than two decades and allow Jonathan Schwartz, his talkative, 40-year-old protege, to become the public face of Sun, it will be the end of one of the most remarkable runs in tech, or perhaps all of American industry.

"Sun has been a labor of love for me for since 1982 and it has been an honor and privilege to serve as its CEO for the past 22 years," McNealy said in a statement.

McNealy, whose father was vice chairman of American Motor Corp., is fond of car analogies. So it's not a stretch to compare his impact on the tech industry to the likes of Henry Ford and other pioneers in Detroit.

McNealy and three other people--Vinod Khosla, Bill Joy and Andy Bechtolsheim--founded Sun with the idea of taking a Unix operating system created by Joy and others at the University of California at Berkeley and putting it into relatively inexpensive workstation computers that would be cheaper and more flexible than the so-called mini-computers sold by the likes of Digital Equipment Corp. and Apollo Computer.

The idea was a runaway success, and Sun as much as any other company is credited with causing the demise of those East Coast computing giants. But the defining moment for Sun came with McNealy & Co. aggressively moved into the server business. That move, coupled with the creation of Sun's Java software development platform and the dot-com boom, propelled Sun's rapid growth in the 1990s.

But when the dot-com boom ended, critics say McNealy was too slow to cut costs. And in an irony for an executive who in his youth undercut the bigger, slower-moving competitors with a low-cost alternative, McNealy was slow to react to the competitive threat presented by servers built with the Linux operating system.

He had hanging on a coat rack in his office a Linux penguin suit--a keepsake from a press conference in which he proclaimed that, once and for all, Sun "got" Linux--but critics say he never quite got a handle on how to deal with the competitive threat that Linux posed.

Down-to-earth approach
Still, McNealy's legacy to the tech industry may be as much his colorful personality as the company he helped build. If Intel's Andy Grove represented the hard-driving business professionals of Silicon Valley and Oracle's Larry Ellison is still the face of the Valley's hyper-rich raconteurs, McNealy has been the down-to-earth face of the Valley's engineers--more comfortable in jeans and sneakers and more apt to talk about golf and ice hockey than fabulous vacations and yachts.

While many executives would wine and dine customers at elite restaurants, McNealy preferred more easy-going places like Joe's American Bar & Grill in Boston, a mid-priced burger joint in the New England city's Back Bay. He also preferred the golf course--where McNealy is considered by Golf Digest to be among the top executive duffers in the country.

Video: A look back at McNealy's wisecracks at Microsoft

McNealy was never actually an engineer. He was an economics major at Harvard University (where, not surprisingly, he was the captain of the golf team), and received an MBA at Stanford University's School of Business. But few questioned his respect for engineers, whether it was software and design visionaries like Joy and Bechtolsheim, or rank-and-file engineers.

McNealy often joked that he really didn't understand what the tech guys were talking about--usually before he launched into a detailed description of company's products that often demonstrated a remarkable knowledge of the specification of dozens of Sun products. Not surprising. Though McNealy downplayed his own intellect, he actually scored a perfect 800 on his math SATs in high school.

Some would argue that McNealy's respect for those engineers cost him dearly during the tech bust, when he appeared reluctant to cut into Sun's considerable research and development budget, believing the only way for the company to save itself was to innovate its way out of it.

Of course, McNealy press conferences became a favorite among the computer press because of his witticisms. He famously compared the merger of rivals Hewlett-Packard and Compaq Computer to "two garbage trucks backing into each other in slow motion," and said using Microsoft software was like using drugs, because "the first hit is free."

Did that wit and love of company betray him? Some believe McNealy went too far when he called Microsoft's Bill Gates and Steve Ballmer "Ballmer and Butt-Head," and that the Sun founder made the long-running feud with Microsoft a distraction for his company before settling the fight two years ago.

McNealy also feuded for years with Wall Street analysts, who thought he should have made cuts deeper and faster, a move he thought would rob the company of its biggest asset: the engineers. Perhaps not surprisingly, investors reacted well to his resignation, sending Sun shares up more than 6 percent in after-hours trading Monday evening.

So what will McNealy do now? He said he will remain active with the company and work as a customer advocate inside Sun. It's also likely the father of four sons will spend more time with his children and on the golf course. But it's hard to imagine Sun--or Silicon Valley--without McNealy leading the charge.