There’s been plenty of reaction this week to Sun’s restructuring announcement from last Friday. That announcement included the inevitable (cutting 15-18% of the workforce), the expected (organisational changes), and the surprising (the departure of Rich Green).

The conventional wisdom appears to be that Sun is positioning to sell off some of its less profitable product lines and focus on those hardware lines that are currently delivering the goods, as well as its open source software stack.

Certainly Southeastern Asset Management, Sun’s largest shareholder, has publicly indicated that its sees Sun’s future as a software company and is having conversations with Sun and potentially with third parties “regarding opportunities to maximize the value of the company for all shareholders.”

Sun’s current problems are not the product of its open source strategy but previous strategy mistakes related to its hardware lines and an over-reliance on financial services. Even if Sun were to divest itself of under-performing product lines there is no guarantee that Sun’s open source strategy will deliver the goods, however.

As Dave Rosenberg commented earlier this week: “Sun’s strategy is audacious and reshapes the way that everything is done, but it’s not clear that the strategy is correct or that Sun’s existing corporate structure can execute on this enormous change.”

Sun’s chief open source officer, Simon Phipps, recently outlined what he called “The Sun Model” for open source business. It is summarized as follows:

1. remove barriers to software adoption between download and deploy;
2. encourage a large and cohesive community of software deployers;
3. deliver, for a fee, the means to create value between deploy and scale, for those who need it

What is missing from this summary, for me, is any mention of communities of developers (as opposed to deployers). On the subject of development, Simon wrote: “As a business model, it doesn’t have much to say about the nature of the development community, but I believe dysfunction in that area is a barrier to adoption so it’s always an issue if dysfunction exists.”

If I were betting an entire company’s strategy on a model for open source business I would hope that the model had more to say about community development than that.

When Sun embarked on its open source strategy there were two leading models that it could have looked to emulate: the 100% open source, community-driven model of Red Hat, which relies on support as a revenue stream; and IBM’s model of engaging with open source communities and using open source within its products while generating revenue from commercial products and services.

Sun opted to go its own way with a model that sits somewhere between the two - rather than engaging with existing communities Sun opted to try and create its own.

No doubt it had very good business reasons for doing that but one of the results is that Sun has created its own open source software stack, distinct from Apache and Linux and Eclipse, for which it is largely responsible for research and development.

Of course it is perfectly entitled to have done so, and I am not advocating that the company should somehow be forced to share its code with other projects, but I do believe that the true economic benefits of open source are gained through playing to its strengths as a development model, as well as a distribution model.

Sun has made itself one of the figureheads of the open source software world and has has got a lot right in terms of projects such as OpenOffice.org. Because of that, as Dave Rosenberg recently noted, “if Sun is wrong, everyone else will look wrong too” at least in the eyes of the general IT media. So there is a lot riding on Sun’s getting its strategy right.

I was recently asked for my thoughts on Sun’s strategy. My immediate response was that Sun is like a sailing boat heading a few degrees off course: it appears to be heading in the right direction but the longer it continues on its present course the further away it gets from its intended destination.

Maybe that’s a little harsh, and I do hope so. Certainly if we look back on this post a year from now I will take greater pleasure from having been proved wrong than right.