The curious case of Sun Microsystems Philippines

In more ways than one, Sun Microsystems Philippines (SunPhil) is an "anomaly" among the large IT companies in the country. Let me try to explain this in light of the recent acquisition of Sun Microsystems by Oracle.

Firstly, SunPhil was formed under a very different business model. Unlike in other Sun subsidiaries where the local office is fully owned by Sun Microsystems, SunPhil actually operates under a joint venture arrangement.

Its origin has an interesting side story. SunPhil's predecessor, PSPI, started out as Sun's local distributor. It was racing and tech pioneer Augusto "Gus" Lagman who urged fellow car racer Mario Mamon to put up PSPI in the late 1980s through a company called IT Holdings Inc. Mamon then asked his wife, Cynthia, to resign from her government job at the Department of Science and Technology so the family could devote more time to their new baby. Lagman, meanwhile, continued to straddle the racing and IT fields by serving, among other positions, as head of the Automobile Association of the Philippines (AAP) and IT Foundation of the Philippines (ITFP).

In 1999, IT Holdings entered into an agreement with Sun Microsystems USA that paved the way for the creation of SunPhil, with the U.S. company owning minority ownership. If I recall it right, that was first time that Sun's U.S. headquarters agreed to have a local firm carry its name despite not being a full subsidiary. This setup would soon be replicated, however, in other countries such as Indonesia.

In July 2001, just as the Mamon family started to pay attention to its theme park business, their holdings company decided to sell its 49-percent stake in SunPhil to Singaporean firm Frontline Technologies for US$2.82 million. A few years later, Frontline gobbled up the remaining shares of the Mamon family to gain complete control of SunPhil. Although the transaction allowed Cynthia Mamon to remain as managing director, Frontline installed an official in the company who held the title "chief operating advisor".

In March 2008, British tech firm BT acquired Frontline, getting SunPhil in the process. The leadership set-up, however, remained unchanged even as BT Philippine head Nilo Cruz moved in at SunPhil's office at the Philam Life Building in Makati. Cruz, incidentally, was a former GM of HP Philippines, Sun's competitor.

It's interesting to note that SunPhil has not had a managing director in its entire history other than Cynthia Mamon. This is attributed presumably to her good performance, as well as clout in the industry, since her family no longer owns any stocks in the company.

Indeed, under her leadership, SunPhil turned in profits yearly even as Sun Microsystems and its other subsidiaries in the other parts of the world struggled financially. Big-ticket contracts in the government and in the telco sector kept the company afloat. This was another abnormality that set SunPhil apart from Sun subsidiaries and among IT firms.

But Oracle's recent purchase of Sun may change all that. In my mind, Oracle has two options: maintain the joint venture arrangement (BT-Sun, which will then become BT-Oracle) or buy out the shares of BT in SunPhil so it can create a full-fledged subsidiary which it can combine with Oracle Philippines, its fully owned subsidiary in the country. It's a bit confusing, but I hope you have an idea of what I'm saying.

Questions on the future of SunPhil would hopefully be answered in the next few weeks.

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Melvin G. Calimag

Melvin G. Calimag currently writes for the infotech section of a popular English broadsheet in the Philippines. Prior to this, Melvin served as an assistant editor at Metropolitan Computer Times (MCT), the first IT publication in the Philippines. He is currently the vice president for internals at the IT Journalists Association of the Philippines (CyberPress), and also serves as a charter member with the Philippine Science Journalists Association.