Sun Microsystems Inc. last week announced its Java Enterprise System and its Java Desktop, which will fundamentally change Suns software pricing, delivery and licensing models. After the announcement at the Sun Network conference in San Francisco, Jonathan Schwartz, Suns executive vice president for software, sat down with eWEEK senior editor Peter Galli.
eWEEK: Given that Sun has done a bit of a dance around its position on Linux and the ability to run Solaris on x86 hardware, some customers are wondering just how committed you are to this new Java product and pricing strategy and your ability to actually deliver what you are promising.
Schwartz: We have been working on this strategy for more than a year and are more than able to deliver on it. We have 90 deals in the pipeline and six are signed, including Telstra, World Book Inc., Hotels.com, Sales-force.com and Lucent Technologies, and we just rolled this out. Our sales force will also be delivering a Java Enterprise System to every one of our customers within 60 days.
Also, let me really clear about our Linux strategy. We dont have one. We dont at all. We do not believe that Linux plays a role on the server. Period. If you want to buy it, we will sell it to you, but we believe that Solaris is a better alternative, that is safer, more robust, higher quality and dramatically less expensive in purchase price. How much is the nearest competitors cheapest enterprise offering? And it doesnt come with a portal server, application server, Web server messaging, calendaring, clustering, high availability services and directory services provisioning. Give me a break. Ours is $100 an employee. How much is theirs? Bring it on. We will also indemnify you for Solaris, and if IBM says you dont need it, then why do they have so many lawyers suing people over patent and copy violations.
eWEEK: There is some confusion about whether Sun is in fact indemnifying its customers who are running Linux against any possible fallout from the legal action by The SCO Group against IBM. What exactly is your indemnification policy?
Schwartz: If you use Linux on the server, even if we sold the distribution to you, you are on your own. If you buy our Java desktop solution [which includes SuSe Inc. Linux] you are completely indemnified as long as you run it as a desktop solution. And by the way, dont take our desktop product and put it on the server. We are indemnifying them for our products. If we incorporate someone elses component we will make sure that we can indemnify it. I have licenses to all those issues that SCO is suing IBM for. If I didnt have them, I certainly wouldnt indemnify them.
eWEEK: What is your take on the SCO position on Linux and its lawsuit against IBM?
Schwartz: IBM is being so hypocritical. If the issue is a non-issue, why dont they indemnify their customers? And if you dont need to indemnify, why do you have the worlds largest patent litigation team inside IBM suing the bejesus out of the entire industry, holding them up for ransom on IP that you claim is yours that they have purloined. Well, go look in the mirror guys. This will tear that company asunder. How do they resolve this? If they settle with SCO, that will simply fuel the next 50 IP claims against IBM. Even if SCO goes under, the claim will last a lot longer than the company. I think, moreover, we will continue to drive Solaris as an operating system on Intel, recognize whats happened to IBM, which made an enormous tactical error. The only operating systems that have credibility on Intel are Microsoft Windows, Solaris and Linux. Which one of them does IBM do? They dont own their own operating system that runs on the volume platform. So they will continue supporting other peoples platforms. So will HP. While they have done a superb job of telling the world that Linux is the future, but sadly it may be true for them because they dont own an OS. We, on the other hand, have a safe, compelling and affordable product called Solaris that runs on Intel, Opteron and SPARC.
Is Sun Backing SCO
eWEEK: Some critics are saying that its not just Microsoft funding SCO but also Sun, citing the fact that you acquired another license from them recently, received warrants to buy shares in SCO and are losing the most customers in the migration from Unix to Linux. It thus makes enormous sense for Sun to fund SCO, their logic goes. How do you respond to that?
Schwartz: We took a license from AT&T initially for $100 million as we didnt own the IP. The license we took also made clear that we had rights equivalent to ownership. When we did the deal with SCO earlier this year we bought a bunch of drivers and when we give money to a company oftentimes we get warrants, which is part of the negotiations. I have warrants in 100 different companies, we have a huge venture portfolio. I cant do anything about the perception thats out there and to be blunt, I dont care as those people arent going to drive our future—customers are.
eWEEK: So, does the uncertainty around Linux benefit Sun and Solaris?
Schwartz: We have an interesting migration opportunity now because we can go back with Unix that is familiar, we can deliver the Java Enterprise System pricing at $100 per employee, which allows them to run Solaris at infinite scale.
eWEEK: Are you hoping that these new Java systems will change the focus of Suns traditional revenue generation model?
Schwartz: I think it can definitely change our dialogue with our customers. If you look at our top 65 accounts, theres 10 million people there. At $100 each thats a billion dollars. So I think it certainly gives us a broader market opportunity, but Im not a good prognosticator about our revenue streams.
eWEEK: This is a subscription-based pricing model, which has not worked well for Microsoft in the past. Are customers willing to pay for a product on an annual basis and which they then also have to pay more for to get the perpetual rights?
Schwartz: Yes, the data remains theirs whenever they cancel. The objective is you get infinite rights to use it for three annual payments and in the end if you want you can buy out the license. Look at the only two comparisons I think are relevant: Microsoft and Red Hat. We will compete with them based on price because they cant match our price.
Whats in Store from
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eWEEK: What do you think Microsoft and Red Hat will do in response?
Schwartz: I think Microsoft will try and dismiss this as something customers arent really interested in, but they will hear differently from customers. I think they will then have to respond by lowering prices. I think they are now the high-cost provider, and this equated into opportunity. Red Hat has neither the components nor the capacity to price on this basis, so Im less worried about Red Hat.
eWEEK: How much market share are you hoping to take?
Schwartz: I expect to take 10 percent of the market in the first year. Ten percent of a $30 billion a year desktop market is huge. So, is it going to be more than 10 percent? I hope so, but in the next year Id like to get a million users. Theres a hundred million computers sold every year, I want to be in front of a million of those and two-million the next year.
eWEEK: Do you have any agreements with the OEMs to sell your desktop system?
Schwartz: We dont as yet. We have tried mightily, but Dell and HP derive most of their profit from the resale of Windows systems. So while we may not get Dell and HP, I assure you we will get Toshiba and Samsung and Sony and folks who are interested in upsetting the status quo.
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