Sun takes on corporate buyers
Published: 16 Sep 2003 14:40 BST
Sun Microsystems will try on Tuesday to change the expectations of corporate software buyers, by unveiling two software suites that each cost a low $100 (£62.43) per employee per year to use.
One initiative, code-named Orion and now officially called the Java Enterprise System, will include a broad collection of software to run on the powerful data processing computers called servers, which are Sun's specialty. The second, code-named Mad Hatter and now called Java Desktop System, is for running Linux, an office suite and other programs for desktop computers.
Scott McNealy, Sun's chief executive, and Jonathan Schwartz, executive vice president of the server maker's software group, are scheduled to discuss the plans at the SunNetwork conference in San Francisco.
Sun is strong in some software niches, but overall the company is weak compared with competitors such as Microsoft, IBM and BEA Systems. With the new pricing and integration work, it hopes to change that.
The desktop and server package will cost $100 each per employee per year, or $150 for both, said Ingrid Van Den Hoogen, senior director of Java and strategic marketing for software at Sun. Both software packages will be generally available in November, she said.
"Sun is being pretty radical with its pricing," said RedMonk analyst James Governor, predicting that the strategy will prove popular. "Enterprises are interested in pre-integrated bundles they don't have to put together or pay some services outfit a ton of money to integrate," he said, and they also are "interested in low price points for good-enough solutions."
However, it's going to be tough for Sun to make much headway against Microsoft in desktop computing, said Jupiter Media analyst Michael Gartenberg. He said Mad Hatter is more likely to be a replay of earlier failed Sun attempts to crack into the desktop computer market with the network computer and with Java workstations.
"For organisations, the question of interoperability with hardware and software is going to be an inhibitor," Gartenberg said, pointing out that most applications are developed for Windows; it's tough to assure flawless compatibility with Microsoft document file formats; hardware support arrives for Windows often long before other operating systems; and it's expensive to switch operating systems.
Centrepiece of growth plan
Sun's software plans are the centrepiece of the company's effort to grow beyond its roots as a hardware maker and re-invent itself as a purveyor of complete packages of hardware and software. In Sun's vision, these products will be tested to make sure each component works with the others, and new updates will be released each quarter.
Sun's holistic rhetoric, if it catches on with customers, could have the convenient side effect of demoting competitors such as software-only Microsoft or hardware-only Intel. It also would elevate IBM, which already is Sun's top competitor and which has a richer catalogue of hardware and software to offer.
Asserting that a pre-integrated whole is greater than the sum of its parts, though, is a departure for the Unix operating system culture where Sun's roots lie. In that "open systems" realm, systems are assembled from "best-of-breed" components from different companies. Although Sun argues that its collection of components will comply with standards that let others' be substituted, it's clearly hoping that throwing in the entire package for one price will draw more customers.
"This is the end of 'open systems,' for now," Governor said.
IBM has been headed this direction as well, however, Governor added, with server software that's improved greatly and that links the company's disparate hardware together. "IBM's Software Group is finally playing the kind of glue role needed by IBM. It's no longer the ugly kid that the server folks don't want to bring to the movies with them," Governor said.
For its part, Big Blue is unruffled by Sun's plans. "We just don't see Sun in many sales situations," spokesman Steve Eisenstadt said.
Microsoft believes its products are worth the money and said Sun's actions are born of desperation. "We believe Sun's decision to create a proprietary version of a Linux desktop offering is representative of the company's recent struggle to find a viable business model," Greg Sullivan, a lead product manager at Microsoft, said in a statement.
Sun is convinced its plans will allow it to seize the initiative, though. "I think it's going to blow people's minds," Van Den Hoogen said of the Java System integration, quarterly updates and low price.
Sun believes its Java Enterprise System will mean "up to 30 (percent) to 50 percent cost savings" for customers compared with using IBM and Microsoft software, Van Den Hoogen said. The Java Desktop System will save "well over 75 percent" compared with Microsoft, she promised.
Sun's price also includes installation service, support and some training. Sun argues the per-employee pricing idea also saves money because companies won't have to pay for audits ensuring compliance with licenses based on everything from the number of email boxes to the number of processors on a server.
The $100-per-employee price tag is capped at 120,000 employees; anyone with more will pay a flat $12m per year, Van Den Hoogen said. The pricing includes quarterly updates, service, support and some training.
Earlier this year, Schwartz said the company would charge per employee, but had hoped pricing to be released in June. Sun has said it will maintain the earlier piece-by-piece pricing for those who want it.
A company signing up now is assured of the $100-per-employee-per-year rate for the first year and two subsequent optional renewal years. The cost of joining later or renewing after the three-year period may be higher, Van Den Hoogen said.
Companies may opt out of the subscription payment plan at any time and continue using the software they have, but they won't get support or software updates, she said.
The Java Enterprise system includes software for computer user authentication, email, calendars, sophisticated Web sites, Java program execution and clustering so one server can take over if another fails. The Java Desktop system, based on the version of Linux from German company SuSE, includes Mozilla, the StarOffice competitor to Microsoft Office, Ximian Evolution for email and calendars, Real Player for music and video, Adobe's PDF file reader, and Gaim for instant messaging.
Sun also said it will release version 7 of its StarOffice software in autumn. StarOffice is derived from OpenOffice, which Sun released as an open-source project as part of an attempt to compete more aggressively with overwhelming market leader Microsoft.
The new StarOffice 7 will feature better compatibility with Microsoft Office formats, a central configuration feature to give administrators better control, a development kit to let programmers build add-on modules, and a price one-fifth that of Office, Sun said.
Six Java Systems
The Java Enterprise System and Java Desktop System are two of six members of the "Java System" family, Van Den Hoogen said. Another is developer tools. A developer version of the Java Enterprise System will cost $5 per employee per year, while Sun is likely to announce the programming tools for the Java Desktop System next quarter in Berlin. "It might be just another few dollars," Van Den Hoogen said.
Sun will detail two special-purpose software collections later, probably in 2004, Van Den Hoogen said. The Java Card System will be geared for employee authentication using technology such as Java-based smart cards with small computer chips and Sun's directory software; the Java Mobility System, for telecommunications companies delivering digital information to cellphones, will include the software Sun acquired by buying Pixo earlier this year.
Sun's N1 project will be the final Java System product, Van Den Hoogen said. N1, a work in progress, is software to control how software runs on large collections of computing equipment and save costs, boost efficiency and improve reliability.
Although Sun sells a version of N1 to manage a chassis full of blade servers, the company hasn't yet released its more open-ended version to manage the much broader set of computing devices typical corporations use.
In the past, Sun released various components when they were ready -- new computers, updated operating systems, bigger storage systems, expanded software packages. Starting from this year, McNealy ordered the switch to a synchronised release of prebuilt packages once every quarter, with all the components designed in lockstep to work together harmoniously.
With this holistic strategy, Sun pays for integration that customers would otherwise have to do themselves or pay a third party to accomplish. It's Sun's way of fighting back to the position of prominence it's lost in recent years with the departure of the manic spending of the 1990s, the maturity of servers based on Intel processors, the inexpensive Linux operating system and the reawakened might of IBM.
Some are convinced Sun's philosophy is on target.
"Systems with a capital S are back," Governor said. "It's going to get a little lonely for software- or hardware-only vendors."
Product batches in the first two quarterly releases were unified largely superficially, Sun admits, but next week at SunNetwork, Sun will begin showing some evidence its product groups are actually working together and not just releasing products at the same time.
One highlight at the show will be Orion, the collection of server software for handling email, hosting Web sites, running Java programs and performing many other tasks.
"A year ago, each of those products were on a different cadence, a different launch cycle," said Larry Singer, Sun's chief competitive officer.
Also expected at the show is Mad Hatter, the version of Linux and higher-level software for desktop computers; new developer tools for Orion; advancements with N1, software designed to let programs run efficiently on collections of different hardware; and a new integrated hardware-software suite to get customers started in grid computing. McNealy and Schwartz are among the executives speaking at the three-day conference.
Sun's integration work will extend to hardware as well through projects such as N1. Ultimately, the company's goal is to release a quarterly update to the gigantic assemblage of back-end data processing and storage technology that McNealy calls the "big friggin' Webtone switch," or more dryly, the network computer.
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