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Sun and the New Software Reality

Anyone in the software industry had to sit up and take notice when Jonathan Schwartz of Sun Microsystems made the recent announcement that the company was going to give away all of its software (http://news.yahoo.com/s/infoworld/20050721/tc_infoworld/62811_1, among others). Sun actually produces quite a bit of software, including Java Enterprise System middleware, Java Studio Creator, the StarOffice productivity suite, and various storage and network management products (Solaris had already been open sourced and inexpensive, at least for small-scale uses).

It's beyond me why he would do that, a former colleague commented to me. I'm not privy to high-level decision-making inside Sun, but I can make some educated guesses about it. First, with the possible exception of Solaris, it's likely that Sun never made money off its software. In and of itself, that's not a reason for giving it away, but it does suggest that a new business model is in order.

Second, I know from talking to friends and colleagues who have worked for Sun in the past that the company culture is fundamentally that of a hardware company. Despite the resounding success of Java, decisions tend to be made on what is best for the hardware groups. Sun no doubt hopes that its software offer will help drive hardware sales.

Schwartz' rationale for providing the software for free is to create a community of developers creating services that would be purchased by those using the software. The software itself would become a commodity, in that equivalent software would be available from many sources.

Does anyone remember Richard Stallman's GNU Manifesto? In his seminal justification for the GNU open source strategy, written over 20 years ago, Stallman wrote that software should not be developed for remuneration, and that software developers should be paid through a tax on hardware. It sounds like Sun is resurrecting the GNU approach to software development.

But I don't think that charging more for the hardware to pay for the software is the answer for Sun. Solaris was a special case, an acknowledged first-rate operating system that nonetheless faced pressure from Linux systems. Open-sourcing Solaris was perhaps the only way of keeping it viable.

What does Sun need to be successful with this strategy? First, I'm sorry to say, SPARC has to go. I'm a computer purist, in that I want to see several alternative processor architectures available. No single architecture is best for all computing problems, and users should be able to make the appropriate tradeoffs. But Sun did such a feeble job creating a market for SPARC that today it is only a drain on the company resources.

Second, it has to build a services organization that goes beyond installing and maintaining systems to understanding customers' business and devising and implementing solutions based on that software. In other words, it needs a true technology consulting arm, similar to IBM Global Services.

Third, it needs to drop, not raise, the price of its hardware. In some cases, it may have to give away the hardware to get the services business. Charging a premium for proprietary hardware is a bad idea whose time has passed.

I don't doubt that Sun is on to something. I do doubt the wisdom of its response, and its ability to carry off that response. I still remember how many times it flip-flopped on Solaris for Intel. Sharing software or hardware goes against the grain of the company, and I don't think Schwartz has changed that.

But there is a message here for any software company that still counts on license sales and upgrades for the bulk of its revenue. Companies such as Sun are turning software into a commodity, just as the Wintel alliance turned hardware into a commodity over a decade ago. As vendors experiment with new software models, it will change the way software is acquired and used for all.

Posted by Peter Varhol on 07/24/2005 at 1:15 PM


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