The very fact that Jonathan Schwartz is leading Sun Microsystems Inc.'s newly created Software Group should be an indication of how serious the company is about leveraging its software assets as a unified force. No moss has grown on this savvy 36-year-old since he joined Sun when it acquired his company, Lighthouse Design Ltd., in 1996; observers consider him an ambitious and skillful ascender of the company's management ranks.
In April, the-then chief strategy officer was tapped as executive vice president of the new software organization that combined under one umbrella all of Sun's existing software groups and product brands, including the Solaris operating system, Java, and SunONE (Open Net Environment) -- itself a unification of server technologies, development tools, and productivity software. At the time, Ed Zander, who has since left the company and his job as Sun's president and chief operating officer, claimed the new group would be one of the largest software organizations in the industry, serving the world's largest base of developers. Now Schwartz has the opportunity to prove wrong the naysayers who dismiss Sun's efforts to position itself as more than a hardware company and mount a challenge in software.
In a recent interview, Schwartz seized on the image of Sun as "disruptive innovator" and discussed how the company can play that role to free customers from the competitors he termed "monopolists" -- and save them money on software as well.
Schwartz said he's hearing three questions from CIOs: How can Sun save them money on the systems they own now, via server consolidation and clustering; how can Sun help them repurpose existing business systems through portals and Web-enabling applications; and how can Sun save them money on next-generation systems rollout. The bottom line, according to Schwartz, is to "Unhook customers from Microsoft licensing fees or mainframe upgrade cycles."
Q: How do customer concerns vary in different parts of the world?JS: They're consistent because everyone is in economic pain. There's a lot of focus on StarOffice, we had our first multimillion dollar quarter on StarOffice globally. Europe is more focused on wireless solutions for deployment ... Asia is a little further ahead on thinking about the impact of all these network technologies on their supply chains and demand chains and getting vending machines online and now they're really just now beginning to innovate on the data center. Asia is a little bit more conservative on the data center, a lot more aggressive on the consumer applications and infrastructure side. But I think the concerns are reasonably consistent. Everyone wants to save a lot of money -- the interest level in Sun given our history as a disruptive innovator means a lot of people ask us, "What can you do to help me now, how can you help me go attack this next set of problems?" ... And we haven't been exactly shy historically about saying how we can save people a lot of money, typically by displacing a competitor.
Q: In what direction are you taking your application server and portal server platforms?JS: I think the strongest evolution of the app server is the realization that the majority of applications are being written to the portal. And so we've put an enormous amount of effort into delivering an award winning portal server.
The app server has been number three in a market of three, with BEA and IBM, number one and number two. But the portal server is an entirely different marketplace where we're way ahead of the other two and we see that as a platform that application developers can use to expose business systems to the Web and the users. So I think the EJB (Enterprise JavaBeans) high-end transactional applications are going to be written to app servers, but that's really at a pretty high level of sophistication. I think the majority of applications are going to be written to the portal environment.
Q: What is Sun, as steward of the J2EE specification, doing to ensure compatibility between J2EE-based application servers?JS: What we're doing to maintain compatibility with J2EE is we're the authors of the spec so we have built-in compatibility.We're actually delivering a J2EE compatibility kit. The problem is IBM is beginning to reveal extensions that force you to have IBM around. And that's causing a lot of suspicion, and people doing shadow development, maybe (IBM) WebSphere development and then maybe Sun app server development on the side to make sure that they can migrate the application, and that's something obviously we want to encourage because that will prevent folks from getting caught up in an IBM-only world. I know IBM appreciates that world but their customers don't.
Q: How much flexibility do developers have using your Sun ONE Studio tools?JS: Sun ONE studio is available for C and C++, and even Fortran if you want that. And moreover, the platform on which Sun ONE studio is built is completely open source. So we follow the same model there as we did with StarOffice, which is we have an open source version available through OpenOffice with millions and millions of downloads and then we have the supported version that we ship as StarOffice that's available for a price tag. That's what I think we'll continue to do with the tools and moreover continue to look at potentially the model we use to distribute all of our software, because we should have a basic open source version of pretty much everything we ship. And then if you want the supported, maybe more robust, scalable clustered version from Sun, you're going to end up paying money for it.
Q: Will you continue to bundle additional functionality into the operating system as you did with putting the application server into Solaris? What functionality or applications are candidates?JS: Sure. I think customers are really asking for us to simplify their lives and there's a few core applications which they are comfortable having delivered from the operating system provider. And there's some that they're obviously not and I think the core application infrastructure, the directory server, the application server, the Web server, the core database for the edge application specifically really give us an opportunity to redefine what is the operating platform. Over time we will continue to be a lagging "sedimenter" in the sense that we're not using it as Microsoft does, to go decimate people out of the marketplace. But I think there's ample opportunity for us to continue promoting directory and app server and then look opportunistically at other application services as they become a part of the horizontal infrastructure. No one at this point is going to complain about the fact that we're bundling Apache and the SunOne Web server. That's it in the marketplace, those are the only two products that are really left other than Microsoft IIS which only runs on Microsoft.
Q: How does this kind of bundling affect your relationships with independent software vendors? How has your relationship with BEA changed since you began bundling the app server?JS: It hasn't. We were very upfront with BEA all along that we were ultimately going to bundle a low-end J2EE app server. And that necessitated their moving higher up the stack and delivering higher value management services or development tools. We've been very upfront with them, they knew it. If you remember way back there were 12 or 13 independent Web server companies. Well the fact was, the industry was just standardizing on a set of APIs, which are being delivered by the open source world as well as Sun and others. The industry's now settled on two. So I think we're expecting to see the same kind of sedimentation occur on the app server side. We just want to make sure that we're in front of that and we want to be very clear about how and when it's happening. So that not only can customers take advantage of it but also BEA can continue moving up the stack. That said, I think it's a little tough for IBM to go out there and extract $50,000 bucks a CPU, saying, ours is differentiated because you write to it, and it only runs on IBM, and so I think it puts a lot more pressure on them.
Q: Are there any lessons for Sun in Hewlett Packard Co.'s difficulties in software? JS: Don't waver. HP just took their eye off the ball and then spent a bunch of money and confused that with keeping their eye on the ball. The Bluestone crowd, their technology was great. HP just really kind of lost it. And they (Bluestone) were a big partner of ours as well. Bear in mind HP also invested a hundred million bucks in BEA, in an attempt to make sure that they ran best on HP, and the reality is, BEA still makes the majority of their revenue on Sun. So I think the lesson from HP is don't confuse activity with progress and just because you're doing transactions doesn't mean you have a strategy.
Q: What will we see from the software group at the SunNetwork conference next month?JS: You're likely to see a more complete software strategy roll out because that's going to be really our coming out.
Q: What's the role of professional services in software implementation, systems integration?JS: It all depends on who you ask. Every product development team will tell you, in any company in the software industry, "I need more professional services. If I only had more professional services I'd sell more." And my response is, StarOffice doesn't have any professional services. So the point is that if the products are easy to understand, develop to, deploy against and operate, you minimize the service. So do I think we need to be a systems integrator to help customers deploy our stuff? No, I think we need to build products that integrate more effectively and really take that out of the equation for them. Did we have any interest in the offer to buy PwC (Consulting)? No. And do we now? No. I think it's a bad economic model.
Q: Wasn't PwC a fairly important partner for Sun? JS: I think that what they've done is really minimize their business as a result because if you look carefully at what happened, the PwC audit partners got cash in that deal, the PwC consultants got stock, and then IBM turned around and said but don't worry, they'll be platform neutral. In an era of conflict of interest -- maybe you could have gotten away with that 10 years ago. Sorry, right now if you hold stock and that's your principal form of compensation in the company, you ain't platform neutral, and I think that's going to have an impact on their business as folks look to migrate towards the KPMGs, the CGEYs (Cap Gemini Ernst & Young), the Deloitte Consultings, folks who really can offer a degree of neutrality because they're not beholden to one IT vendor.
Q: There's a concern among enterprise customers that there's some fragmentation of standards efforts for Web services, with a different vendors lining up behind Liberty Alliance in which Sun played a founding role, and the Web Services Interoperability Organization founded by IBM and Microsoft, among others. What's it going to take to get everyone to cooperate?JS: Well, we would love to join WSI. We would love to join as a founder. We're not comfortable having IBM and Microsoft dictate the standards -- which they've begun to do. What we would also love to do -- and this is speaking as Sun and not as the Liberty Alliance because I'm only one member of many -- we would love to have IBM and Microsoft join the Liberty Alliance, we've extended the invitation, the invitation is still open.
So what do I think about it? I think they're being childish. I think they're also beginning to spook the industry a little bit. I was just with an industry analyst who told me that Microsoft and IBM had come in to do a joint update. Well sorry, when you have two monopolists walking in to say they'd like to tell you how the IT industry is going to be run, how do you think customers are going to feel about that? Not great. The response we've gotten from the analyst community and from the customers has been, we're sick of what IBM and Microsoft are doing, you keep standing ground and we're going to be there by your side.
When we look at what's happening in the evolution of Java, IBM is beginning to peel away a little bit and beginning to look like they're going to side with Microsoft in an attempt to try to drive the world to an IBM view of the world, and I think the Java community is beginning to leave that behind and to look at IBM as a spoiler, who's trying to go patent everything rather than necessarily someone who wants to go work on the innovation that will continue to disrupt the industry.
Q: What misconceptions are out there that you'd like to address?JS: Look at how Microsoft reacts to a lot of this -- I think they are the most venomous in how they react and that's in part because they've got the most to defend. When you look at what we're intending to do with Linux on the desktop and you look at what Sun Ray technology does today, and you look at the damage that we've begun to inflict with StarOffice, the venom that Microsoft is directing at us is a reflection of the animosity that I think they've generated in the marketplace because of Software Assurance (licensing program). That has created a lot of ill will: At a time when companies are feeling a lot of economic pain Microsoft is reaching into their pockets to go take a bunch of money out. So we've got technologies today that can allow a customer to migrate off of the Windows platform and onto an open source desktop that gives them a huge amount of new flexibility and opportunity, saves them a ton of money, potentially tens of millions, hundreds of millions of dollars.
I think the misconception about IBM is that somehow IBM is going to be Linux's best friend and it's going to do all these things because it's good for the industry. There are a lot of folks who are beginning to wonder what IBM's motives are. The biggest issue why they didn't join the Liberty Alliance is because they didn't like the fact that we were promoting it to be a royalty-free standard. IBM wanted to patent it and then go charge a royalty against it and that just ain't how open source is going to work and it's not how interoperable standards are going to work. So we think we're on the side of the angels on this one. We're just going to be driving hard and at the end of the day we have a very loyal developer following and they're going to end up driving the change that we really want driven in the industry.
Q: Is there a sense that Ed Zander is going to be replaced, or is Sun operating under a new structure without a COO?JS: When the organizational change was made, (Chairman, CEO and President) Scott (McNealy) brought his new staff into a room and said folks, my job didn't change, yours did. So he's comfortable with his new organization. I think we're operating with a much higher degree of pace and sense of urgency around what we're doing in part because there's just a lot more visibility. What Scott has been able to do in the organization, by saying he wants to have a lot more visibility into our businesses, is it's caused all of us to turn around and look at our businesses and say folks, I need a lot more visibility into my business if I'm going to have to worry about delivering not only to Scott but also to the company as a whole and to our stockholders. If you look at my org chart you'll see a very, very flat one, I think I have probably 16 direct reports, 16 or 17 at this point, everybody from the team that focuses on J2ME devices to the team that focuses on availability in clustering to the team that focuses on Solaris, on the SunOne desktop, on the tool set, on grids, on and on. And that means that I know a lot about all of those businesses now and can really stay in touch with the strategies as they evolve. I also make sure that we're much more effectively synchronized as a software team, so when I'm sitting down at Scott's staff meeting, we are much more synchronized as a company and that has efficiencies that benefit everybody. So it's a long way of saying no, I don't think Ed's going to be replaced.