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Behind the Sun-Microsoft Rhetoric
Posted by: trraju on Apr 08, 2004 - 08:49 AM
Microsoft
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There's an old cliche known as "the elephant in the room."
It's huge and in the way, but somehow nobody talks about it.
The elephant in the room last Friday, when Sun Microsystems and Microsoft announced their fairly stunning detente, was commoditization - the pressure from widely available, low-cost alternatives.
Go behind the rhetoric and Microsoft's promise to pay Sun nearly $2 billion. You'll find long-term trends that have to be gnawing at the companies' chief executives, Scott McNealy of Sun and Steve Ballmer of Microsoft, who shared the stage in a Friday press conference and acted like friends.
Sun once soared on the back of its high-end, high-margin server computers running on its Sparc processors and Solaris version of the Unix operating system. But some customers began looking more favorably at Linux (and Windows) running on increasingly powerful and ever-cheaper Intel-based computers.
Sun's recent moves, including a smart new software strategy led by its newly promoted president and chief operating officer, Jonathan Schwartz, have made the best of a difficult situation.
But the other major announcements Friday - Sun's disclosure of a big loss, 3,300 more layoffs and further restructuring - testify to the magnitude of the job.
For Microsoft, which again showed its unique ability to buy its way out of trouble, the threat is more distant. But even the world's most powerful monopoly is beginning to feel some heat from the free and open-source software communities. If software becomes a commodity, Microsoft's staggering profit margins - and its dominance - will be at risk.
In the short run, both companies came out ahead. So, most likely, did their customers.
Schwartz is mostly persuasive in saying that customers will benefit from the companies' cooperation on making their products work better together. If Microsoft and Sun do what they've said they'll do, customers who want to use both will be able to spend less time on interoperability and more on getting their own work done.
But look at the deal in another context, Schwartz said Friday. Consider the "competitive dynamics" of the technology industry and "who's not mentioned in the press release," he said.
He didn't name names, but the obvious reference was to IBM and, to a lesser degree, Hewlett-Packard. Both are in the big-systems market, and they can't be happy about the idea of a special relationship between Microsoft and Sun going forward.
IBM's position is especially interesting here. It has made the use of Linux and free software a core element of its strategy - in a real sense aiming at both Microsoft and Sun.
The free software community was reading the tea leaves Friday, too, and there were some distinctly worrisome parts of the deal from that perspective.
Most notably, Ballmer and McNealy emphasized, as did their press release, the "intellectual property" element of their new arrangement.
The chief threat these days to Linux and other open-source software is not a lack of quality. It's lawyers.
Microsoft has made clear its intention to use patents to attack open-source software. It has been a key enabler of the infamous SCO Group, the Utah company that's pursuing a holy war against Linux and suing IBM and other companies on alleged contract violations relating to its software.
Sun, when it was trying to undermine Microsoft, wasn't shy about using open source. It bought a competitor to Microsoft Office, called StarOffice, and dramatically undercut prices. It also adopted Linux for its "Java Desktop System," an operating system and set of applications that is becoming a genuine competitor to Windows and Microsoft Office. How ardently will Sun pursue this strategy now?
Schwartz said competition isn't going away here, and insisted that the deal will only reinforce the market for Linux and other open-source products. He also noted, accurately, that Sun has been one of the more ardent contributors to the open-source community with, among other things, its office applications suite.
StarOffice is commercial software. But Sun put OpenOffice, on which it's based, into the hands of the community.
For now, I'm agnostic on how this will affect open source. I'm not ready to assume entirely benign intentions on the part of companies that have made their fortunes on proprietary products.
Friday's deal settled a lot of scores for two of the tech industry's leaders. I hope it wasn't designed to kill a mutual foe, namely the threat of commoditization.
If it were, customers would be advised to ignore all that reassuring talk about how the deal is for their sakes. Instead, they should make sure their pockets aren't about to be picked.
(Visit Dan Gillmor's online column, eJournal (www.dangillmor.com/blog). E-mail dgillmor@mercurynews.com; phone (408) 920-5016; fax (408) 920-5917.)
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