Surprising Sun Sets Software Pace
Sun Microsystems Inc. is betting huge sums of money that it can quickly
gain a strong software toehold in the development operations of large
corporate IT organizations. The workstation manufacturer has followed
up its spectacular success in spreading the Java gospel with a two-plus
year buying spree aimed at fortifying its software business.
Founded in 1982 as a maker of Unix-based engineering work-stations,
Sun hit a few financial bumps a decade ago but eventually managed a successful
transition to the Unix-based server business. More recently, Sun took
advantage of its Java development and ownership to become at least a perceived
leader as a provider of Internet products, and analysts say its systems
are used to build and run many corporate Web sites. In recent years, the
company’s computer revenue has grown significantly at the expense of rivals
like Hewlett-Packard Co. and IBM.
The company has clearly benefited from a Unix resurgence caused by its
suitability as a Web server platform. Unix has also benefited from continued
delays in the shipping of would-be rival Windows 2000 from Microsoft Corp.
Late in January, Sun opened up its Solaris source and stopped charging
license fees for systems with eight or fewer processors. It is packaging
iPlanet as part of Solaris, and looking to make money on service and support
Java: Darling of developers
The key to Sun's software expansion strategy is Java, the revolutionary
tool unveiled in 1995 as a development language with the promise of "write
once, run anywhere" capabilities. Java quickly became the darling of developers,
giving Sun an opportunity to gain a much more meaningful place in the
minds of corporate IT executives. Java has gained strong support from
nearly every major player in the computer industry - except Microsoft,
In addition to Java, Sun has spent approximately $750 million to improve
its development tool offerings at both the high- and low-end by acquiring
Forté Software Inc., Oakland, Calif., and Czech developer NetBeans Ceska
In December, Sun began shipping Java 2 Extended Edition (J2EE) to bring
Java into the higher end server world. J2EE surprised some observers with
its on-time delivery and others, including some strong partners, with
its higher-than-expected price tag. Sun's recent decision not to cede
control of Java specs to an independent standards group also threatens
to diminish support.
To date, observers agree that Sun's efforts to buy its way into the
application server and development tools businesses have been somewhat
rocky. The application server strategy - now dubbed iPlanet - is becoming
clear after a calamitous acquisition of NetDynamics less than two years
ago. Sun has said it will now concentrate its efforts on new versions
of Netscape Application Server (NAS) offerings built by the so-called
Sun-Netscape Alliance created jointly by Sun and America Online. By mid-2000,
Sun plans to place NAS under the iPlanet moniker.
Meanwhile, experts are expectant that Sun's recent development tool
purchases will vastly improve on the previous weak Java Studio offerings.
Observers do note that the company's failure to define a clear software
development strategy for IT developers has so far been masked by its success
with Java and in selling servers and services for implementing corporate
Web operations. Sun insiders concede the software efforts have been slow,
but maintain that the firm is now on the right track.
Observers say Sun has been under pressure - for some time - to come
up with a solution that is broader than its traditional business of servers
and operating systems. Many large IT organizations look to buy integrated
systems from a single supplier rather than best-of-breed components that
have to be integrated. "Sun is getting grief from the customer base to
offer a solution," commented Ann Thomas, an an-alyst at Patricia Seybold
"Potential customers are looking to customers like Sun to be more of
a solutions provider," added Michael Gilpin, an analyst at Giga Information
Group, a Cambridge, Mass.-based consultancy. "It's expensive [for corporate
IT organizations] to do their own integration of software and hardware."
"Today, Sun is very much a hardware and Solaris organization," said
Gina Centoni, director of Java platform product marketing at Sun. "As
time goes on, we're not going to be satisfied with just selling Sun hardware.
The goal is to take everything but Solaris to multiplatform environments."
Giga's Gilpin said recent Sun software acquisitions show that the company
is attempting to become a solutions provider. However, he said, "their
ability to deliver is still somewhat in question."
The need to more clearly elucidate its strategy to IT executives is
not lost on top Sun executives. "We do need to show more details," conceded
co-founder, Chairman and CEO Scott McNealy late last year. "The development
strategy will be laid out over the next nine months."
'The big opportunity'
Sun's latest foray into the business of selling software development
tools comes as part of its efforts to rule the World Wide Web. "The Web
is now in charge," noted McNealy. "The big opportunity is connecting things
to the Internet. There's a lot more things than there are people." McNealy
said the new stable of Sun tools improve mightily on the company's previous
efforts in the development tools arena.
McNealy outlined plans that call for Sun to somewhat copy the Microsoft
model of flooding the market with free, low-end software. For example,
in mid-1999, Sun began distributing StarOffice, an integrated desktop
application suite for no charge. At the end of last year, a low-end toolset
called Forté for Java Community Edition, based on the acquired NetBeans
IDE, also became available at no charge. "Fundamentally, software is going
to be free," McNealy said of Sun's long-term plans, though he would not
disclose which packages are to be taken off the price list. Insiders say
the rest of the Sun tool line, which will include a comprehensive version
of NetBeans and the high-end Forté tools, will carry competitive price
The latest development tools strategy must gain the support of key users
if it is to succeed, said Christine Axton, an analyst at Ovum Ltd., a
London-based consulting firm. "Sun doesn't yet have the understanding
of the development community that it should," Axton said. "Taken together,
the acquisition strategy has been quite odd. I can understand each move
alone, but together they have fragmented the developer community. Developers
don't want a story that will change tomorrow."
Observers do give Sun high marks for radically changing its development
operation after the acquisition of Forté. "Sun has never demonstrated
an ability to sell software," said Thomas at the Patricia Seybold Group.
"But I do like some of the things they are doing. I like them bringing
in Patricia Sueltz." Sueltz, the former head of IBM's Java operation,
was hired last fall to replace the highly regarded Alan Baratz as head
of Sun's software operation. Baratz left to join investment banker Warburg,
Pincus & Co.
"This group is much more capable of selling software than most people
at Sun [have been] in the past. They brought in Forté's management team
to run tools. They know how to sell these technologies," added Thomas.
"This is the first time there has been a group within Sun that knows how
to sell software. There is evidence that this group could be successful.
I don't think Ed [Zander, Sun president and COO] and Scott [McNealy] will
ever understand that they need to sell software. They know that software
is part of the solution. It is important to Sun to get people that understand
Sun was forced to change the management of its development unit last
month following the sudden resignation of Forté co-founder and former
Chief Executive Martin Sprinzen, who had earlier agreed to take the post
of vice president and general manager of Sun's Internet Application and
Performance Tools unit. Former Sprinzen lieutenant Jonathan McKay was
immediately named to take over the group. Mc-Kay, who headed Forté's marketing
operation before and after its acquisition, said he plans to continue
the unit's current strategy for the foreseeable future. Analysts also
expected few significant changes in the short term, though McKay is expected
to better take advantage of Sun's sales and marketing teams.
And Sun's tool business is suddenly substantial, note observers. Analysts
estimate that the company's tool business, including acquired and holdover
development software but not application servers, generates $100 million
to $150 million in revenue.
While Sun's development tool plan has not yet been completed, insiders
say the strategy will include three lines of tools. The NetBeans IDE unveiled
in December will be the low-end tool and will continue to be distributed
without charge. A midrange product will incorporate the low-end tool and
add-on modules such as an updated debugger, a repository and/or a screen
painter that will compete with offerings from Inprise Corp. and the Symantec
tools recently acquired by BEA Systems. The Forté SynerJ tools, which
are expected to be renamed Forté for Java Enterprise Edition and the Forté
4GL, will make up the high end of the product family.
"These are the tools of the future for Sun," said Bill Roth, Java 2
Extended Edition product line manager. David Taber, senior vice president
of business development in the Forté unit added, "In the big picture,
you get a range of IDE packages instead of just one IDE. The one you get
now is free - NetBeans lets you get started and build a ‘hello world'
app." Sun will also recruit third-party software developers to build add-ons
for the IDEs, Taber said. The Forté operation will also sell Sun's existing
line of compilers, and some low-end Java technologies.
Until the Forté acquisition, Sun sold the internally developed Java
Studio toolset that even insiders agree did not meet the standards required
by corporate developers. "Java Studio admittedly is rickety," said Sun's
Centoni. "That's why we bought Forté. Sun is looking to satisfy developers."
Sun plans to utilize multiple sales channels for the tool products.
The plan calls for the Sun sales force to sell the tools for the Solaris
platform, offering an integrated package of tools and systems. This group
competes with rivals like Microsoft, IBM and, to a lesser extent, Hewlett-Packard.
Meanwhile, the standalone Forté sales force will sell each of the tools
for multiple platforms, including Solaris, Linux and Microsoft Windows
NT. The low-end tools will be distributed mostly via the World Wide Web.
"We can sell for mixed development environments," said Sun's Taber, adding
that "we will take our share of NT business." The Forté unit also retains
responsibility for the EAI software brought out prior to its acquisition.
Taber added that Forté engineers are working with the team building
the latest Netscape Application Server to integrate the Forté tools into
the server. The Forté application server was cut from the product line
after the acquisition by Sun.
Observers note that few computer makers have successfully garnered significant
revenues from software sales. Giga Information Group's Gilpin noted that
while IBM has been somewhat successful through the years selling databases,
development tools and application servers, most other hardware makers
have had little success. For example, Hewlett-Packard and the former Digital
Equipment Corp. made several serious thrusts into the software business,
yet mostly failed to gain customers for anything but operating systems.
Can Sun succeed where others have failed? "Sun is many people," Gilpin
said. "Whereas I think there are members of the executive team that know
they need to make it work, I don't think that idea has made it into every
nook and cranny of the sales organization. They are mostly interested
in selling hardware because of compensation plans. Possibly management
should alter those plans to help software sales."
Sun ended 1999 with some significant Java moves, including the on-time
shipment of Java 2 Extended Edition and a widely reported decision to
halt efforts to hand responsibility for the Java standard to an international
standards group. Both moves were met with mixed reviews from partners
and analysts. Witness IBM's decision not to license the J2EE platform
and to level strong criticism at Sun's decision to retain control of the
Despite those criticisms, the benefits of Java's capabilities remain
attractive to many large IT organizations.
"Of all the technologies available to us, Java is by far the most compelling,"
said Curtis Chambers, IT director at The Home Depot, an Atlanta-based
hardware retailer. "It has got us into three-tier and n-tier computing.
And as we continue to grow, we are reducing our training costs."
Chambers said Home Depot is not overly concerned that the future of
Java is tied so closely to Sun. "Sun's ownership of Java doesn't make
much difference to us," he said. Chambers said the retailer chose Java
for its multiplatform capabilities and expects those to continue no matter
who controls the software.
Home Depot began its Java efforts almost three years ago working with
Sun and its primary vendors, including IBM, Merant and Informix, to ensure
that all would support the fledgling Java language. "We were impressed
with IBM's response, [as well as] Merant's and Informix's response," said
David Pennington, chief architecture manager at Home Depot. The retailer
is already running several corporate-wide and in-store applications built
in Java and running on Windows 95, he said. Early this year, 300 developers
in the 1,000-plus person Home Depot IT organization were building Java
applications, according to Chambers.
Developers are now working on apps to run on a network of bootable thin
clients - without hard disk drives - that will run in each Home Depot
retail store. The thin clients will run either Windows CE or Linux, Chambers
said. "Linux is looking more and more like the dominant option. I don't
care which one we use, because with Java we are [language-] agnostic."
Chambers said that early on in Home Depot's Java experience, development
managers worked closely with Sun during the process of creating Java foundation
classes and Java servlet classes. "We don't have a real formal relationship
with them now, probably because we don't buy much Sun hardware," Chambers
Such Java implementations are just what co-founder and Chief Scientist
Bill Joy expected during his work on the project, dubbed Oak, starting
in 1992. "The goal was to have as few implementation dependencies as possible,"
Joy said. "Java is not a complete silver bullet, [but it] provides measurable
improvement" to efforts to provide machine-independent software.
Though Home Depot is not a significant Sun systems customer, analysts
do urge other top Sun executives to better understand how Java can and
is boosting revenues by prompting sales at other sites.
"Scott [McNealy] understands that Java has helped in the competition
against Microsoft. He may not understand that it is helping him sell hardware
but he does know it helps Sun," said Thomas at Patricia Seybold Group.
"Sun faces a conundrum with Java - how to make money without [angering]
its partners," added Giga Information Group's Gilpin. "Sun doesn't want
to create a situation where all the money comes from partners. On the
other hand, I think that this is somewhat an artificial issue. Sun sells
more hardware because of Java. If they allowed profits to be allocated
that way, they could show they are making money."
Sueltz, president of Sun's Software Products and Platforms Group, contends
that Sun does understand the value of Java to the bottom line. "The goal
is to make money ... to make good money," she said. "We can enable software
platforms via open standards, we can drive everything forward for developers,
we can enable hardware and services. We're building enablement software
to enable the rest of Sun to" accumulate revenue, Sueltz noted.
Some observers question Sun's commitment to an open Java after Sueltz'
stunning announcement during the J2EE unveiling that Sun had reversed
its decision to submit the Java specs to the international standards group
ECMA. That decision has prompted an outcry from key Java partner IBM and
from some analysts.
"When Sun walks away from a standard, it's something that should be
looked at," said Rod Smith, who was promoted to succeed Sueltz as vice
president of Java at IBM last fall. "We want Java to be an open standard.
I think Java is bigger than any one company." Counters Sueltz: "Java is
bigger than any one company. We are the caretakers. I'm sure there are
forces out there questioning our motives, but we have no ulterior motives."
Sun's ECMA decision and the new licensing policy for J2EE were cited
by IBM as key reasons for its decision not to support J2EE. The new licensing
policy calls for J2EE users to pay Sun a percentage of the sales of products
that incorporate J2EE. Hewlett-Packard long ago decided not to license
Sun's Java version due to what it called stringent licensing policies.
"I don't think Java could have been nearly as successful as it has without
IBM," said Giga Information Group's Gilpin. "Most people buying application
servers don't care if IBM supports Sun's Java or any other Java. But they
do want to make sure the Javas work together. I think Sun is being pressured
by customers to make sure that happens. Even if IBM never licenses J2EE,
customers will want WebSphere and iPlanet to work together."
Despite IBM's decision, several companies have licensed J2EE and will
incorporate the specs in a variety of products. "We are working closely
with Sun on Java," said John Goodson, vice president of research and development
at Merant plc, Rockville, Md. "We absolutely have a say in the specs;
Sun is extremely receptive to what we say."
According to Sun's Roth, the new systems includes four pieces - a suite
of specs, a reference implementation, a bridge to Sun's compatibility
test suite, and the J2EE blueprint program or best-practices guide.
"Sun has to lead with tools," added Rick Cattell, a Sun distinguished
engineer. "We need to make the [Java] platform more receptive to tools.
We have to make it easier [for tool suppliers] to build tools using J2EE."
Despite the setbacks, Sun is well positioned for a successful software
run. But observers still wonder whether Sun officials that have grown
up selling billions of dollars' worth of computer systems can gain a software