October 8, 2002 10:30 AM PDT
Sun CEO: We're "good enough"
McNealy, speaking here at a technology conference sponsored by market research firm Gartner, attempted to explain Sun's position of supporting both the open-source Linux operating system and its own Solaris Unix operating system. He said Sun may have erred by pushing customers to adopt complex Sun systems built on Solaris and a 64-bit architecture, when more slimmed-down systems would suffice.
"The real issue--our mistake--is that we thought the whole world would have gone to 64-bit (Solaris). It turns out that 32-bit is good enough, and a ton of 32-bit apps run on x86 and Linux," McNealy said. He positioned Solaris as an upgrade path for customers needing more computing muscle. "Linux is very compatible with Solaris," he said.
Last month, McNealy said Sun plans to enter the PC business by selling Linux-based desktop systems next year. Those desktops will cost less than half to own and operate than comparable machines running Microsoft's Windows operating system, Sun claims. The company hopes to reap profits from the server systems that customers will need to buy to manage those multiple desktop systems.
McNealy said Sun will differentiate itself by selling PCs for less than competitors, and by bundling additional software. "We have priced our box under Dell (Computer). Versus Dell--we are both (PC) supermarkets here, we both sell the same thing--we have Solaris and Linux, with application server, directory and Web server, and open-source software...for free. We have a better support model and a 64-bit upgrade plan," he said.
McNealy, who sported a fresh crew cut, joked that his no-nonsense look was part of an austerity program at Sun. "It's the 'No. 2' at Supercuts. Costs $10."
He also reiterated Sun's vision of assembling various pieces of technology--developed by Sun and by partners--into an integrated system that can save customers money. "I call it a big friggin' WebTone switch. Marketing calls it network computing," McNealy joked. "You can start with the entire puzzle from Sun, and take out pieces that you don't want. What we offer is good enough. It's like my haircut: It ain't pretty, but it's good enough."
Sun's strategy of bundling middleware, such as application and directory server software, with its Solaris operating system can save customers money, McNealy said. But how does Sun benefit? The money saved on software can be spent on server hardware, said McNealy. "We think there are huge dollars being spent on middleware that can be spent on more servers."
McNealy also described plans for the company's higher-end servers and storage systems. Sun plans to pool these systems into a single computing resource under a plan called N1. McNealy said N1 will make computing systems more efficient.
But that increased efficiency may have an undesirable side effect, McNealy conceded: Slower hardware sales. "We may sell less hardware, but if we don't cannibalize ourselves, someone else will. We're doing N1 because we can," he said.
On the financial side, McNealy said Sun has enough cash to weather the current economic downturn. "We have generated cash every quarter for the last 12 quarters. We have no long-term debt, and we are gaining share. We're not outrunning the bear, but we're outrunning the other hikers," he said.
McNealy dismissed concerns that Sun's low stock price might label the company as a takeover target. "I just rattle my golf clubs and say: 'Come on down. If you think you can run this sucker, have at it.'"