September 18, 2002 1:13 PM PDT

Sun's Linux PC cheaper, McNealy says

SAN FRANCISCO--Sun Microsystems will get into the PC business next year, selling Linux-based desktops that will cost less than half to own and operate than comparable systems running Windows, Sun CEO Scott McNealy said Wednesday.

McNealy had said last month that Sun was planning to offer a to compete with Microsoft, but he offered further details Wednesday at the conference here. McNealy disclosed that Sun will sell PC hardware as well as software--calling the system a "purple box," a phrase that applies his company's trademark product hue to the "white box" term for generic PCs.

Not everyone will want a Sun PC, McNealy said. "It's a very compelling, if limited, market opportunity today," he said. Sun plans to aim the product at "limited-use environments," including education, government, retail, banking, and corporate call centers.

The PCs are designed to drive sales of expensive back-end systems, McNealy said. The Sun-branded PCs will be sold in quantities of 100, along with software and a required server that's used to store individual users' settings, login information and e-mail and online calendar applications.

Sun's plan is "a big gamble," said analyst Roger Kay, but there's plenty of extra money going to Microsoft for desktop computers. "Microsoft found a big bubble of oxygen it's breathing that nobody else gets to breathe. It just begs for poking," he said.

Kay estimates that the limited market Sun is pursuing buys a few million units per year. One potential customer he spoke to heads a company that employs 3,000 people to transcribe doctors' audio tapes. "They can easily cut that over" to systems such as Sun's, Kay said.

The Sun PC is the company's latest and most direct effort to undermine its longtime nemesis, Microsoft. In the past, Sun has tried to use its "write once, run anywhere" Java programming language to get developers to create software that can work on any computer, not just those running Windows. More recently, Sun has tried to propagate its "thin client" workstations, which rely on a central server's processing power.

None of these efforts has succeeded in denting Microsoft's dominance. The JavaStation, a desktop computer touted by Sun in the late '90s, generated lots of talk but few sales. One key problem with JavaStation and other is that they aren't independent computers. The hard drives, personal data, and applications are all stored on servers. If the servers go down, the desktops become paperweights.

Promoting a full-fledged desktop cures some of these problems. It's a competitive market, though, and one in which Sun has no track record. Still, Sun will be able claim a more modest victory if it succeeds in eroding Microsoft's customer base or revenue.

Several companies are currently promoting Linux desktop operating systems, but few desktop manufacturers promote Linux desktops. Sun executives have also said that the promotional "soft dollars" that PC makers and dealers get from Microsoft and Intel prevent these companies from veering from the Windows way.

PC manufacturers, though, say little customer interest exists for Linux desktops at the moment. Even PC dealers in China that sell both Windows and Linux desktops say interest is limited.

Sun's desktop systems will use the Linux operating system, along with a collection of other software from the open-source community and technology taken from Sun Ray products. Like Sun Rays, the Sun desktop computers will include smart-card readers for making the login process more secure, McNealy said.

Software packages besides Linux include the Mozilla Web browser, the desktop software, Evolution e-mail and calendar software, and the user interface, Sun said.

Sun said it hasn't yet set a price for the PC package. However, the collection is expected to cost about $300,000 to buy and administer for five years, said Jonathan Schwartz, Sun's executive vice president for software.

The comparable cost for 100 Windows PCs is just over $1 million, Schwartz said.

Analysts said Sun's estimate might be high, but the company is still making its point. "I would say those figures are slightly inflated," Kay said.

McNealy also described plans for the company's traditional focus, higher-end servers and storage systems. Sun plans to pool these systems into a single computing resource under a plan called .

"We'll be doing things in the acquisition space," buying companies or technology to make the N1 vision a reality, McNealy said.

In addition, McNealy discussed planned improvements for Solaris, Sun's version of the Unix operating system, that highlight Sun's belief that higher-level software features will "sediment" into the operating system.

In May, Sun began bundling server software features with its Solaris operating system, McNealy said. The move will extend what Sun did with its new Solaris 9, bundling an application server for running sophisticated Internet services, firewall software to keep unauthorized users out and a basic directory server to manage information such as username-password combinations.

McNealy hinted that new additions could include its portal server software for building Web sites for specific groups of people, its e-mail software for routing messages, its calendar software for keeping track of users' schedules and Web services features for building business processes with next-generation Internet communications standards.

"There are all kinds of products that are going to get integrated," McNealy said.

Sun has shipped 300,000 copies of Solaris 9 so far, McNealy said.

 

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