Newsmaker: Sun's chiefs on the hot seat

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Q: Since this is the end of an era, Scott, what do you think is the biggest single piece of your legacy?
McNealy: I would probably say opening the interfaces and driving the whole community development process has been my biggest legacy.

Sun was the Red Hat of Berkeley Unix. We took TCP/IP (the networking standard used by the Internet) and beat LAN Manager and Token Ring and IPX from Novell and all the rest. NFS (Network File System) we open-sourced. The whole Java community process is probably one of the greatest community development innovations. CDDL (the Community Development and Distribution License), OpenOffice.org, OpenSolaris.org--all of those things are all part of what we call "sharing."

We are the one computer company that's really taught the rest of the technology world how to share.

--Scott McNealy

We are the one computer company that's really taught the rest of the technology world how to share and are actually challenging those who don't share. As Jonathan says, it's an instrument of social change as well as economic and technical change. The whole Internet and networking requires the sharing of protocols and interoperability.

It's a little Al Gore-ish to say we invented community development and an open interface, but if you go back to 1982...the first computer we ever shipped had TCP/IP. When we started Sun, the Wall Street gang didn't want to fund us, because we didn't have lock-in. Now you can't get funded if you do have proprietary lock-in. That was the big change.

Q: You guys talk a good game. Everybody finds your vision compelling, but it hasn't always been that profitable for you, particularly in the last few years. What's different now that means this is going to catch on and make you guys some money, where it hasn't in the last few years?
McNealy: First of all, it ain't over. We've got $4.4 billion of cash. We're in it for the long haul. We're 17 straight years cash-flow positive from operations. Don't let the GAAP (generally accepted accounting principles) numbers fool you: We generated $190-some million in cash from operations last quarter on a 6 cents loss--go figure. Can you tell me how we keep doing that every quarter?

We are sneaky successful in the worst of times and wildly successful in the best of times. I think the next five years are going to be a lot better than the last five years, but that's up to Jonathan to make happen.

Schwartz: Bear in mind what our starting point is: around $17 billion in market cap, a $13 billion (annual revenue run rate) company with one of the largest R&D budgets in the world, facing a market that will never shrink for as long as we are on the planet. There's no other industry in the world that can look forward and see as much untapped demand as we can.

We are going to go make sure we intercept as much of that demand as possible. We've gone from zero to 5 million Solaris licenses in 12 months--just imagine what the next two to three years are going to look like. The margins are healthy, the revenue is growing. We've got to orient ourselves for growth. Next year, we keep our costs in line and we'll go grow some recurring earnings that will definitely get people more interested.  

More Newsmakers

[sonoma_rave]

Un-***-believable

>Not even the oil industry can count on that
>demand profile, because they're going to worry
>about fuel cells and ethanol and a bunch of
>alternatives. I'm not worried about the
>alternative Internet emerging and our being
>placed out of it.

What about Linux?????

Are these guys on the same planet as the rest
of us?????

-rave

[Bill Dautrive]

What planet do you live on?

Planet an operating system is the same thing as a network?

Never heard of it.

Linux is a competitor to Solaris, but not to the internet.

How is linux( or any OS, or piece of software for that matter) going to force any company out of the internet?

[enzomedici]

Cut from the same cloth...

...and no plan in hand. Sun seems to forget it's not about Java, cool chips, or whining about Microsoft. Business is about revenue. Sun's losing on all fronts. Big iron = no revenues, Java = no revenues, Pushing Linux = no revenues.

Please enlighten us on Sun revenue plans. Why should companies even bother with Sun anymore?

I guess the only real reason is the new Sparc multi-core chips, other than that, no need to even bother with Sun anymore.

[alek_nedic]

Please enlighten us on Sun revenue

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