LAS VEGAS--Sun Microsystems co-founder and Chairman Scott McNealy wants to help phone companies become "destinations," he said during a speech at the NXTcomm trade show here Wednesday.
Scott McNealy, Sun Microsystems co-founder and chairman
(Credit: Marguerite Reardon/CNET Networks)Specifically, he wants to help these companies develop their businesses around services and content rather than simply providing connectivity to other Web sites on the Net. Sun provides the server technology and data center management services necessary to distribute content on the Web.
As part of its ongoing effort to help phone companies evolve their businesses in the next generation of the Internet, Sun announced on Wednesday a new version of its MySQL Cluster product that is specifically designed for the telecom market.
In a discussion with a handful of reporters after his speech, McNealy elaborated on what he meant by making phone companies "destinations."
"Why aren't the big carriers doing what BlackBerry is doing with e-mail?" he asked. "I can get my e-mail in one click. Why don't they provide chat, public data storage, video sharing, or social networking? It's not hard to do."
McNealy said he doesn't expect phone companies to develop these services themselves, but he said as long as they can brand new services so that consumers want to use them instead of going off on other Web sites to find them, they can compete with the likes of companies such as Google, Amazon, and Yahoo.
Amazon in particular has become a potential competitive threat to cell phone companies with its new wireless e-reader product, the Kindle, McNealy noted. This device allows people to download books, newspapers, and magazines using Sprint Nextel's wireless network. Amazon has bought wholesale capacity on Sprint's network, which makes the online retailer look and act like a mobile virtual network operator, which competes directly with cell phone operators.
Of course, the notion of network service providers creating a portal or destination site for consumers is nothing new. That was AOL's strategy in the dial-up market. And cable operators have all tried to do this for their broadband services. Verizon and AT&T have each separately partnered with Yahoo to create portals for their broadband services highlighting special content and other services. But for the most part, these strategies have largely failed as savvy Internet users often bypass these portals for sites like Google to find what they need on the Web.
Still, McNealy believes that carriers must do something if they hope to compete and ultimately win the battle for users both on traditional broadband as well as in the emerging wireless Internet market.
"They don't have to out-YouTube YouTube," he said. "They just have to out last them. But the real question is do (the phone companies) have the attention span to make it work."
He said Verizon, which is one of Sun's largest customers, could leverage its huge retail presence to market services directly to its consumers much more easily than some of these Web-based companies.
While he acknowledged that most of the large phone companies have already been working toward becoming "destinations," he singled out Australia's Telstra as one in particular that has executed well on this concept.
"It's not like they've been sitting around doing nothing," he said. "But Sol (Trujillo, Telstra's CEO) gets it."
Telstra's BigPond Web site acts as the public face for Telstra's broadband and wireless service offering subscribers content and services directly from the Web site. Subscribers can rent or buy movies online and download music. They can read news or download other video content as well as access games or shop online.
BigPond has been a big success, Truijillo said during his keynote speech on Tuesday at NXTcomm. Specifically, he noted that in 2007 BigPond sports had a bigger audience than its next three biggest competitors in sports content.
"When you have the right content, and it's customized for customers, you get the usage," he said. "And you get it in ways that most people are not used to getting it."
Sometimes the best decisions become clear only with the benefit of 20/20 hindsight. So I'm sure Scott McNealy, the most cocksure tech CEO I ever met, must know he made the right move getting out of the way at Sun Microsystems.
Since turning over the reins to Jonathan Schwartz in April 2006, Sun has picked itself off the floor, staging one of the more improbable corporate comebacks in recent Silicon Valley history. Come on now, fess up: how many of you believed Sun had a rendezvous with irrelevance? OK, I'll be first to raise my hand. After the dot-com bubble burst, Sun felt the pain more than most. In the years since, the company was in a neck-and-neck race to the bottom with Borland Software, another former high-flier that has since fizzled out.
Truth be told, I thought Schwartz talked a good game with the media, but I doubted he had the right stuff to revive the company. He reminded me more of one of those smug yuppy jerks who once populated the senior management ranks at Microsoft (pre-antitrust trial, before all the smack-down which later ensued.) Or as McNealy was wont to say on other occasions, Schwartz came across as "all hat and no cattle." Whenever he met with CNET editors, for example, Schwartz came across as obviously bright, but so obnoxiously in love with the sound of his own voice that I couldn't wait for the meeting to end. He was convinced you were flat wrong and that should be the end of the discussion. Couldn't we see he was right?
Well, four consecutive quarters of profit later, who am I to argue with the track record? No doubt, a fuller assessment must acknowledge that many of the seeds of Sun's recovery were planted during McNealy's time. Even as Sun's world appeared to be collapsing around him, McNealy kept investing in R&D projects. That later paid off in the coin of success with things like Sun's Galaxy and blade servers. Also, McNealy helped bring back one of the industry's legendary designers at a critical moment when Andy Bechtolsheim rejoined Sun in 2004.
Ever since, Schwartz has done a splendid job moving Sun along the right paths. He's been eloquent about the need to step beyond Sun's own hardware and software. And his vocal of open-source software has been especially timely.
I was impressed with today's announcement that Sun is buying MySQL. Here's what Schwartz says about the deal in his blog.
MarketWatch ran a story today quoting some dude from Global Equities Research claiming Sun overpaid.
Was it too much? Considering how MySQL commands nearly half of the open-source database market, that's a potentially juicy client list of new customers--even though it's going to cost Sun $1 billion.
Jonathan Schwartz, chief executive of Sun Microsystems, sat down for a public chat with Fortune at the magazine's first iMeme technology conference on Thursday. In noting some of the differences between him and his predecessor, Scott McNealy, who handed over the reins about a year ago, Schwartz said: "He likes to drink wine out of a box; I like to drink wine out of a bottle."
News.com's Kari Dean McCarthy offered this quip in response: "Maybe they should hire someone who likes to drink wine out of a glass and see where that takes them."
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