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Thoughts On The Sun/Microsoft Agreement
We, together with most of the rest of
the information industry, has spent a lot of time this week picking
apart the Sun Microsoft agreement, reading what others have to say
about it, and trying to figure out what it all means.
We confess, the speculation is a lot
more fun than anything we can actually prove with hard facts.
So read carefully, because we’re going to tell you
everything we’ve been thinking about, but we’re going to try to
be careful to separate speculation (ours and others) from the
additional facts we’ve been able to collect in interviews with Sun
(very brief) and with Microsoft’s Jim Dessler, a Communications
exec who’s also an attorney (somewhat longer).
We continue to think a good way to look
at the Sun/Microsoft agreement is by putting together a set of
questions and then seeing how well we can answer them; the answers
get more detailed and interesting over time.
If you have better answers (facts or fancies) than ours, by
all means send them along. We’ll be happy to share them with your fellow readers.
Question:
What Is Microsoft Really Getting Out Of This?
Microsoft’s Jim Dessler
notes that over the course of the past two to two and one-half
years, Microsoft has been working on settling various legal matters,
most notably the U.S. Antitrust case, the private antitrust cases,
AOL, and now Sun. He
says it’s important to note that, “We wanted to do agreements
that wouldn’t just settle legal conflicts, but that were broader
and would set the foundation for a better relationship going
forward.”
That notion resounds in an
internal memo Ballmer apparently sent to the Microsoft staff which
appeared on the Internet on April 5 and which says, in part "Given
the increasingly interconnected nature of technology, we will
continue to find ourselves simultaneously working in partnership
with and competing with other companies in the industry."
So it’s the old ' coopetition' thing.
We asked both Sun and Microsoft if
perhaps what Microsoft might get was some of Sun’s deep expertise
in security and operating systems, two areas where we thought
Microsoft might like some help.
Sun thought it was too soon to know just what kinds of
technical trading might occur, although obviously there would be
more now. Microsoft’s
Dessler commented, “Broadly. It’s moving beyond conflicts and
forging deeper technical relationships, sharing knowledge, creating
more secure computing environments.”
He implied – and we concur, of course, that anything that
makes computing more secure is going to improve the customer
experience.
Question:
What’s The Relationship To The EU Finding?
Isn’t The Time More Than A Coincidence?
Everyone’s denying this one.
Ballmer denied it in the announcement, pointing out that the
negotiations had been under way for a very long time.
Jim Dessler commented that
the only impact that the EU settlement talks had on this timing was
that “Brad Smith and other key people focused their attention very
intensely on trying to resolve the EU situation” (which
interrupted the Sun MS negotiations), so once the EU thing got as
far as it was going, they could return their attention to the Sun
negotiations.
Dessler did make one very
interesting comment, noting again that it was never contemplated
that this agreement would impact the EU process.
“The only issue is that in the (EU) hearing of November
2003 perhaps the best prepared and most skillful legal team among
the third parties was the Sun legal team.
So moving forward they will no longer be a part of this
process.” That seems
to imply that even if the EU doesn’t place any importance on
Sun’s withdrawing from the EU complaint; their absence could
change the eventual outcome.
Question:
If The Emphasis Is On .Net/Java Interoperability, Whose Java
Are We Talking About? Sun’s Or An Across-The-Industry, Open Standard?
This is clearly a problem baby for
everyone to answer. Microsoft seemed uncertain as to how to answer.
On some level, this is Sun’s answer, of course.
Any changes to Java are their changes.
On the other hand, defining interoperability must be a
Microsoft/Sun issue.
We think we’re going to have to wait
to hear more about this, but we think that this may be one of the
most critical issues.
If the interoperability is very good but
it comes at the expense of the Open Standards point of view would
that advantage Sun against IBM and HP?
Both of them, after all, are Microsoft partners, too.
Or would it just make Java less interesting?
We’re not alone in
wondering about his. Rick
Ross, founder of Javalobby, a developer group that supported Sun
throughout the Sun Microsoft litigation, has written an article that
asks “Where is Java in this settlement?”
(You can read the article yourself at http://www.sys-con.com/story/?storyid=44409.
He
raises such excellent points as:
-
What will happen to Java
under the settlement (our question above)?
-
Will Sun have the
resources to continue to develop Java when it is laying off 3,300
employees?
-
Will Sun use the money
it is getting from Microsoft to help fund the continuing development
of Java?
These are great questions.
They deserve answers.
Question:
What Was The Role Of Customer Pressure?
Both
Ballmer and McNealy referred in the announcement of the
Sun/Microsoft settlement to the importance of the customers’
wishes in deciding to change their relationship.
Microsoft’s Dessler agrees that
being responsive to
customers was the major incentive. He says he wouldn’t characterize that as customer pressure,
but rather that over the past few years both companies have become
more attuned to the needs of customers and customers have been
asking for this but not by threatening, more like feedback in many
different contexts.
One of my colleagues, ever
the conspiracy theorist had another idea.
He points out that both Microsoft and Sun are very big
Federal government customers and he believes that the Federal
government, fed up with how difficult it was to get their assorted
systems to “talk” to each other, applied quite a bit of pressure
to their suppliers. If
they did, we suspect they weren’t alone.
The Imponderables
Then there are questions we
know no one can answer, because no one can even admit discussing
them. They just skirt
too close to various antitrust issues.
Of these, the three that
fascinate us the most are these:
-
Why is Sun certifying
its Intel and AMD servers for Windows?
Is it going to emphasize Linux less and emphasize Windows
even a little?
-
Have they (Sun) promised
to lay off Linux in some markets? North America?
Some part of Asia?
-
Has Sun decided to
change some part of their StarOffice/OpenOffice strategy?
Obviously, none of these
have “answers.” We’ll
just have to see what happens in the marketplace.
Sun Marches On
In the meantime, Sun is
trying to show that it’s business as usual.
We’ve received an announcement that E-Plus which provides
cell phone service to more than 8.2 million customers in German has
decided to go with Sun’s Java Enterprise System for its
infrastructure. They
will use only some of the software initially, adding additional
components over time.
This is exactly the kind of
situation Sun has identified where its pricing is favored by the
demographics of the company and its customer:
8.2 million customers (who might need to use some of the
infrastructure software and will get to do so for free) and 2,800
employees, who will pay the usual (we assume) $100 per employee per
year licensee fee. If
Sun can find enough customers like this, they might change how some
software is priced.
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