McNealy Lays Out a Plan for Profits at Sun

Tells partners changes are in store -- but not for basic technologies

By Patrick Thibodeau

April 26, 2004 12:00 PM ET

Computerworld - SAN DIEGO -- If you're a Sun Microsystems user, expect some changes. Your servers may come free as part of a software and services package. Subscription pricing plans, including one for Solaris, will expand. And there will be a growing emphasis on utility pricing models.
At least that's the vision Sun CEO Scott McNealy described at the iForce partner conference here last week. Despite having given up the title of president to former software division head Jonathan Schwartz in a management reshuffle earlier this month, McNealy made it clear that he's in charge and that he and Schwartz are "joined at the hip."
McNealy compared his leadership style to the aggressive, top-down approach of a military leader, pointing to former U.S. Army Gen. Norman Schwarzkopf, commander of Operation Desert Storm, as the type of leader he admires. It's an apt comparison: McNealy is under the gun to improve profitability after Sun posted a net loss of $760 million for its most recent quarter and cut 3,300 employees.
"You are going to see a lot of changes here," McNealy promised his business partners, whose fortunes are closely tied to Sun's. McNealy said that he's focused on improving profitability and that the credibility of his vision, at least on Wall Street, will rise only if the bottom line rises -- despite the fact that Sun has $7.5 billion in cash.
"The opportunity exists; the execution will determine the outcome," said Anna McDermott, president and CEO of GE Access, a General Electric Co. subsidiary that serves as a value-added distributor for about 800 Sun resellers.
Technology on Track
Talisen Technologies, which makes secure remote-access software, also sees an opportunity. Two months ago, the St. Louis-based company become a Sun partner and is integrating its product into the Java Enterprise System, a software stack that includes Sun's directory, application and portal servers.

Jonathan Schwartz, president of Sun Microsystems

"We think the technology is first-rate," said Jeff Brandt, Talisen's director of business development for the aerospace sector. "The question is, how do you get the message out?"
McNealy said Sun isn't changing its core technology direction; for instance, it isn't backing away from its UltraSparc processors. In fact, McNealy said he sees chip throughput improvements as essential to enterprise customers for emerging tasks such as processing radio frequency identification data from thousands of connected systems.
And Sun has no plans to make a fundamental shift to Linux. It will offer Linux in its desktop systems and on some servers, but it intends to stick with Solaris

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