McNealy gives it away

It has to be good news that Sun's Scott McNealy has buried the hatchet with Microsoft. That's certainly the way buyers of the two companies' products are viewing the rapprochement that came out of the blue 10 days ago.

It has to be good news that Sun’s Scott McNealy has buried the hatchet with Microsoft. That’s certainly the way buyers of the two companies’ products are viewing the rapprochement that came out of the blue 10 days ago. But I'm sure there's more to it than meets the eye.

The end to hostilities is all the evidence anyone needs to write Sun’s epitaph. For McNealy to have called a truce with arch enemy Microsoft is surely confirmation of the crisis outsiders have been describing at Sun. McNealy’s new conciliatory approach to the company he has publicly referred to as the evil empire looks awfully like he’s cutting his losses.

Sun will say, of course, that it’s nothing of the sort. It has $US5 billion in the bank and spends more money than any other, in relative terms, on R&D. What possible cause for concern could there be?

Well, for example, there’s the latest financial result. Preliminary revenue figures for its third quarter, which ended on March 28, are expected to show a loss of $US750 million to $US810 million, which includes the cost of laying off 3300 staff worldwide. Cutting thousands of jobs is hardly the action of a company with a glowing future.

The terms of the deal with Microsoft see close to $US2 billion being handed to Sun immediately to settle antitrust litigation and patent disputes. That’s a tidy sum to pocket while at the same time getting some highly distracting issues out of the way. McNealy doesn’t have a potential sale of the company in mind, does he?

It turns out that McNealy and Microsoft boss Steve Ballmer first began working to overcome their differences about a year ago. Most of the talking leading up to the agreement was done over the phone, but company executives also met in the flesh.

McNealy apparently set the ball rolling by inviting Ballmer to play a round of golf -– them against another another pair of players, who they didn't name (and against whom they lost). Other meetings took place at Microsoft's campus and at McNealy's house.

Such chumminess seems unbelievable when the record is examined to see what McNealy and Ballmer have said about each other’s company in the past. McNealy entertained me and a few hundred other journalists at the Australian National Press Club in 2000 with a string of put downs of Microsoft, .Net and Windows. Microsoft was a “convict” company, .Net a “hairball” and a Windows PC was a “ space heater”. Ballmer has also dished it out, reportedly telling the

New Yorker that “Sun is just a very dumb company” and that McNealy made him mad with his “corporate character aspersion”.

That was then. Now, IT buyers are heartened to hear that greater interoperability between the two companies is being promised. Robin Johansen, the IT boss at Beca Carter Hollings & Ferner, says the IT challenge is made simpler if there are fewer standards to worry about. Les Christopher, the head of IT at Hamilton’s Livestock Improvement, sees the agreement as acknowledgement by both companies of the threat of Linux.

McNealy’s intimates might provide the real clues as to what it means. Jon Feiber, a Sun manager from 1983 to 1991, says in

High Noon, a book about McNealy, that “if Scott blinks at all, Microsoft will eat his lunch. Anything other than absolute conviction and unbelievable maniacal desire to compete with Microsoft is going to lose. You’re not going to beat Bill Gates by being conciliatory or compromising.”

This deal looks like a loss.

One thing the surprise resolution to years of combat proves is that it is still possible to keep secrets in this industry. So who knows who McNealy might be pitching his company to. Might Oracle’s Larry Ellison be receptive, as PeopleSoft continues to give him the cold shoulder?

Doesburg is Computerworld’s editor. Send letters for publication to Computerworld Letters.

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