Tomorrow's Fortune 500

I remember a particularly unpleasant conversation with a Sun executive about a year ago. The introduction of our "eco-responsible" Niagara systems had just blown up a $250,000 purchase order from a big customer, replaced by a $25,000 Niagara (sorry, T2000) order. "You're killing me," he said, "are we trying to shrink or grow this place?"

What followed were some choice words about headquarters being out of touch with the field, not understanding real world challenges, pricing going in the wrong direction, etc. And frankly, pricing Niagara was a big bet - putting a price on innovation is an art, not a science. And lest you ask... yes, we're trying to grow, not shrink.

But there's an interesting phenomenon in the computer marketplace, which strikes some as counterintuitive: if you double the performance of a machine, customers don't buy half as many, they tend to double their order. Same goes for utilization, if you can double server utilization via Solaris containers or VMWare, people don't buy fewer computers - they buy more. The value of innovation, at least to our core customers, is growing so fast that if the price declines, the overall return (value/price) goes through the roof - encouraging a feedback loop. Moore's Law and free software drive relative pricing down, and customers accelerate their growth.

So I had two pieces of advice for the unhappy executive, 1) I'm sorry to hear about the order (executives are people, too), 2) please make sure your teams are selling into our competition's installed base, not just our own, and 3) trust the market will grow.

Since then, our Niagara systems have ramped from $0 to more than $100M per quarter in only two solid quarters of shipment - while our overall (multi-billion dollar) systems business has grown by double digits (while many of our peers have shrunk). The growth of Solaris 10 on HP, Dell and IBM certainly drive awareness for our innovation, but pricing's been working in our favor, too. Even our trusty friends in the analyst community have taken note of our consistent share gains.

And although I'm thrilled to see our share gains, I'm worried our growth masks a trouble spot - among customers that don't buy $250,000 at a time, but more like $2,500 - startups and small companies. Granted, we are making headway with a few very cool startups, but there are too many signs that all's not well in a market that daily redefines the network. Do I have data? Not perfect data, but certainly anecdotal evidence. As an example...

Recently, we held an "unconference" for startups in the Silicon Valley area - an unconference is one in which the agenda is defined by its attendees, after they arrive (sounds strange, but it totally works.) We had solid, even overflow attendance at this event.

Nearly all of the feedback was positive. Nearly. But there was a troubling, and consistent message. It usually went like this, "wow, this is a great idea... thank you, Sun. But hey, why are you guys here? I thought you built big expensive stuff that ran in banks?"

Ouch.

It was a message delivered with sufficient frequency that we've started to really focus on acquiring new customers - and no, not just banks and telcos, but new companies. The startup community, a traditional stronghold for Sun.

So if you are a startup, or you know someone who is, please send them the following.

We are committed not only to growing in today's Fortune 500, but tomorrow's, too. And as you know, all our software is free for the asking (you pay only for commercial support, when you want it). From Java to Solaris to NetBeans, to everything in between - it's all free for the asking.

But we can't just give hardware away for free (at least permanently). And we know you're price sensitive - so we're going to drive prices into the ground to lower the cost of using Sun's newest innovations. As of now, that's exactly what we've done. If you're a US business that's been in business less than 4 years, and you employ fewer than 150 people, you'll find this blog posting very interesting. Just go look at what Thumper will cost vs. any of our storage competitors (by our calculations, we're about half the price). Just click here to apply for the program.

And yes, we are in the midst of globalizing this program as we speak - "younger than 4, fewer than 150" isn't a global definition for a startup (that's known as a midsize business in some places).

Why are we doing this, even though we're showing great growth?

Because growth in our installed base is nice. Growth in the competition's installed base is better.

But growth in tomorrow's installed base is best of all. And by definition, every large customer Sun serves today started as a small customer.

Remember, just click here.

Posted on 10:44PM Nov 28, 2006 | Comments[40]

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A Rising Tide Lifts All Boats

A rising tide lifts all boats. If there were ever a philosophy that guided our decision making at Sun, it's that - the notion that an internet connected by freely available standards is more valuable, to Sun and our customers, than one defined by dependencies on proprietary technologies. Although the metaphor doesn't translate particularly well (I know, I've tortured translators around the world), the concept is familiar to nearly everyone, no matter the industry or geography.

History is replete with examples of failed efforts to defeat standardization. My personal favorite is Thomas Edison's attempt to patent the lightbulb, so he could threaten litigation against anyone using an "infringing" non-Edison client bulb attached to his servers generators. And there are just as many success stories for broadly adopted standards, from shipping containers to power grids, air traffic control to the Java platform itself.

Few folks, at least outside of Sun, understand how pervasively successful the Java platform, and the community supporting it, have been over the past decade. But Java runs on more devices than Microsoft Windows, Linux, Solaris, Symbian and the Mac combined. Nearly 4 billion devices at this point, from smart cards to consumer devices, DVD players to set top boxes, medical equipment, all the way up into the majority of the world's transactional systems and 8 out of every 10 cellphones sold. The Java platform is, already, a global standard.

The source code has been available for years. And we have a robust, multi-party community that defines the standard, driven by more than 1,000 contributors, from Google to Oracle, Motorola to Nokia, Apple to Apache, Red Hat, Samsung, Sony, SouJava - if they matter to the internet, they belong to the Java Community (with one exception, despite our frequent invitation). Millions of developers and customers benefit every day.

But over the past few years, our success has felt increasingly incomplete.

There was an obvious division growing between those that believed in free software, also known as the open source community, and those that believed in open standards. And it felt like we at Sun were straddling a few too many fences - Solaris has become one of the most popular projects in the open source community, along with Glassfish (our open source Java EE application server), NetBeans (our development environment), and another one of my favorites, Project Looking Glass (an inspiration for many). But the Java platform itself was never listed in that lineup - because its license was more restrictive, designed to enforce community compatibility above individual freedom. (Our motives were pure, but we'd been burned in the past.)

But a rising tide lifts all boats. And now that Java's established itself beyond a doubt, it's time to take the next step, to utterly obliterate the barriers to entry for developers around the world seeking to build the next great device, or the next great internet service. Whether in the US, Brazil, Poland, China, Tibet, Taiwan, Europe, Mexico - where ever the internet travels (to more places, at this point, than even electricity).

And by now, you've seen that's exactly what we've done. We've followed through on our promise to join hands with the free software community, and have chosen the Free Software Foundation's General Public License (known as "the GPL") as the governing license for the evolution of the Java platform. (Crow and hats available for those needing a snack :-)

The GPL is the same license used to manage the evolution of GNU/Linux - in choosing the GPL, we've opened the door to comingling the communities, and the code itself. (And yes, we picked GPL version 2 - version 3 isn't available, but we like where the FSF is headed.)

Picking a license was a very complex task - we took an enormous breadth of issues to heart in making the selection, from protecting our customers and licensees, to continuing to foster a wildly successful developer community. We had to worry about device manufacturers, media standards, big enterprise systems, government and military deployments - remember, more businesses and devices leverage Java than any other development platform. This was no simple feat.

So to the legal team at Sun, and our friends at the Free Software Foundation - I would like to offer my heartfelt thanks. We could not have gotten here without you. If Shakespeare had understood intellectual property, he never would have said all those mean things.

And in closing, I want to put one nagging item to rest.

By admitting that one of the strongest motivations to select the GPL was the announcement made last week by Novell and Microsoft, suggesting that free and open source software wasn't safe unless a royalty was being paid. As an executive from one of those companies said, "free has to have a price."

That's nonsense.

Free software can be free of royalties, and free of impediments to broadscale, global adoption and deployment. Witness what we've done with Solaris, and now, what we've done with Java. Developers are free to pick up the code, and create derivatives. Without royalty or obligation.

Those that say open source software can't be safe for customers - or that commercially indemnified software can't foster community - are merely advancing their own agenda. Without any basis in fact.

They're also fighting a rising tide.

Posted on 10:46AM Nov 13, 2006 | Comments[73]

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I Believe in Network Clients

At an interview last week with John Markoff, I made a statement that seems to have generated some concern over my sanity. I said, "I don't believe in thin clients."

Let me start by saying I started my technology career with a company that built client (ie, desktop) software. I care a lot about user experience. And for that reason, I've always thought the words thin client were oxymoronic. No two words have ever been less comfortable sitting next to one another - one cannot have a client without at least some functionality or 'state' on a device, and the girth of that state (as measured by memory or storage or application footprint) directly correlates to the interactivity of the client.

In simple terms, TV's got more interesting when they sprouted set top boxes. Radio got more interesting when iPods came along. And cell phones blossomed when you could download games and ringtones to their resident Java platforms. (Cache is king - although it can be stolen (think laptop), but I'll leave that cryptically hanging for another blog).

Industry convention says that apps written to browsers are defined to be "thin." But by that definition, thin really equates to "using someone else's runtime environment" - in that the browser itself has to be present for the service to be rendered. And last I checked, browsers require operating systems and windowing environments. Not exactly thin. So in my book, it's inaccurate to say Google or YouTube are "thin clients" - they're services that leverage someone else's thick client. A browser.

With this heresy behind me, I'm also (less controversially) of the belief that the most interesting consumer innovations are those we experience with our eyes - through compelling clients. And until recently, very few companies were investing in client software or hardware - sure, there were lots of browser apps, but that's what they were.

But that's changing. Innovation on clients is back - we see it in a flurry of Web 2.0 companies investing in creative desktop interaction and the resurgence of JavaScript, in the myriad toolbars the big portals are driving into the world, and more interestingly, in an ever broadening array of new devices showing up in the hands of teenagers, on automobile dashboards, in our living rooms, basically everywhere. None of these are thin - at least in my definition. They all, however, leverage the network. And that's the big innovation - it's no longer just a browser presenting the network to users. Its standalone client applications and devices.

But why the renewed energy around clients? This was venture capital no man's land a few years back, but no more.

First, the strategic reason - relying on someone else's browser is a precarious choice. Especially when the distributor of the browser can use it to compete against you (type "news" into Microsoft Vista's browser, and you don't go to news.com, you go to MSN News...). That's driving a lot of companies to validate their services against Firefox, Opera and the Java platform - and as interestingly, it's driving companies to rewrite their apps to be standalone network clients, like iTunes, or the NetBeans developer tool. Standalone network clients, hardware or software, avoid the threat of disintermediation from unfriendly runtime environments.

Secondly, users don't like to wait. Which from my pedestrian vantage point is the fundamental motivation behind "Web 2.0" - resident functionality, whether Google Earth or NASCAR's PitCommand, is more satisfying than visiting a web site that tries to load great heaping volumes of JavaScript into a browser every time a user appears (or more frustratingly, reappears). Patience isn't a virtue when it comes to computing - out of site, out of mind (pun intended). Make the user wait, they'll go elsewhere - provide a persistent executable, one that lingers between usage - or attaches to your belt loop - you're more likely to keep the customer.

Lastly - the network has finally become pervasive. You can get a signal nearly (I did say nearly) everywhere - but as we move from a world of relatively reliable landline networks, to one in which we share services with mobile and wireless networks, the latter's spottier reliability is becoming more pervasive. And for a network service to retain its utility, it's got to do more than fail to appear when invoked off the net. Which implies an interactive client that persists, or hangs around, even when the network disappears for a moment. That's why your in-car navigation system works, even if the update feature is disabled.

Now again, I am at my core someone who cares about clients - and user experience. Servers without clients are called space heaters - so it's good to see innovation returning to clients, especially network clients. It's been bottled up in the traditional definition of thin for too long. And although I don't believe in thin (except for one very pure, very low power, unthievable interpretation), I'm a huge believer in the network. And all devices that attach to the network (just go to CES next year, you'll be awed).

So with that as a preamble, allow me to congratulate the Java community on having voted to approve a new Java platform, Java Standard Edition 6 - whose arrival yesterday via the Java Community Process heralds the single biggest improvement in the Java platform in years. And a vast improvement in user experience. Vast.

With Java now powering more than four billion devices (ahem, network clients), the question we now face is how do we approach the next few billion. And without giving away the answer to that question, I'll leave you with one of my favorite quips:

Different isn't always better.

But better's always different.

Posted on 09:41AM Nov 08, 2006 | Comments[21]

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Sunlight on a Cloudy Day...

I did an interview last evening with John Markoff, of pretexting fame, at the Churchill Club (a Silicon Valley community gathering). I'll point to the links as soon as they're up - I tried to hijack the interview to reverse roles, so I could interview John on what it was like to be snooped on (his response, "it wasn't the first time").

We talked about a variety of topics - from leadership and politics, to the changing open source landscape. On the latter, from where I sit, we're seeing an increasing schism in the market, separating those that protect their customers at the expense of the open source community, from those that protect the community while leaving customers vulnerable. Our view is you have to respect both, and that we've effectively threaded the needle with both OpenSolaris and OpenSPARC, and Sun's commercial derivatives of both - and that those best practices will guide our approach going forward. If you want proof, stay tuned for next week's announcements. (It won't be a boring week.)

John and I also spent some time talking about corporate transparency and shareholder communities (I'd just presented, that morning, to a group of Sun shareholders at Sun's Annual Shareholder meeting, links and audiocast here (and yes, to the commenter who suggested we need to refresh our file formats for technology neutrality, you're quite right, stay tuned).

As I've said before, transparency and efficiency are obligations as much as opportunities - a better informed investor can make better decisions, just like a better informed customer or developer.

Posted on 12:01PM Nov 03, 2006 | Comments[22]

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