Interview: Sun CEO Scott McNealy

Sun Microsystems CEO Scott McNealy spoke with IDG News Service correspondent Robert McMillan about company changes, plans for 2005 and how open source relates to Solaris and Java.

IDGNS: Sun has made a lot of interesting changes in the last year. What has been a real success?

Scott McNealy: I’ll tell you what we’ve done: We have lowered the cost model big time in the company; we have improved operating contribution significantly. I think we’re on the right track with utility computing, with our community development strategy. I think our Opteron story is very exciting, our chip multithreading story is going to break here very soon and that’s going to be very exciting. Open sourcing Solaris is a big deal. The momentum with Java is a story that people are now just taking for granted, but it is a stunning achievement.

IDGNS: But what do you think will be the big hit for Sun in 2005?

McNealy: Well imagine we hadn’t done Java 10 years ago, where do you think Sun would be today? It would be all Windows. We’d be done. If people aren’t writing Java Web services, they’re writing to .Net. If they write to .Net they write to Windows. If they write to Windows, they don’t write to Sun equipment.

So people say well how come you didn’t monetize Java. Wait a second, there’s $7.4 billion cash in the bank since we launched Java. Just because we didn’t charge for it… it’s like saying, you know, HP doesn’t make much money on printers, they make it all on printer cartridges. There’s different ways to create the market and monetize it.

And so you’re asking the question, how are you going to monetize the market going forward. Well sometimes you don’t share that.

IDGNS: Some developers have called for Sun to open source an implementation of the Java Virtual Machine. Why haven’t you done that? The arguments that Sun makes for open sourcing Solaris seem to apply equally to Java.

McNealy: Mainly because the Java community process was there from the beginning. We’ve got over 900 corporations and organizations who are part of the Java Community Process. There’s just not a community development issue there, and I’m not sure what problem it solves. What problem does it solve? We’re really trying to figure out. We’re happy to adjust and modify the Java Community Process. You can still do open source or proprietary implementations of any Java technology on your own. There’s a certification process. We’re not really sure what it solves. We don’t want to fix something that’s not broken at this point.

IDGNS: In that vein, what problem does open sourcing Solaris solve?

McNealy: We don’t have a Java-like community process set up for evolving it, and we don’t have access to the source code for developers to get access to it, because we have encumbered code to get out. That’s the big difference. There is no encumbered code in Java.

IDGNS: Sometimes it seems as though Sun is trying to become a software and services company. What has convinced you that you should keep investing in these multicore UltraSparc chip designs like the upcoming Niagara processor?

McNealy: Companies that don’t do microprocessors and core systems development have all lost money except one: Dell. Every one of them has lost money reselling somebody else’s microprocessor. Name one that’s profitable besides Dell and Intel.

IDGNS: Why is that?

McNealy: Because the money is in the system. In the end, it’s kind of like Ford would have a hard time OEMing Chevy drive trains. You can’t go to Fisher Body as Ford Motor Co. and expect to make money on the upholstery.

You can go build a car out of 50 different suppliers components, or you can buy a Ford. And I’ll bet you what, the Ford will be a better price performance maneuver. That’s why we do it. We can do that, actually, with a very small, focused design team that is very tightly integrated. To us it is more important that the chip architecture be integrated with the computer and the operating system and the Web services and network stacks than it be affiliated with the silicon process.

IDGNS: With Lenovo Group acquiring IBM’s PC business, it seems that there are two ways of looking at this. One is that Silicon Valley may eventually go the way of Detroit, with more and more of the things that are done here moved offshore.

McNealy: What is the R&D that was in the IBM PC business? They didn’t do any software; they didn’t do any disk drives, they didn’t do the power supplies, they didn’t do the sheet metal — last time I looked they didn’t have any steel plants over there. They didn’t mold their own plastic, they didn’t do the motherboards — those were all built by Intel — they didn’t do the microprocessor. All they did was some order taking and some final logistics. That’s what the PC business is all about today for anybody who’s not Intel or Microsoft.