Economist article on Sun's Linux Strategy

DavidNWelton writes "The Economist has a well-written article about Sun's Jonathan Schwartz and his Linux strategy. It also mentions Microsoft, and the SCO lawsuit."

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[Tyrdium]

The ponytail versus the penguin

Does Sun's Jonathan Schwartz have a better strategy than Microsoft's for surviving the threat of free software?

HOW can you compete with something given away free? That has been the question dogging big software firms, above all Microsoft, ever since free ("open-source") programs made it into the mainstream--notably Linux, which is now a serious rival to costly proprietary operating systems such as Microsoft's Windows. It has also been the chief headache for Jonathan Schwartz since Sun Microsystems put him in charge of its software business a year ago. Although there has long been speculation that Linux might one day kill Windows, Sun has always seemed a more plausible, and imminent, victim of free software. But the Silicon Valley firm is now fighting back: a new approach, the product of Mr Schwartz's labours, was unveiled on May 19th.

Aged 37 and pony-tailed, Mr Schwartz might easily be mistaken for a hacker, or even for one of the Young Turks who developed Linux just for the hell of it--though he also shares the aggression and feistiness for which his boss, Scott McNealy, is well known. He joined Sun in 1996 when it bought his software firm, Lighthouse Design. After that, he was the driving force behind the Liberty Alliance, an industry group developing a rival method to Microsoft Passport for securely and easily moving personal details around the internet. Seasoned observers of the industry are impressed by his grasp of the complicated beast that is software. But will even that be enough?

Ironically, for Sun, in contrast to Microsoft, Linux has been less a software than a hardware challenge. Yes, the program is free--but many firms use it mainly because it allows them to buy cheap servers powered by Intel chips rather than more expensive Sun boxes. Since Sun's flagship Solaris operating system and Linux are both a variant of Unix, an operating-system standard, many applications written for the former can be easily converted to run on the latter. The result is that Sun is rapidly losing market share to makers of Intel-based servers, mainly Dell.

At first, Sun dismissed this threat. Then it tried to embrace Linux--offering its own cheap Intel-based servers running the free operating system. (Mr McNealy even dressed up as a penguin, the Linux mascot, at Sun's 2002 analyst meeting.) Yet the new computers were poorly received. Potential customers doubted that Sun was really serious about Intel-based machines.
So what is Mr Schwartz's new strategy? In San Francisco this week, Sun unveiled two new low-priced servers based on Intel chips. It also revealed that Oracle had agreed to make its software work on these machines--adding to speculation that Oracle is about to buy Sun. But much more significant was a subtle but crucial shift in the firm's Linux strategy: as well as Linux, Sun will now also push an Intel-compatible version of Solaris.

Mr Schwartz may seem to want to have it both ways. But he is trying to capitalise on an important trend. Some software users have started to realise that even Linux is not as free as it appears: for instance, it has to be maintained and upgraded. "Linux is like a puppy--in the beginning it's great, but you also have to take care of it," says Mr Schwartz. He hopes that firms will opt for Solaris, because it requires less care.

Simply put, Mr Schwartz wants to give customers a choice. On the one hand, he will offer them an open-source solution, which lets them tinker and benefit from the collective brain power of volunteer developers. On the other, he will offer a proprietary option for customers worried about operational costs.

Contrast this with how Sun's arch rival is dealing with the Linux threat. Microsoft executives no longer call open source a "cancer" and a "destroyer of intellectual property", at least in public. But, if anything, the firm has become more aggressive in competing with Linux. Last week, Microsoft was reported to have set up a special fund to pay for dee