When a news analyst is heard to say (as did Yankee Group analyst Laura DiDio) “What if two of the industry’s biggest luminaries decided to hold a press conference and everybody came, but there was no news?” you have to wonder what they were expecting. In the case of the recently-announced alliance between Sun and Google, the answer is pretty clear, since many were speculating in advance of the event. A Google-branded office software suite that will run online – and incidentally throw Microsoft for a loop – was a favorite prediction among those who make it their job to figure these things out in advance.
Jonathan Schwartz, Sun’s president and COO, certainly did nothing to discourage the excitement in the blog entry he wrote leading up to the event. He talked about the old model of buying software 20 years ago, where you paid for everything in advance. “But now how do you ‘buy’ software? You go to yahoo.com, or java.sun.com, or opentable.com, and you use what they offer – for free. Software as a service has…fundamentally changed the business model.” He went on to talk about the different shape of desktop applications now, coming “in the form of applications that are network service platforms. From the obvious, to music sharing clients and development tools, there’s a resurgence of interest in resident software that executes on your desktop, yet connects to network services. Without a browser…If I were a betting man, I’d bet the world was about to change.”
So what did Google and Sun actually announce when it came time for the press conference at the Computer History Museum? Was it earth-shattering, or at least Microsoft-shattering? Um, not quite. The two companies unveiled an agreement to promote and distribute their technology to users. What does this mean specifically? Well, for starters, within 30 days, Sun will begin distributing the Google Toolbar with its Java software when users download the latter from Sun’s website. Since Java software is downloaded 20 million times per month (according to Sun CEO Scott McNealy), that’s nothing to sneeze at – but is it really worthy of a press conference?
Oh, yes, there’s also the little matter of Google buying Sun hardware, which will give a boost to Sun’s bottom line – not just from Google’s purchases, of course. Others will take their cue from Google and its huge datacenter (and Google’s reliability requirements) and be encouraged to buy what Sun has to offer. But again, that’s hardly worth a press conference, especially since Google didn’t say exactly what it was going to purchase from Sun. Again, that’s hardly worth a press conference.
So was this whole thing really just an early Christmas present from Google CEO Eric Schmidt to Sun CEO Scott McNealy, as one analyst implied? Well, that’s possible. After all, Schmidt worked under McNealy for 14 years before joining Google. In fact, come to think of it, the two companies have far more things connecting them than you would think.
Both companies got their start at Stanford, about a decade apart (does anyone remember that Sun originally stood for “Stanford University Network”?). Google now pays the salaries for plenty of engineers who once worked for Sun. Both companies have cultures driven by engineers, in fact. And Sun co-founder Andy Bechtolsheim gave Google’s co-founders, Larry Page and Sergey Brin, $100,000 back in 1998 to incorporate their company.
Of course, both companies share a major rival: Microsoft. And this is where it gets interesting. Because the partnership already goes beyond the toolbar, and will go even further. Google is already a member of the Java Community Process steering committee, and will probably get more active. This strikes directly at Microsoft’s .Net platform. Sun and Google will also engage in joint research and development – you can expect to see a Google search bar added to OpenOffice.org, an office suite that Sun made open source in 2000. That strikes at Microsoft’s own Office suite. Google is also expected to help with development of OpenSolaris, Sun’s open source version of the Solaris operating system. Hmmm, operating systems…Microsoft wouldn’t have any major monopoly, errr, products in that area, would it?
If this doesn’t seem like a natural alliance to you yet, think again. Remember Sun’s slogan: “The network is the computer.” The company has been trying to promote this idea for as long as I can remember covering it. Google, with its huge network, has been offering a plethora of services through the browser that we used to think of as belonging on the computer; email is just one example. Indeed, Mark Mahaney, an analyst at Citigroup Research, reflected on both the naturalness and the excellent timing of the agreement: “For many years, Scott McNealy…talked about the network replacing the PC as the platform. In hindsight, his pitch was much too early…However, today’s announcement indicates that perhaps the Internet can become the platform for applications delivery.”
A Microsoft spokeswoman was reported by the L.A. Times to have reacted to the announcement with “What’s there to say? There’s not much of an impact for us.” But if they were wise in Redmond, somebody removed all of the breakables objects, and maybe even all of the chairs, from Steve Ballmer’s office. Google has this ability to take anything and make it cool, fun, and particularly easy to use. Imagine them getting their hands on Sun’s software.
In the case of OpenOffice, at least they wouldn’t have too much work to do. With the latest updates, the average user would be hard-pressed to tell the difference between it and Microsoft’s Office, especially with the word processing program. Many if not most of the features are the same, the interface is practically the same, and OpenOffice can save files in the .doc format – multiple versions of that format, in fact. OpenOffice can also save documents in open source formats, something Microsoft’s Word can’t do. Apparently, not many people realize this – but with Google’s help in promotion and distribution, that will change.
On the other hand, would the Microsoft Office suite be the direct competitor to whatever Google and Sun come up with? Mary Jay Foley of Microsoft Watch has pointed out that the logical Microsoft competitor to a lightweight, fast, cheap, web-based Office alternative is not Office – it’s MSN Services. Office, after all, was never intended to be run on the web. On the other hand, Outlook Web Access and the pending “Kahuna” (a Hotmail/Outlook Web Access successor also known as MSN Mail) were designed as web applications from the bottom up. There is no word as to when Kahuna will go live, however. But Kahuna isn’t the only bullet for Microsoft’s gun; the company is also working on a hosted collaboration suite that will include email, unified messaging, instant messaging, VoIP and data conferencing abilities. It is aimed right at the small- to mid-sized business market – or in other words, the same folks who would be interested in a potential Sun-Google offering.
Some of you may be wondering that Microsoft doesn’t feel betrayed on some level. Didn’t the software giant just bury the hatchet with Sun back in April 2004 in a $1.95 billion, 10-year agreement? Yes, the two firms did indeed settle Sun’s Java-related antitrust lawsuit, agree to share patents, and make some promises about software interoperability. However, if it looked as if both parties were pushed into it, in a sense they were. Their customers wanted the deal, because they weren’t happy about the fact that technology from the two firms didn’t work and play well together. Scott McNealy says of the Microsoft deal: “I think it was a required partnership, and the customers wanted it. I got hammered until we announced that.”
A number of analysts were unimpressed by the announcement. Cherry Hill Research president Henry Blodget believes it was a “non-event.” Looking at the market, he observed that “Free or nearly free office suites have been available for years, and, on its face, today’s partnership will merely make one of them more available.” He thinks they are “likely to appeal to only a tiny segment of the office productivity market – mainly consumers working at home who don’t mind using a stripped down product – and no distribution deal is likely to change this.” Perhaps Blodget should speak with Peter Quinn, CIO of Massachusetts. He has mandated that, by January 1, 2007, state employees will have to save all documents in either OpenDocument or Portable Document File (PDF). This move to open source – and away from Microsoft Office — by a state government in the U.S. is widely seen as a major blow to the software giant.
Industry analyst Rob Enderle also couldn’t see what the fuss was about. “There really isn’t much depth to this partnership. I think Eric is doing this as a favor for Scott. It provides a certain amount of press and visibility to Sun when there hasn’t been very many positive things going on at the company.” It is true that Sun needs this deal; it has lost $4.5 billion since June 2001. But the company had already been starting to show signs of recovery.
Perhaps the correct view about this agreement is that it is just the tip of the iceberg. Both of these companies are devoted to delivering things via a network. There isn’t a bigger network than the Internet. And the idea of saving your stuff somewhere other than your own computer is becoming more and more acceptable, with web-based email and digital photo albums and the like. If Sun and Google are set to make the desktop less important, that is going to hit Microsoft in an $11 billion a year breadbasket. How Microsoft will respond remains to be seen, but you can be certain it won’t take this lying down.