01/22/96 NOW, SUN HAS TO KEEP JAVA PERKING

NOW, SUN HAS TO KEEP JAVA PERKING

How hot is Java? Even before the official Jan. 12 release of Sun's bold new network software, 14 big-name companies, from Microsoft and Netscape Communications to IBM and Toshiba, have already agreed to license it for at least $125,000 a pop. As a result, Sun is years ahead of its original (admittedly modest) business plan--and scrambling to forge a new one. That's why on Jan. 9, Sun hired Alan E. Baratz to run JavaSoft. Says the former chief executive of Delphi Internet Services Corp.: ``I probably won't be sleeping in the next couple months.''
Baratz, once a top networking strategist at IBM, will have to be alert to keep Sun ahead of its own creation. A new computer language, Java lets programmers write tiny applications that can zip across the World Wide Web and bypass Microsoft's Windows when they arrive. Already, programmers have used Java to create some 600 ``applets'' for everything from animation to transmitting electronic ``ticker tape.'' And because Java will be built into the next release of Netscape's Web browser, millions of personal computer owners will be sipping the cyberbrew this year.
``THE NEW INTEL.'' What's in it for Sun? Lots--but licensing revenue may be the least of it. Java will pay off, says Chief Technology Officer Eric E. Schmidt, if all it does is stimulate demand for Sun's network hardware, software, and service.
Still, Java offers potentially huge revenue opportunities that Sun--facing more competition than ever on the hardware front--can't afford to pass up. Besides licensing fees, Sun's main source of Java revenue this year will be from software tools to help developers create Java programs. In March, Sun will release Workshop for Java, a $100 package it expects will appeal to more than 300,000 Windows programmers.
Beyond 1996, the plans get murky. For one, Sun is thinking of offering its own Java applets, including an Internet variation on Notes, Lotus Development Corp.'s groupware. But even if it convinces software partners that it's not stealing their business, Sun couldn't charge Microsoft-like prices because individual applets have far fewer functions than full traditional programs.
The biggest jolt would be a Java-based operating system that could replace Windows completely. Sun already has a prototype that could be ready by 1997, but company officials won't say whether they plan to market it. If they do, free or inexpensive distribution over the Internet could make it a standard almost immediately. Says Gartner Group analyst Hubert C. Delaney: ``Java doesn't have to make money for Sun, just help them break Microsoft's business model.''
Sun isn't limiting its plans to computers. Schmidt envisions embedding the software that runs Java applets in everything from printers to wireless phones, giving them more computerlike adaptability. Sun may even design a microprocessor chip tuned to run Java applets at lightning speed. Says Schmidt: ``This is a path to where Java could be the new Intel.''
New Intel? New Microsoft? Whew. Nothing would make Sun Chief Executive Scott G. McNealy happier, but he'll be satisfied, he says, if Java simply gives Intel and Microsoft some competition--opening the market for Sun. That prospect alone has investors psyched: The day Microsoft endorsed Java, Sun's market value jumped $336 million. ``The halo effect is stunning,'' says McNealy. Anything more will be cream in his coffee.
By Robert D. Hof in Mountain View, Calif., and John Verity in New York