CEO Jonathan Schwartz is considering what may be the company's riskiest advance yet into open-source territory
It has been five years since Sun Microsystems (SUNW) Chairman Scott McNealy donned a penguin suit at a San Francisco conference to demonstrate Sun's d?tente with Linux. Rather than dis the open-source operating system as an inferior competitor, Sun would sell it, albeit in select corners of the market.
McNealy's now off stage, having stepped down as chief executive in April, 2006, but his successor, Jonathan Schwartz, is still trying to make Linux fit. Sun's new boss is even more willing to embrace open-software development methods, letting programmers contribute to the code used in what were once some of Sun's most closely guarded products, including Java and Solaris.
By June, Sun plans to complete the release all of the source code for its widely used Java programming language under the General Public License, the same agreement that governs Linux. And Sun has spent the past two years trying to drum up interest in OpenSolaris, a version of its Unix operating system that developers can download free from Sun's Web site.
Price Is an Issue
Now, amid falling sales of its bread-and-butter servers and mounting pressure on Schwartz to cut more jobs and boost a stock price that's dropped more than 22%, to $5.26, since early February, Sun is considering its most radical open-source move yet: releasing Solaris under the love-it-or-hate-it GPL. The move could reinvigorate Sun by putting one of its crown jewels into the thick of the open-source movement—or it could diminish the worth of one of Sun's most valuable pieces of intellectual property.
Even Schwartz concedes that while customers value Solaris, they're often tempted by less expensive systems. "If you force them to buy Solaris, that works for a short time," he said at a presentation to reporters on Mar. 23. "But eventually they find a way to get rid of Solaris. It happened." Sun wants to make sure it doesn't happen again, now that the company has eked out a profit after years of losses following the dot-com meltdown and IT spending slump earlier this decade.
How Sun ventures further into the open-source waters remains under debate inside the company. More answers could come at the company's JavaOne conference in San Francisco May 8–11. The theme of this year's show: "Open Possibilities."
Releasing Solaris under the GPL—an idea Schwartz first broached publicly in a January, 2006, blog post—could catalyze large numbers of developers to write software that runs on Sun gear. Technology in Sun's newest Sparc microprocessors, which have won rave reviews for performance, is also available under the GPL, as is most of Java.
Aligning the licensing rules for Sun's operating system, programming language, and chips could give companies new incentives to use them in tandem (see BusinessWeek.com, 5/8/06, "Sun's Big Open-Source Bet"). It could also give Sun more firepower against IBM (IBM), which makes a fortune selling software and consulting services to companies that run Linux.
And unlike the Sun-crafted license that governs OpenSolaris, a GPL version of Solaris could give Sun instant credibility in the open-source world, a mantle it lost years ago. "When Sun grew up they were the developers' platform of choice," says Fred Killeen, chief systems and technology officer at General Motors (GM), a big Sun shop. "That whole generation now is going open source. This takes them back to their roots to get that population reinvigorated."
But releasing Solaris as GPL software also poses high risks for a company struggling to hang on to every shred of value in a computer industry that's rapidly shifting from specialized products to low-cost machines that run Linux and Microsoft (MSFT) Windows and feature Intel (INTC) and Advanced Micro Devices (AMD) chips.
Under the GPL, developers are free to lift and modify portions of the code that makes software products run, without the company that owns the code deriving any exclusive benefit from the changes. When GM signed a broad deal to license Java-based software from Sun in 2005, it built in an escape clause in case Sun's open-source plans for the software stripped away its value, says Killeen. Still, Sun may have little choice. "They aren't really competing with proprietary operating systems anymore," he adds. "They're competing with Linux."
Even if Sun takes the GPL plunge with Solaris, many industry observers say it may be too little, too late. "They're moving in the right direction," says Jim Zemlin, president of the Linux Foundation, an industry group that counts the major computer suppliers among its members and pays Linux creator Linus Torvalds' salary. "The question is, How fast can they move? Solaris is great technology and has a large ecosystem. But the Linux community has critical mass," says Zemlin.
Others are even blunter. "It's all for naught," says Scott Kveton, CEO of software company JanRain and former head of the open-source computer lab at Oregon State University, which ran many of the servers used by the Mozilla Foundation, creators of the Firefox Web browser. "If they'd done this three years ago, they'd have a fighting chance, but people see Solaris as an irrelevant platform. I don't see them stemming the tide of people switching to Linux or Windows."
Fast Action Is a Must
Whatever it does, Sun needs to move fast. Its $3.28 billion in revenue for the quarter ended Mar. 31 was short of analysts' forecasts, and a slowdown in demand for servers, the computers that run Web sites and corporate networks, may be to blame (see BusinessWeek.com, 4/25/07, "Sun Micro Gets the Cold Shoulder").
Goldman Sachs (GS) analyst Laura Conigliaro estimated in an Apr. 24 research note that Sun's server sales fell more than 9% in the quarter, and she expects Sun to lay off more staff soon to reach profit goals. Bear Stearns (BSC) analyst Andrew Neff, in a note released the same day, said it's "not clear if [Sun] can re-accelerate growth on a sustainable basis."
In Sun's view, more developers writing to its platform equals more revenue. To get there, the company needs to make Solaris "palatable and effective for people who traditionally use Linux," says Bob Brewin, Sun's chief technology officer for software. "And Solaris is seen by that community as lagging." Sun has been adding support for Web-friendly programming languages—like Perl, PHP, and Ruby—to Java, to appeal to the Silicon Valley startups the company is eager to court.
Big Companies Cutting Back
Emerging Web companies including Twitter, online video company Joost, and Marc Andreessen's social-networking site Ning are using Sun technology, says Peder Ulander, vice-president of software marketing. But a GPL version of Solaris wouldn't be groundbreaking unless lots of developers write for it, says Chris Beard, vice-president of products at Mozilla. "Licensing your source code under an open-source license is just one step in being open source," he says.
At the other end of the spectrum are big companies like FedEx (FDX), eBay (EBAY), Exxon Mobil (XOM), and Verizon (VZ) that are bulking up on computing to run programs that can route trucks and planes, track packages, and run networks, Schwartz said in March. The same can't be said for a wide swath of Corporate America, which is slowing IT spending on systems that manage payrolls, inventories, and general ledgers, as increases in processing power outpace business growth. "You don't want to hang out too long in that part of the marketplace," Schwartz said. "We want to be on the right side of that split."
Yet releasing a GPL version of Solaris could obviate some of the technologies that make Solaris most appealing. The operating system includes powerful software like DTrace, which can analyze why a program's running slowly, and ZFS, a file system that heaps performance gains on a Web site or program, that nothing in the Linux world can touch. Under the GPL, "those would very quickly show up inside Linux," says Mark Shuttleworth, CEO of Canonical, which distributes a version of Linux that runs on Sun's Niagara chips. "Then it's legal to take code out of Solaris and put it into Linux."
Linux Community in Flux
The trade-off may be unavoidable, says Jonathan Eunice, founder and principal IT adviser at industry consultancy Illuminata. "That's what open sourcing is all about. You have to give up something to get community involvement," he says.
On the other hand, OpenSolaris' Common Development & Distribution License has been criticized since the rights to any changes users make to Solaris' code revert to Sun (see BusinessWeek.com, 11/14/06, "Sun's Surprising Openness"). Further muddying the waters is the chaotic state of affairs at the GPL license administrator, the Free Software Foundation, which is struggling to write a new version of the license and has taken fire from Torvalds for threatening the intellectual property of companies that might use it. On Apr. 25, Eben Moglen, who ran the foundation's legal affairs, resigned.
Perhaps most important, not everyone at Sun thinks GPL Solaris is the right way to go. "It's way premature to be thinking about this," says Simon Phipps, Sun's chief open-source officer. The license was "perfect for Java," since its requirement that users republish their modifications to Java's source code prevents proprietary versions (see BusinessWeek.com, 7/5/06, "Sun: Brew-It-Yourself Java?"). But Solaris, an outgrowth of the Berkeley Software Distribution version of Unix that Sun co-founder Bill Joy wrote in the '70s, comes from a different tradition. More than 30,000 programmers have worked on OpenSolaris projects, and things won't change without their say-so, Phipps says. "They're pretty skeptical about using the GPL," he says, "no matter how enthusiastic Jonathan is."
New Management Team
Other executives are angling to put their stamp on Sun's open-source efforts too. In May, 2006, the company rehired veteran Rich Green as executive vice-president of software, following the departure of software chief John Loiacono to Adobe Systems (ADBE). "Rich is really about driving innovation and change," says Brewin. Loiacono, he says, "comes from a different background." Then there's Ian Murdock, the creator of the Debian version of Linux, whom Sun hired on Mar. 19 as chief operating platforms officer to help attract Linux developers to Solaris. His job, says Phipps, is to steer the future course of Solaris. Exactly how that might unfold isn't clear. "Whenever we ask him, he says, 'Well, I'm still looking. Ask me in a few weeks.'"
The irony, of course, is that if Sun had done all this a decade ago, it might have avoided many of its current problems, perhaps even positioned Solaris where Linux is today. Some gadflies at Sun were advocating for open-sourcing Solaris in the '90s, but it never got done. "The debate at Sun hasn't been about whether we should do it or not, it's been about how we should do it," says Phipps. "Those are the questions that bog Sun down." Maybe settling the debate will help get the growth engine revved back up.