McNealy: Don't dismiss us in data centers

Sun Microsystems warned us: You can interview CEO Scott McNealy, but don't ask about the financials, which Sun said will include up to an US$810 million (AUD$1,072m) loss for the latest quarter. We more or less stuck to technology and strategy questions, though interviewers Deni Connor and Jennifer Mears still managed to get a rise out of McNealy.

Q: IBM is pushing on-demand and autonomic computing. Oracle is promoting grid. HP (Hewlett-Packard) is talking up utility computing. What's Sun's vision for the new data center?

We're shipping everything you put in a data center except for the floor tiles, walls, ceiling, air conditioning and the network that comes in. We offer reference architectures to help you solve a particular data center problem, whether that be 3 million e-mail boxes as a service provider, or an SAP reference architecture to run your ERP, or a data warehouse using Sybase. What we want to be known for is the best infrastructure to run your Web services on. We want to be known for innovation. We want it to be known that every one of our user-visible interfaces is open and adopted by some or all. Name one proprietary interface at Sun. I challenge you.

Q: You talk about how Sun wants to do the car, not the pieces. Is the company's N1 Grid that car?

You can buy our piston ring, a 1U x86 box or a storage array. We'll play the piece-part game if you want to do assembly and customize. We'll offer professional services to help you put it all together, or we'll assemble it in our factory for you. In terms of doing the car, what does N1 have to do with it? N1 is the control panel for virtualization and provisioning of those services so that you can turn all of the equipment across data centers into a virtual single compute infrastructure that can dynamically and easily reallocate resources to the jobs that have the highest priority or need the resources the most.

Q: It looks like you have a few different virtualization engines, one for systems, one for storage and another for networks. Are you moving toward a converged system?

The N1 control panel will make all of that invisible. It fascinates me that if you were sitting down with (Ford Motor Chairman) Bill Ford, you wouldn't be asking him about the transactional rack and pinion whatever hoochamajiggie with the dual overhead cam whatchamacallit. Yet nobody ever wants to talk with me about our digital asset management architecture or our infinite mailbox. They all want to talk about the crankshaft, and I find it fascinating. Because Bill Gates has forced us all to become computer scientists, we all want to know about the gizzards and innards.

Q: You made a number of acquisitions in the past year: CenterRun, Nauticus, WaveSet. How do they fit into N1?

WaveSet and a bunch of the other acquisitions are part of our Java Web services stack, the platform on which you write and launch executable content and Web services content through a portal. N1 is where stuff like Pirus, CenterRun and TerraSpring come in. They are all about virtualizing and provisioning CPUs, disk drives, switches and services.

Q: Sun spent 16 percent of its revenue on research and development last year, a number some financial analysts criticized as being relatively high. Is this investment paying off?

Sixteen percent is high by historical standards, but I have not yet had a customer say shame on us for doing all that great invention and innovation. We've got a very, very strong cash position. In the last two years, we've completely redone our entire product line with Solaris 10, UltraSparc IV, UltraSparc IIIi, our Opteron products with Kealia, as well as the current stuff we have. The v20z, the x86 Xeon 3GHz-plus machine, the entire Java Enterprise System, a whole new tools strategy led by (Java inventor) James Gosling and then the N1 strategy. You put all those pieces together with our managed services efforts and we have a completely re-energized, retooled product line.

Q: As far as being open, how do you feel about expanding from the proprietary Sparc architecture to Intel or Advanced Micro Devices machines?

What is proprietary about Sparc? Would you at least explain to your readers that it is an open chip interface that anybody can innovate to? There are multiple other people implementing Sparc microprocessors out there. So it's not proprietary. But the beauty of Web services protocols and APIs like HTML is that it doesn't matter what microprocessor or operating system you are viewing an HTML page from, does it? You can do it from your cell phone or your PC or your Mac or your Sun workstation, or from a PDA or from a set-top box. It's write once, render anywhere.

And with Java runtimes everywhere, you can create executable content and execute that on any microprocessor operating system. It allows people who write to the Java Enterprise System to do static and nonstatic content and run it on a portfolio of microprocessor architectures and implementations without having to change one bit of their user interface.

With N1 they don't have to change their network administration and systems management, and with Java they don't have to rewrite their applications. Some day the customer is not even going to know (what microprocessors they're using). Do you know there are about 100 microprocessors in your automobile today? How many of them can you name? How many of the operating systems (on them) can you name, and does it matter to you?

Q: Do you expect the Sparc machines to complement your Intel and AMD machines, or do you see over time migrating from one to another?

There will always be different kinds of loads placed upon the Web services infrastructure. Some will require 64-bit; some will require 32-bit; some will require high clock rates; others will require absolute failover and retry and other kinds of availability measures. There will be all kinds of different parts of that infrastructure that will require different load optimization, and there will be no one chip or no one architecture that will provide all of the general-purpose and specific capabilities that a Web infrastructure would want to offer. So we'll use whatever engine and just bury it into that infrastructure in a way that the customer doesn't have to deal with it and they won't have to rewrite their applications.

Q: Sun has made a big push into low-end servers, and often the effort seems to be to undercut Dell (Inc.) Does Sun have the cost structure to sustain this game?

A 1U Dell Wintel box is to Web services delivery what a piston ring is to transportation. If they threw a little Dell server on your desk, you'd be about as close to delivering a reliable, scalable usable Web service as if I threw a piston ring on your table and said drive to Chicago. We're not in the AutoZone business. We're not in the car parts distribution business. We can do that as well as anybody. But that's not what our core is about. We're in the systems business.

So when you look at putting all of the pieces together - the edge servers, the back-end servers, the storage, the switches and load balancers, the clustering software and N1, the services and support, the applications, tuning, loading and configuration, the upgrading and remote monitoring and all the rest - we can put all that together, and we are the low-cost producer in terms of delivering a complete, assembled environment. There are a lot of folks out there that think it's cheaper to go out and buy the piston ring, the camshaft, the carburetor and the engine block and get all of the pieces cheaper than you can buy a complete engine. But by the time you get through assembling it, it ain't cheaper. We've got a pretty interesting and compelling story, unless you're going out for the cheapest piston ring and then Dell's got an advantage - maybe.

Q: Things have been tough financially for Sun lately. What's the latest outlook?

We have $5 billion-plus cash in the bank. We've been cash-flow positive for the last eight or nine years from operations. We have the largest installed base and the No. 1 64-bit microprocessor franchise with Sparc. Solaris is the No. 1 Unix franchise out there and runs on all of the major microprocessor platforms except PowerPC.

We have the Java franchise with a billion and a half devices out there, which I think at this point is now bigger than the Microsoft installed base, with no viruses, and major design wins in all the major service providers and financial service providers.

I like our position. I like our brand. I like our product line. Our cost structure is a little high, but we're not going to go take a meat cleaver to it and ruin the product calendar or let customer satisfaction suffer. So as we are able to address the cost structure in a positive way, we'll take this thing back to profitability.

Q: What do you think about the SCO/IBM/Novell brouhaha?

First of all, Sun is the No. 1 donator of open source software to the community behind the University of California at Berkeley. There is probably no company that would be more disappointed to see the open source movement hit a pothole. We have full software indemnification against any SCO claims because we spent about $90 million 10 years ago paying off Ray Noorda at Novell for all of our Unix (intellectual property), which is unlike IBM, which won't indemnify you on your Linux because they don't know whether this lawsuit has any legs.

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