Sun pricing model wows users

Some Sun Microsystems Inc. users were clearly intrigued by the new per-employee software pricing model the vendor announced last week, saying they plan to investigate the model with a view to saving money or at least getting their hands on some additional Sun products at no extra cost.

At its SunNetwork conference here, the company announced a radical plan to offer all of its infrastructure software products, including its directory, application and portal servers, in a bundle called the Java Enterprise System -- all at a fixed annual cost of US$100 per employee. The idea is to free users from having to negotiate complex pricing deals based on "fuzzy" variables such as how many processors a product runs on or how many people use it.

"I like it because at least it's straightforward and predictable," said Thomas Insel, a Unix administrator at Gracenote Inc., an Emeryville, Calif., company that licenses media software to consumer electronics makers. He's also interested because the licensing model could give him access to Sun products that he wasn't using before. The company has only 50 employees, so at $100 per employee, per-employee pricing makes it far more affordable to get Sun's entire middleware lineup, he said.

Some larger corporations anticipate similar benefits. One large U.S.-based financial services company installed the Java Enterprise System as part of Sun's beta program. With 5,000 employees, it determined that buying Sun's complete package of software would give it access to more Sun products than it had before for the same price, said the company's senior IT architect, who requested that his name and the name of his company be withheld.

Although Sun maintains that haggling over price isn't an option under the new model, the financial services company still managed to strike a deal. "There's always room for negotiation. If it's not on the software, it's on the services or something else," the architect said.

Beaumont Hospital in Dublin also tested the Java Enterprise System, but it doesn't plan on making the move. Much of the server software that the hospital uses is open-source, including the JBoss application server and the OpenLDAP directory server, so it would end up paying more, said Tony Kenny, the hospital's IT project manager.

Beaumont is in the process of switching 12,000 employees to Sun's Java Desktop System (formerly Mad Hatter), Sun's open-source alternative to Windows and Office that was also announced at the conference last week. The hospital has faced deep funding cuts, and the price of the desktop system -- also $100 per employee per year -- made it more attractive than Microsoft Corp.'s software, Kenny said.

Kenny said he's generally pleased with the software so far, although functionality is limited in some areas such as remote desktop management.

Honour System

Sun officials said they adopted the per-employee model because it's simple and can be verified in U.S. regulatory filings, where public companies must disclose their employee counts. Outside the U.S., the company will rely on the honour system, said Sun CEO Scott McNealy. "I'm not really worried about (British Telecommunications) stealing our software," he said dismissively.

Some customers will benefit more than others, Sun acknowledged. Executive Vice President Jonathan Schwartz said his worst customer visit was with the Indian Ministry of Railways, which he said has 15 million employees. "The quote of $1.5 billion didn't go down too well, but we'll figure something out," he said.

Having a high employee count was enough to make a large U.S. beverage company hesitant. An IT manager who asked that neither he nor his company be identified said the simplicity of the pricing model is very attractive. But his company employs thousands of warehouse workers who don't use any software, he said, "so we'd have to take that into consideration."

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