Sun’s Schwartz: Linux honeymoon is over on Wall Street

Jonathan Schwartz looks to Wall Street as one of the few industries with the means—money and will—to regularly redefine the computer industry. So Sun's president and chief operating officer is making it a goal to get to know Wall Street a lot better, including a visit to New York next week trying to drum up some attention to this effort. Wall Street & Technology did a quick E-mail question-and-answer with Schwartz in which he, among other things, predicts a growing disillusionment with Linux. Sun has had to battle a cost-cutting mentality that prompted many financial companies in recent years to migrate off Solaris to Linux running on cheaper boxes. "I would say about one customer a month is telling me that the honeymoon is over because for all practical purposes, the Linux market has tipped to a single vendor—Red Hat," says Schwartz. Here's the full exchange:

Wall Street & Technology: What does Sun have to do differently than it has been to win more business on Wall Street?

Schwartz: If you had asked that question two years, or even a year ago, I would have been able to tell you what we should be doing differently. But right now Sun is doing all the right stuff. For one thing, Sun is listening closely to its customers. It sounds simple, but listening requires us to put our egos aside and find out what is really keeping developers, operators and the CXO up at night. It's about really understanding their needs and then creating the technology—and solutions—that matters to them. And it's not just me, Scott McNealy, my executive staff. The whole company is listening. If our employees aren't visiting our Executive Briefing Center, spending full days with customers, then that's a big concern of mine.

Secondly, we're attacking two things head-on: cost and complexity. I haven't found a customer yet who has complained about that. Instead of selling just a piece of software, or just a storage device, we're selling the whole system. It's a smarter system than anybody else's on the planet because it runs on top of something we call Solaris, which is by far the best operating system on the planet. Why? It's got the rich features that Wall Street customers want at a price point that is below Red Hat's. And, it runs on both SPARC and x86 processors, for whatever your purpose. Mind you, Sun didn't do Solaris on X86-based chips a few years ago, so this is a big change based on customer feedback. And today we also have an agreement now with Microsoft to develop products that work together, that interoperate. How's that for doing things differently?

WS&T: Where is the adoption of Linux on Wall Street today—just getting started, or starting to peak? Which reality is better news for Sun's business?

Schwartz: We want Linux to succeed because Linux is a version of Unix. And Sun is built on Unix. There will always be the need for Linux, but there will always be a market for Solaris—the number one Unix OS on earth. Honestly, I would say about one customer a month is telling me that the honeymoon is over because for all practical purposes, the Linux market has tipped to a single vendor—Red Hat. And things like professional services support, upgrade costs, ISV support and security are becoming an issue no one wants to depend on a single vendor for. Imagine having thousands and thousands of servers all over your data center with just-OK features to manage them to make sure they are fully utilized. That ends up being a lot of system administrators who don't work for free. So we've seen a lot of companies turning to Sun asking us what to do now.

We know at least one instance when a financial services company had a problem with Red Hat's operating system and they asked Red Hat to fix it ASAP. Moments later it found its way onto a developer forum, posted by a Red Hat engineer. How's that for one throat to choke? Suffice it to say, this customer came to us for a better way. One by one, our customers are beginning to see that Solaris on AMD Opteron is the fastest and most reliable answer to leveraging commodity hardware while managing your compute network with ease. And now with Solaris 10, Sun has the types of features that Red Hat does not have, like logical partitioning and dynamic tracing. That's because there are billions of dollars of R&D in Solaris 10, and this is the payback to our customers.

WS&T: Sun hardware is seen as expensive, often too expensive. Do you agree it's thought of that way today? What's your answer?

Schwartz: Someone must have started a rumor that Sun equals expensive, but if you look at the number of "success stories" my team shows me where customers are saving millions of dollars a year running Sun, then you'll realize it's just a question of showing everyone, one by one, the facts. Our biggest challenge was perception, not price or performance. We needed to prove that we've made a big change. In the last year we've been delivering on that. As I was saying, it's not that we don't have the industry-standard hardware, or that we don't have an extremely simple and predictable pricing model for our middleware and desktop stack, which we call Java Enterprise system and Java Desktop System respectively. We support GNU/Linux and have millions of Java developers as part of our ecosystem.

The challenge was to get our products into our target market—those that don't want vendor lock-in and are looking for the best price/performance on the market. That becomes a perception challenge. So what we've done is begin proving ourselves to Wall Street. We're currently conducting a sizable handful of very strategic pilots with the top firms on Wall Street, running whatever Sun systems they choose to run whatever applications they want. Give them choice and let them decide. People like what they see.

WS&T: In a year-or better, what measurement should we look at to see if you've succeeded in this market segment?

Schwartz: You probably know this better than I do, but Wall Street is a tightly knit community, a community I am getting to know better every day. I'm not permitted to give forward-looking statements, particularly about our financial results, but once our pilot customers start being as vocal about Solaris running on AMD Opteron as they were about Linux two years ago, I can assure you other industries will be following close behind. And we're seeing incredible momentum already, literally triple-digit growth in AMD Opteron server units shipped quarter over quarter coupled with huge Solaris download numbers. Chris Murphy is editor of InformationWeek and co-chair of the InformationWeek Conference. He has been covering technology leadership and CIO strategy issues for InformationWeek since 1999. Before that, he was editor of the Budapest Business Journal, a business newspaper in ... View Full Bio