Sun Microsystems CEO Jonathan Schwartz said the vast attempt to seed future developers with free, open source Sun software will pay dividends as the company launches its cloud computing initiative.

"Where is the money?" Schwartz asked rhetorically before the Open Source Business Conference in San Francisco, a question that seemed particularly relevant at a time when Sun has reported narrow break-even quarters or losses on its 4-year-old open source gambit.

"Our cloud services will be available for a fee, not free," he answered. And students, independent developers, and startup businesses that like to download Sun open source code are prime candidates to use low-cost, pay-as-you-go services in the cloud. If they don't use commercial software, chances are they don't have a data center to host their code writing efforts.

Sun has only recently talked about the computing services and storage that it will make available in a cloud running in Sun's data centers. Schwartz's address to the open source conference is the first time he's made public Sun's plans to try to connect open source downloaders to cloud services. As the owner of the OpenOffice desktop productivity suite, MySQL database, and GlassFish Java application server, Sun is generating millions of downloads a week of its software. But only a small fraction convert into subscribers and purchasers of technical support.

Matt Aslett, analyst with the 451 Group, estimated last year that Sun converted one out of every 1,000 installers of MySQL into a paying customer.

Schwartz said Sun is seeing 200,000 "registered" downloads a day across its product line, giving it information on 200,000 "assets," or potential customers further down the road. Through the registration process, Sun learns who and where its downloaders are and what they're interested in. "We're reaching the entire planet through free open source code," and "free," Schwartz added, "works really well in a downturn."