12:15 PM
Bob Evans
Bob Evans

Business Technology: Score One For The Customers

So why exactly did Microsoft and Sun agree to kiss and make up? Was it the $2 billion Microsoft is paying Sun? Or the $800 million Sun is expecting to lose in its most recently completed quarter? Or is it because you--their customers--finally told Sun and Microsoft to get over themselves and help you run your businesses?

If you ever doubted the power of your pocketbook and your purchasing decisions, just reflect back on last month's litigation, schmitigation lovefest between Microsoft and Sun. Why exactly did they agree to kiss and make up?

First, some preliminaries: sure, it'll be good for both companies to put less money into the pockets of lawyers and more into the hands of their developers, and, for Microsoft in particular, it'll be great to knock one item off its substantial list of legal entanglements. And for Sun, which recently issued warnings that its third-quarter loss could top $800 million, anything that will help it focus on delivering high-value products and technologies instead of pursuing external distractions will be a big step forward.

But while those all played a role, it's very likely that the prime mover behind the rapprochement was you, the customers and prospects of Sun and Microsoft. I've blabbered about this before in this space, but there's a substantial body of evidence that I'll get to in a moment indicating that customer dissatisfaction and frustration and eroding confidence had finally reached a point that could no longer be ignored. Despite their long tradition of battling each other over all manner of technical issues where the outcomes were often of marginal value to customers, Sun and Microsoft finally realized that what they actually had been doing was making their problems their customers' problems. In so doing, they sent this unmistakable message to customers: the problems you're encountering and the solutions I could offer you are not as important to me as is my hissing contest with my competitor--so just shut up and deal with it.

Perhaps that has changed in the month since Microsoft and Sun dropped the brickbats, exchanged a couple of billion bucks (Microsoft pitching, Sun catching), and agreed to collaborate so that customers can interoperate. Now, of course it's possible that all the customer-centric talk from Sun CEO Scott McNealy and Microsoft CEO Steve Ballmer was just so much smoke, and that they're hoping the resultant smokescreen will buy them a little more time to keep trying to scratch each other's eyes out. If both companies were in perfect shape, I might be willing to consider that theory--IF Microsoft had no other legal challenges to worry about, IF Sun weren't mired in such awful financial straits, and IF both companies weren't rightly concerned about the huge momentum behind IBM's WebSphere (sales up 24% in the quarter ended April 15). But they're not in perfect shape, and the rationale for the settlement given publicly by McNealy and Ballmer centering on the desire of both companies to make life easier for customers makes a great deal of sense. And it underscores a message that every other IT vendor had better be willing to believe and practice: Customers these days have breaking points, and they have alternatives, and they will not tolerate technology partners whose actions make it unmistakably clear that their own internal troubles outweigh the needs of their customers.

Here are two examples from customers, as we reported last month:

Microsoft's reluctance to support non-Microsoft Java standards has caused the IT staff at casino operator Harrah's Entertainment Inc. to run into integration and interoperability problems, says CIO Tim Stanley. Anything that reduces those problems is welcomed. "We're so highly integrated, having the Java world and the Microsoft world be more interoperable on the software and integration level would be a big win for us," he says.

Crossmark Inc., a provider of sales and marketing services, has been using Microsoft's Java Virtual Machine but was switching to Sun's version because of earlier legal rulings. The agreement may change that, says Charlie Orndorff, VP of infrastructure services, who welcomes the truce. "This was more of an ego battle," he says. "The technologies need to work together, rather than having the companies doing things to spite each other."

And here's a comment about specific cost-savings that could arise from a better working relationship between Microsoft's Active Directory and Sun's Identity Server.

It's about time that happened, says Tony Scott, chief technology officer at General Motors Corp. "GM's whole desktop [network] runs off Active Directory," Scott says. GM also runs Sun's Directory and Identity Servers. "Getting better interoperability between them would help," he says, potentially saving 5% to 10% on project-development and deployment costs.

Was it also possible that Microsoft and Sun felt that such an alliance could blunt blunt the growing momentum of IBM's WebSphere? At least one CTO from a major industrial company thinks so:

"These two were pushed together by a common threat from IBM and open-source consortiums. They've come together to combat their continued erosion of market share," said Richard Plane, chief technologist of Harris Corp.

Indeed, a Yankee Group report said breakthroughs in getting the Java/Unix platform to interoperate with .Net/Windows could upset the competitive dynamics in the market.

In a report issued after the settlement announcement, Yankee Group industry analyst Dana Gardner said the prospect of Sun's technology intermingling with Microsoft's proprietary systems on a protocol level "should send shivers down the spines of other IT vendors." If the Java/Unix platform begins to play nice with .Net/Windows, it lessens the need for middleware purveyed by the likes of BEA and IBM, and for integration work in general, according to Gardner.

Other Voices

Think twice before you send that E-mail. No, think three or four times. That's arguably the main lesson of yesterday's conviction of former Wall Street titan Frank Quattrone on charges that he obstructed justice by sending a 22-word E-mail. ... The former master of technology financing was convicted more or less for sending a single E-mail that urged people at Credit Suisse First Boston Corp. to follow his employer's "document-retention policy" and clean up their files.

-- Editorial in The Wall Street Journal, May 4

Meanwhile, Ballmer and three different Sun executives also went to great lengths to emphasize that customer considerations played a major role in the decision to reach this settlement.
"Our companies will continue to compete hard, but this agreement creates a new basis for cooperation that will benefit the customers of both companies," said Steve Ballmer, CEO of Microsoft, in a statement.

Sun chief technology officer for software John Fowler even had the until-now audacity to actually admit that customers do not live in homogeneous environments .

"Sun recognizes that mixed environments are a reality and Sun is investing to make customers successful with Sun products in a mixed environment."

Sun president Jonathan Schwartz emphasized the potential for making Web services easier to build and deploy.

By ending hostilities and achieving greater interoperability between their products, Sun and Microsoft will "grow the market for both companies," Schwartz says. If their software works well together, customers will be able to use any platform to build Web services.

And finally, from the ultimate insult-slinger himself, Sun CEO Scott McNealy, comes a bit of insight that should give heart to every business-technology executive that solutions are possible for even the most seemingly intractable problems and obstacles foisted upon them by IT vendors. Those solutions, McNealy muses, might arise because the warring IT suppliers decide to grow up--or, they might arise because there's a new sheriff in town. Speaking of the Sun-Microsoft settlement, McNealy said,

"Maybe we've grown up, maybe they've grown up--who knows. Maybe the customers are getting more in charge these days."

Bob Evans,
Editorial Director [email protected]

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