The integration of Sun's software will help the company implement the flat-fee and utility-pricing models. Sun is unable to say when it will offer completely integrated software that includes directory server, identity server, portal server, application server, clustering, and messaging apps. But Jonathan Schwartz, executive VP for Sun Software, expects that weaving the company's software together will let it cut prices significantly.
According to Sun's vision, a company with 20,000 employees could expect the cost of this integrated software to be only 10% of the cost to purchase, implement, and integrate the individual apps. By cutting such costs, Sun hopes to compete in the small- and midsize-business software market against Microsoft.
"We'll sell our software at 50% (the cost) of what Microsoft offers," Schwartz says. Sun can afford to do this, he adds, because small and midsize businesses are a new market for the company, and it can always make up the margins on the hardware it sells. "One of our goals is to move software integration off the customer's (profit-and-loss calculations) and onto Sun's P&L," Schwartz says.
As vague as Sun's time frame is for delivering a completely integrated software and operating-system package, the company's plan for offering software on a per-use basis is even less clear. Schwartz admits he's not a big advocate of usage-based software pricing because of the difficulty of finding a unit to measure and bill for usage. But, he admits, "there appears to be a euphoria in the market over this."
Sun plans to extend metered and flat-fee pricing to users of its Linux-based software as well.