Google And Sun Reveal Strategic Alliance

Google Inc. and Sun Microsystems have agreed to promote and distribute each other's software technology, the two companies said Tuesday at a Mountain View, Calif., press conference.

Under the agreement, Sun will make the Google Toolbar--Google's browser-based search software--available as an option for consumers who download its Java Runtime Environment. This should significantly expand the number of people using Google's search software.

"What Netscape did for the Java Runtime, we now believe the Java Runtime can do for the Google Toolbar," Sun CEO Scott McNealy said, noting that Sun's JRT gets downloaded 20 million times a month. Google declined to provide details on the number of people using the Google Toolbar, but did claim that the company's Web site sees 80 million unique visitors a month.

"I think it was a natural for us to put this thing together," McNealy said, citing a long history between the two companies. He characterized the mutual goals of Google and Sun as growth, revenue, and customers.

For its part, Google has committed to "explore opportunities to promote and enhance Sun technologies, like the Java Runtime Environment and the OpenOffice.org productivity suite."

Such opportunities, if significant, are likely to come at Microsoft's expense. The OpenOffice.org productivity suite competes directly with Microsoft Office, which accounts for a substantial portion of Microsoft's revenue. In fiscal 2005, Microsoft's Information Worker business unit, which includes Microsoft Office applications, generated more than $11 billion, more than a quarter of Microsoft's revenue.

OpenOffice.org's productivity software hasn't posed much of a threat to Microsoft Office. That may change with Google's backing, though Google CEO Eric Schmidt declined to go into detail about his company's future involvement with OpenOffice. "What we've said is we're going to work to make the distribution more broad," he said. "We've not announced a specific thing we're going to do yet."

At some level, the specifics aren't as important as the driving idea behind the alliance. As McNealy put it, "Both companies are dedicated to software as a service." Contrast this with Microsoft, which, until its recent reorganization, championed software as a product. Together, Google and Sun represent a business model that threatens to overturn the tradition that has worked so well for Microsoft in the past.

The agreement also promises more Sun servers in use at Google. "We're already a Sun systems customer, and we're going to extend that quite significantly," Schmidt said, though he would not elaborate, citing a policy of not discussing hardware purchases.

John Loiacono, executive VP of software at Sun, says no agreement to buy specific hardware exists between Sun and Google. But computers based on Sun's upcoming Niagara chip, as well as new Galaxy systems using AMD's Opteron chip, could be applied to running low-cost search transactions.