Sun Microsystems is set to announce this week a new strategy for licensing its software to corporations -- an approach intended to simplify the way the company sells, maintains and upgrades its software and, with any luck, help turn its fortunes around.
At its customer conference starting here today, the company will take the wraps off its Orion project, which Sun executives discussed for the first time in February. Since then, analysts and customers have waited to see whether the program -- which significantly simplifies and lowers the price of acquiring software -- will have any measurable effect on stemming the migration of Sun's customers to other software systems.
"They hope to be a disruptive force in software, and in a sense they've got little to lose," said Steve Milunovich, an analyst with Merrill Lynch. Orion is a significant departure from the practices of the enterprise software industry, where a sale typically involves a lengthy and complex price negotiation based on the number of microprocessors, servers or any number of other factors. With Orion, Sun will sell an integrated software operating system based simply on the number of users, with any software updates being released on a quarterly basis.
The company will also unveil this week a version of the Linux operating system for personal computers that features an innovative user interface. The company hopes that project, called Mad Hatter, will allow it to retain customers who may desert Sun's Solaris operating system and proprietary servers in favor of other versions of Linux that run on servers made by Dell and other low-cost distributors.
Orion and Mad Hatter are seen by industry analysts as crucial to Sun's efforts to maintain its position in the network computing market. Both programs, which Sun is expected to market aggressively, also indicate the company's continuing shift of its business toward software and services and away from selling costly computers.
But many corporations have already made the move toward low-priced corporate servers based on Linux or Microsoft Windows from the more costly Sun technology, with that trend showing no sign of reversal. Milunovich said he expected many corporations to take an interest in Sun's new pricing and upgrade strategy, which will critical to Sun's future.
"We found as much as a third of Sun's base is considering migrating over time to Intel or Linux-based systems," Milunovich said. "In my view, this attempt may slow the migration but not reverse it."
The annual show also arrives just days after Sun suffered the resignation of William Joy, who was a co-founder and has long been considered one of its innovators. His departure comes after the exit of several executives last year, including Edward Zander, Sun's president, and Michael Lehman, the chief financial officer.
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