Can Sun redefine the economics of computing?

At a Churchill Club event on October 26, 2005, Jonathan Schwartz, president and COO at Sun was interviewed by Quentin Hardy, Silicon Valley bureau chief as Forbes. You can download the audio of the one-hour interview here. Schwartz reprises his usual, and perceptive, themes touting Sun's vision and prejudices, such as how volume in the marketplace matters; the changing business landscape in which eBay could become a bank; Java as a platform for digital rights management; the disruptive influence of free software and online communities; IBM's reluctant support, and validation, for OpenSolaris on its blade servers; why Google and Sun see the world in a parallel way; how Sun's new Niagara chip could redefine the economics of Internet; and the shift to power-efficient processing.

Schwartz clearly lays out the future landscape of computing and the Internet, with free, high volume software as a centerpiece, but it's not clear whether Sun can capitalize on it.

Sun's future still boils down to whether it can differentiate itself as an infrastructure provider (including tape, with the recent acquisiton of StorageTek) delivering services to the planet when the playing field is leveled by "free" software.

Can Sun disrupt pricing models enough with the hardware and support services it delivers to the connected community? Can Sun do to IBM and HP in utility/commodity computing what its good friend AMD has done to Intel, clearly out innovating the x86 king and providing a better value? Google becoming a major customer and purchasing 100,000 to 1,000,000 servers and well as processors and storage systems, while leaving some decent profit for Sun, would be a good start in punching up the volume. But Google has so far rolled its own systems with apparent efficiency. On the other hand, at some point Google might find it more effective to outsource commodity hardware.

Sun has always been ahead, and sometimes out of tune (late to the x86 market, for example), with the market. The "network is the computer," but enterprise customers haven't taken the idea to the logical conclusion that Schwartz and his cohorts envision. Perhaps, over the next few years, the customers will catch up with Sun and its R&D investments in creating the engines for commoditized computing will pay off. But Sun's worthy competitors, with equal access to the same free open source software downloads, won't be sitting on their haunches...