Schwartz, the $1 warrior. But to what avail?

David Berlind: Jonathan Schwartz's most recent blog entry suggests that the Sun President and COO might be having a tougher time selling the idea of a $1/CPU utility than he did selling the Liberty Alliance.

COMMENTARY -- It has been a while since we've blogged about what Sun President and COO Jonathan Schwartz is blogging. When we last blogged, it was about a Schwartz posting on January 14, 2005. Since then, he has penned about 14 entries without much coverage from Dan Farber and me here on ZDNet (in our columns or blogs).

He generally wrote incisively about Sun's product strategy, which he has a vested interest in sharing and marketing via his blog. His most recent entry indicates that Schwartz might be having a tougher time selling the idea of a Sun (or partner)-hosted $1/CPU Sun Grid Compute utility than he did selling the Liberty Alliance -- a Schwartz-led, Microsoft thunder-stealing coalition that proved he can build industry consensus and disrupt his competitors' best-laid plans.

Though I don't remember the exact day, I do remember when a Sun insider called me to say, "Keep your eye on Jonathan Schwartz. His star is rising." When I was asked what was meant by that, the insider said that Schwartz would soon be running the company and that he was going to shake things up.

On the heels of the dot com bomb, it was right around the time that Schwartz's personal project -- the Liberty Alliance -- was beginning to take off, and it was shortly after Schwartz told me that Microsoft couldn't be trusted. For those of you not up to speed on the Liberty Alliance, it is a Sun-led coalition whose primary purpose at the time was to head Microsoft's identity technology (Passport) off at the pass. Looking back, the way Schwartz described it, Passport was a phishing technology of the worst kind. To telecommunications, financial services, and entertainment companies that saw Passport as a login technology for customers to more conveniently access their Web sites, Schwartz argued that Passport was more like spyware that would allow Microsoft to harvest the data it needed (identities, demographics, etc.) in order to pitch the customers of those companies on Microsoft's versions of those services (telecom, financial, entertainment, etc.).

That was in February 2002, a couple of months after Steve Ballmer told a Sept. 11-subdued crowd at Gartner's Symposium that Liberty had zero chance of mattering. Ballmer miscalculated. With Microsoft now rethinking identity, Passport turned out to be much closer to zero (particularly now that eBay has dropped out) than Liberty (which most recently enlisted long time holdout IBM). To date, in terms of market successes, the Liberty Alliance is still probably the finest feather in Schwartz-the-maverick's cap.

Since his ascent to President/COO, Schwartz has lived up to his billing as someone who would shake things up at Sun (and in the industry). Had you traveled in a time machine from 1999 to 2005, you might not believe your eyes. With both hardware and operating systems, Sun has two feet firmly in the x86 camp (particularly after striking a deal with AMD). After Sun CTO Greg Papadopoulos and Microsoft chairman Bill Gates spent some quality time together, the two companies' CEOs (Scott McNealy and Steve Ballmer) didn't just share a stage, they were practically chums as they discussed the terms of their kiss-and-make-up deal. (Since the April 2, 2004 announcement, however, the two companies have little to show for their collaboration, but I would expect some good news as the first anniversary nears.) Sun's flagship operating system Solaris has gone open source and, between Apache and JBoss, Java is closer to being open-sourced than not. Sun even has a desktop Linux offering (JDS). With Sun's Java Enterprise System (JES), Schwartz has tried to disrupt traditional software pricing on the basis of company size rather than number of seats. With the $1/CPU/hour, transparently priced utility offering, even for a limited set of applications, he's trying to rattle the traditional hardware channel with what could be his most disruptive initiative over time.

Is Schwartz-the-disrupter done? Probably not. There are still large walls to break down, particularly the one between the Sun-endorsed and the IBM-endorsed (two competing Java integrated development environments). Four years ago, the mere mention of Eclipse would turn the necks of Sun execs red, especially Richard Green's. Green has since left Sun as have many other heavyweights in the wake of Schwartz's Tasmanian Devil-like spin through almost every one of the company's halls. Others superstars have signed on, such as XML pioneer Tim Bray.

Building a coalition like the Liberty Alliance is no small feat-- but such coalitions don't have to answer to Wall Street or stockholders. Another Schwartz-led one around digital rights management may be on the way. Now, getting market traction for the many bold coalitions and initiatives is Sun's Sisyphean task.

I know these sorts of decisions take time and that the negotiations are often confidential. But, after six months worth of quotes from phantom IT executives who are apparently smitten by Sun's direction, by now I half expected more explicit conversions--ten to twenty humongous wins that prove that those execs are buying more than Schwartz's vision. Judging by Schwartz's blog, which has carried some convincing $1/CPU/hour arguments, getting customers to flock to utility computing is going to be a bit more difficult than attracting flies to flypaper, or, using his favorite metaphor, signing people up for electricity when it became cheap and reliable.

I checked with Sun to see if the company had any utility customers yet. Via e-mail, a company spokesperson wrote: "Sun does not have any new updates to share on utility computing traction. We can tell you that Sun is currently working with several customers, but are not in a position to discuss the specifics without the explicit permission of these customers. Please rest assured that we will provide you with the information just as soon as we can. Schwartz recently said that Sun has engaged with a dozen customers in developing "multi-thousand CPU, multiyear contracts," But, at the end of his most recent blog entry on the issue, Schwartz concludes, " At work, I'd say we-- the IT industry, and IT culture--have a ways to go," in reference the acceptance of standardized IT and the utility computing model.

Schwartz's build up to that conclusion tries to cut down the myth that end-user companies can beat $1/CPU/hour on their own. It's not the first time he's had to defend the $1 price tag. Last month, he had to publish a fill-in-the-blanks spreadsheet to prove that there was more cost to IBM's 48 cent offering than meets the eye. My colleague Dan Farber took a closer look.

One important footnote: Not every application is up to being hosted in utility fashion where tasks can be divided by processors. But in Schwartz's big picture, that problem will (or at least should) be solved in due time. Sun is expected to debut this summer an application utility service, in which software partners can overlay their software on a Sun infrastructure. A developer service is also planned for this summer that allows programmers to write software and integrate it on a large number of Sun-hosted networked computers.

The company is also working on a desktop utility, in which Sun cooperates with a high-speed Internet access company such as a cable television company that distributes Sun Ray terminals that connect to Sun back-end servers for computing power.

If you're an IT exec, Schwartz's blog contains a message to be a revolutionary yourself. It's about survival of the fittest--the fittest IT personnel, organizations and businesses. Don't be a dinosaur--help bring about cultural change by embracing utility computing. If your stack is too old to go the utilitarian route, in a hospice situation, plot a course. If you're not part of the solution, then you could be part of the problem. Get with the new economics and join the new IT species or get out of the way.

If you're a CEO, then Schwartz's message is that you might have some dinosaurs in your midst. An honest crunching of the numbers, declares Schwartz, will bear out the advantages of Sun's $1 offering.

Schwartz half-diplomatically argues, to the extent that $1/CPU/hour is supposed to make your IT headaches someone else's headaches, take a close look at who is crunching your numbers. Says Schwartz in his recent posting, " Now, I recognize this may not ingratiate Sun to a segment of the marketplace, but many of the folks who present that position are actually responsible for the creation, maintenance and support of in-house grids. The always unasked question in these dialogs is, does your calculation include your salary?"

If Schwartz speaks to as many executives as his blog suggests, then he is clearly in the trenches, leading his forces in the face of difficult odds. For many companies, their first taste of utility-like outsourcing won't be just the hardware. It will be both the hardware and the software (a la, Rightnow Technologies, and NetSuite).

For CxOs who "get it" and who are already reaping the benefits of utility computing from this wave of software-as-a-service ASPs, the question may not be: "How do I reproduce the same economics by outsourcing the rest of my hardware to Sun?" The question is, "How do I find more ASPs with open APIs that allow for some customization and integration so I need to "own" fewer applications and the infrastructure to run them?

There may be certain homegrown applications that you want to maintain yourself. If I'm the CIO or even the CEO, one question still remains for Schwartz: If I'm better off outsourcing my hardware infrastructure to Sun, then why aren't the companies that already buy-off on the idea of utility computing -- so much so that they're selling it, such as a -- doing it too?

For example, I don't remember the exact words of CEO Marc Benioff when I asked him why he wasn't buying horsepower from Sun at $1/CPU/hour (particularly since runs on Sun gear). What I do remember is the look on his face. It was as though I had come from another planet. As I drove home from that meeting, I couldn't help but wonder why, if it doesn't make sense for Benioff (a Sun customer who obviously believes in utility computing), how it could possibly make sense for others. I think it's a rhetorical question because no explanation will do.

I have no doubt that Schwartz is right -- that there's a cultural element to the uphill battle that Sun and other purveyors of utility computing now face. If you're a CxO and someone in your IT ranks hasn't come to you by now and proposed that it's about time to pilot a utility project, then you've got some cobwebs to clean out. If you're in the IT ranks and you're not bucking conventional wisdom by proposing such a "radical" pilot to the powers that be, rest assured that one of your peers will. For you, the question is: Do you want to be leading that revolution, or be kicked out by it? But if Schwartz and his competitors really want to empower the revolutionaries, then he may have to successfully preach to the choir (the Salesforces, Rightnows, Netsuites, Authorias, Googles, Yahoos, etc.) before the parishioners will be convinced.

You can write to me at If you're looking for my commentaries on other IT topics, check out my blog Between the Lines.


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