Sun owes it all to Scott McNealy

It's probably fair to say that Sun won't be recording 2003 as one of the golden years of its 20-year history. Increasing competition from cheap Intel boxes running Linux and Windows played havoc with its server sales -- the traditional mainstay of its business -- while several key execs, including co-founder Bill Joy, decided to part ways with the firm.

After years of being in the top five of the IT big-hitter league table, analysts began to not only question the company's business model but its continued existence. Some commentators even began to call for the removal of the company's controversial chief executive Scott McNealy.

But as 2004 gets underway, Sun's lot seems to have improved slightly with a narrower than expected second-quarter loss, and a number of large public sector wins in the UK pointing to a brighter outlook for the beleaguered giant.

ZDNet UK spoke to Sun's UK managing director, Leslie Stretch, about the company's Linux desktop strategy, McNealy's future and the end of Cobalt Networks.

So what does 2004 hold for Sun UK?
The Office of Government Commerce is in today carrying out workshops on the evaluation of Java Enterprise System -- following the framework which we announced just before Christmas. We have been investing in the public sector for years now but it's only in the past six months that this has turned into contracts. So from a revenue perspective the public sector is the future.

We have got the patient care records programme, with BT as a partner. We are playing on our own in a very similar way with the criminal justice project. It's a Java XML project to connect up the criminal justice agencies. Similarly the patient care records (PCR) scheme is Java and XML project to connect up and digitise PCR. To take you from the edge of the network and take you right through the health care system. The congestion charge system also runs on Sun. So from a digitising Britain/public sector we have got a lot in place.

On the PCR system -- most of our December production capacity in the UK was probably taken up with the computers for that. [The value of this project is rumoured to be around $250m]. It is huge for us -- it is our largest ever contract in the UK.

You must have heard about the leaked IBM internal memo in which the company seemed to commit to an internal rollout of desktop Linux and then backtracked. How far has Sun got with rolling out desktop Linux internally?
This would probably surprise some people but our style isn't to bully people into using what we use. I can safely say that three months before we hit production on that project [Java Desktop] most of the company was using it. The reason they were using it is because it presents them with the same user interface as their thin client environment so they are used to it.

It's not our style to go round issuing edicts. This company is made up of iconoclastic techies; you start telling them what to put on their desktop and they'll soon tell you were to go. What I have observed is wholesale adoption. So we can help IBM; certainly I'd like to meet them in the UK and help with their desktop rollout.

Do you think some of your staff are still using applications like Excel? Is there really an open-source equivalent of that yet?
In our finance group we have got the most intensive spreadsheet users, and for years we have been using what's available on the Sun Unix platform. And until Star Office that would have been Applixware.

For people who come into the company and are Excel, Word and Office users, we have actually got a whitepaper we take them through and help them migrate very quickly. In the company there are 30,000 thin clients which we run the business on. If you go to the finance group down at our HQ in Fleet, you'll find thin clients; you won't find traditional desktops running Excel. The macros you produce in StarOffice are more than capable of handling any spreadsheet mechanics we need to do in running our P&L. But on top of that the data is all held in a datacentre; I don't have critical financial data sitting on isolated desktops.

Would you go as far as saying Sun UK is completely Microsoft-free?
Oh, I would say we are but not through an edict. It's not down to a bullying memo. I am not obsessed by the Microsoft thing. I just want good technology. I am also serious about helping IBM. We have proven the integration of the email environment, the office environment, the browser, it's there. Let's go for it.

A Gartner analyst recently claimed that a lot of Sun's financial problems are down to insufficient attention to partnerships claiming your company is 'just not seen as a great partner' and is perceived as being 'dominating and not accommodating'. How do you respond to that kind of criticism?
Well, there are some interesting facts around this. Ninety percent of our business in the UK goes through a channel. And not just resellers: software vendors and system integrators. If you take that one very visible contract with the NHS, then it's a consortium led by BT.

I read a quote from the HP MD Steve Gill saying that he wants to lay the foundations to double HP's services business in the next two to three years. We are not going away here in the UK. We have got some great public sector traction. I have got some technology and innovation that he hasn't got. He has got some service capacity that I haven't got. I think it would be in customers' interests for us to be more open with each other in collaboration.

That same Gartner analyst also questioned Scott McNealy's leadership, claiming his vision of the IT industry has become a barrier to Sun's development. Do you think there are any palpable rumours along these lines within Sun?
This summer he [Scott McNealy] beat Gary Player by two holes at St. Andrew's. The guy is vibrant. He has got immense energy. He has architected the business into the position it is at the moment, which is moving forward from strength to strength and that is down to him.

But some people do find him contrary and intimidating?
I think we should enhance strong personalities. We shouldn't let it get in the way of sensible business.

Sun surprised analyst this month with a better than expected loss. What do you put this turnaround in results down to?
From a UK perspective, we have acquired a number of new customers in the last six months. And that has created new business. We are well into double-digit growth in the product line, not sequentially but year on year and that's an indicator for the company. A lot of that was due to new customer signings, not just down to existing companies upgrading their estate.

Sun announced at the end of December 2003 that just three years after acquiring Cobalt Networks for £1.2bn it had decided to kill off the business. Was the whole thing one big waste of money as some commentators have suggested?
At the time it made us the biggest Linux player on the planet. We gained a lot of knowledge and expertise and the financial write-off has been dealt with. In the boom you have got to take risks and acquire know-how and market share any way you can.