16 September 2003 Sun Microsystems last night opened up a new front in the systems price war as it launched its much-heralded per-employee software licensing scheme.
Sun CEO Scott McNealy said the Java Enterprise System licensing scheme would revolutionise both the way the IT industry sells its products and the make-up of IT departments in future.
He predicted that the $100-per-employee price, which includes some professional services, training and support ‘credits’, will trigger a fresh price war in the IT industry. “Let’s see how the rest [of the industry] responds to this,” said McNealy.
The main target in the offensive is IBM Global Services, which, claimed McNealy, derives much of its revenue from pulling together the disparate sections of IBM’s Websphere platform. “You could call this a scorched Earth policy, I would call it maybe a warmed Earth policy,” he said.
IT departments will also be transformed by the new scheme, added Jonathan Schwartz, Sun’s executive vice president of software. Since the Java Enterprise System comes pre-integrated and tested, IT directors will no longer have to deploy large numbers of in-house staff or external contractors to pull together the different components of the middleware stack, he said.
The different components of the stack will all be updated simultaneously each quarter, providing IT decision-makers with greater visibility than before, he said. And since the new licensing contracts will run to only about two to three pages, IT directors will no longer have to license software audit programs from third parties.
“The Java Enterprise System is serious software made simple — simplified product, simplified operation and simplified price,” said Schwartz. “This [announcement] puts IBM, Microsoft and others on the defensive and firmly establishes Sun as the low-cost provider offering customers simplicity, predictability and affordability.”
Schwartz indicated that many IT departments would be able to shrink in size as a result of rolling out the new licensing scheme. But Sun sources later played down those comments, suggesting that IT workers would merely be redirected into more value-adding roles within an organisation.
The new licensing plan — formerly known by its codename, Project Orion — covers a range of software and middleware products including the Solaris operating system, application server and portal products.
The global price is $100 per employee. It is expected that each licence will cost around £65 when it is eventually launched in the UK in the fourth quarter of 2003.
But that amount will not apply to every organisation. The new plan will be free for companies with fewer than 100 employees. However, such organisations will have to pay for services and support from Sun’s value-added resellers
Furthermore, the number of consultant hours and training programs bundled in with the $100 figure depends on the size of the company. There will also be an unspecified price cap for the world’s biggest organisations.
Sun’s existing ‘a la carte’ plan — whereby customers can pay for software products in a variety of ways, including per-CPU and per-directory — will continue to be offered to users. But Sun executives said they expected most customers to migrate to the new scheme eventually.
In addition to launching its new enterprise middleware licensing plan, Schwartz also took the wraps off Sun’s long-awaited low-cost desktop strategy.
The new product family consists of the Sun Java Desktop System — formerly known as Mad Hatter — the Java Card user authentication smartcard, an updated version of Sun’s StarOffice personal productivity application suite and new enhancements to its line of Sun Ray thin client desktop computers.
Like the new Java Enterprise System plan, the Sun Java Desktop System costs $100 per employee and will be available later in 2003.
