Java continues to be a bright spot. "Java is a technology that's still opening doors for Sun," King says.
In particular, Sun sees its Java technology as the key to competing in emerging markets, such as Java-enabled phones and smart cards that contain personalized information about their user. Java 2 Platform, Micro Edition, for example, is a standard that opened up a market for Sun for Java-enabled cell phones. Says Schwartz, "We open markets with software; we monetize them with systems."
Although Sun no longer makes its own Linux distribution on the server side, it plans to release by October its open-source Mad Hatter desktop operating system. Sun claims to have 60 PC makers, including Dell and Sony, lined up for Mad Hatter. Pricing for the operating system will be determined when it's formally launched, although Schwartz says it will probably be $50 to $100 per year per desktop.
Sun's strategy to compete with Dell, HP, and IBM on the low end of the server market took a hit last week when the company announced that, less than a year after it started shipping its x86-based LX50 server, it will stop selling the product in October. Companies still interested in buying an x86-based server from Sun will instead be encouraged to buy either the Sun Fire V60x or Sun Fire V65x servers.
While server vendors are compelled these days to have a strategy for the low end of the market, King isn't convinced that such a strategy makes sense for Sun. "The margins are thin, and Sun's got other problems to address," he says.
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