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TheStreet Open House

Sun Shines Up Free Software Slate

It's getting harder and harder to buy software from Sun Microsystems (SUNW), because the company would rather give it away.

Sun, which already gives away its Solaris operating system, said Wednesday it will make a key suite of software and developer tools available at no cost for both development and deployment. But taking a page from the Open Source playbook, Sun will charge for support.

The company figures that getting its software into the hands of developers will lead to market opportunities. "Volume wins in the marketplace for technology; the price that drives the most volume is free," said Jonathan Schwartz, president and COO of Sun.

Eventually, all of Sun's software will be free, he added.

Businesses and developers can now download for free Sun's Java Enterprise System, a suite of programs that includes an application server for managing Web-based business software, and Sun's N1 Management software and developer tools.

The Enterprise System, Schwartz said on a conference call, currently pulls in about $100 million a year in license and services revenue. But the new business model will ultimately build total revenue since, he claims, customers will pay for support, indemnification and other services, even if they are not buying a conventional software license.  "I have yet to meet the customer who is willing to run an unsupported product," he said during the conference call.

Schwartz points to the success of Red Hat (RHAT), which sells service and support for its version of Linux.   

Interestingly, Schwartz made no claim that the proliferation of Sun's software will lead to increased hardware sales, the traditional heart of the company's business. Indeed, since February, some 3.5 million copies of Solaris have been licensed, but the majority is running on hardware made by other vendors, he said.

In recent trading, shares of Sun were flat at $3.89.

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