Sun's McNealy Wants to Break Windows

Commenting on the desktop initiative last month, when details of the package were less clear, Merrill Lynch analyst Steve Milunovich called the initiative "intriguing" and said that his own survey indicates that 40% of chief investment officers would consider Linux on the desktop. But "given limited resources ... this doesn't appear to be a battle Sun will win," he added. "Sure, it's a thorn in Microsoft's side, but will Sun make much money on it?"

Well aware that any assault on Microsoft's desktop franchise is likely to be greeted with even more than the usual dose of skepticism, Schwartz is quick to point out that the desktop initiative isn't likely to do very well in North America. "To put it bluntly, North America is the least price-sensitive market in the world," he said.

Translation: Microsoft is so well entrenched here even a much cheaper alternative won't entice all that many businesses to switch. But Asia, parts of Europe and South America are a different story, he said.

Sun is also considering a new pricing plan, called "per citizen," Schwartz said. The company is exploring this idea with agencies of foreign governments that want to deliver electronic services to their populace.

Martin Reynolds, a fellow with Gartner, an IT market research company, called the initiative interesting, but said piracy of Microsoft products in parts of Asia could be a fatal problem. "What's the difference how cheap the Java Desktop is when you can get Windows and Office, the standards, for free?" he wondered.

In another move to recast its line-up towards more low-end products, on Monday Sun announced a strategic alliance to use AMD's Opteron chips in its servers running on both Solaris and Linux. , hoping to tempt buyers with cheap prices.

Within the next calendar year, Sun will roll out two- and four-way powered servers , offering 64-bit Solaris in the first half of 2004 (customers can currently run Solaris on Opteron in 32-bit mode).