SUN'S JAVA: THE THREAT TO
MICROSOFT IS REAL
Sun Microsystems once hyped its new software
Sun Microsystem's JAVA language as a way to make Web pages extra-cute.
Almost by accident it unleashed the next great wave in
computing.
BRENT SCHLENDER
REPORTER ASSOCIATE ERYN BROWN
Plus:
Flowers From Java
If he doesn't already, Bill Gates may come to regret Pearl Harbor
Day 1995. That was the day he outlined Microsoft's grandiose plan to
make war with Netscape Communications and morph itself into the
overlord of the Internet. It was also the day the mighty billionaire
blinked. As part of his presentation to financial analysts and the press
in Seattle, he announced that Microsoft would climb on the
bandwagon for Java, a hot new Internet programming language
promoted by his nettlesome archrival Sun Microsystems. Gates had no
choice, really, but to go along with Sun. In so doing, however, he
exposed Microsoft to a threat more dangerous than any Netscape
could present.
Java is one of the hyped-up Internet software technologies that have
spawned the World Wide Web, awful words like "intranet," and those
strange-looking addresses on business cards and TV commercials.
Originally known as a way to jazz up Web pages with graphic
animations--stock tickers that crawl across your screen, for example,
and dancing icons--Java has quickly evolved into a whole lot more. To
Microsoft's dismay, it is fast becoming what is known as a computing
platform--a sturdy base upon which programmers can build software
applications.
We're not just
talking word processors and spreadsheets here, but also applications
to handle sales, customer service, accounting, databases, and human
resources--the meat and potatoes of corporate computing. Java is also
making possible a controversial new class of cheap machines called
network computers, or NCs, which Sun, IBM, Oracle, Apple, and
others hope will proliferate in corporations and our homes.
The way Java works is simple. Unlike ordinary software applications,
which take up megabytes on the hard disk of your PC, Java
applications, or "applets," are little programs that reside on the network
in centralized servers. The network delivers them to your machine only
when you need them; because the applets are so much smaller than
conventional programs, they don't take forever to download.
Say you want to check out the sales results from the Southwest region.
You'll use your Internet browser to find the corporate intranet website
that dishes up financial data and, with a mouse click or two, ask for the
numbers. The server will zap you not only the data, but also the
sales-analysis applet you need to display it. The numbers will pop up
on your screen in a Java spreadsheet, so you can noodle around with
them immediately rather than hassle with importing them to your own
spreadsheet program.
To graph the numbers, you'll call in a charting applet that will let you
print out your report nice and pretty, all without leaving your browser.
And you'll always get the latest, greatest version of the applets too:
Since the software is stored in only one place, corporate techies can
keep it up to date more easily.
The real beauty of the Java language, however, is its power to save
users money. Corporate chief information officers, a.k.a. CIOs, think
Java may be software's holy grail both because it vastly simplifies
creating and deploying applications and because it lets them keep their
existing "legacy" computers and software. Java programs, once
written, can run without modification on just about any kind of
computer: a PC, a Macintosh, a Unix workstation--heck, even a
mainframe. The underlying operating system makes no difference. Java
actually can breathe new life into older specialized computers that were
at risk of becoming obsolete.
In scarcely a year, Java has evolved into a major challenger to
Microsoft's Windows family of PC operating systems--faster even than
DOS and Windows rose to challenge traditional mainframes and
minicomputers. Java is also well on its way to becoming the most
important Internet software standard, catapulting Sun past Netscape
and Microsoft as the leader in Internet computing.
While Sun is essentially donating the Java language to the computer
world by publishing all the specs and letting anybody use them, the
technology will spur lucrative growth for the company. It should fuel
already blazing sales of Sun's Internet servers (which can cost up to
$25,000) and jump-start its new line of sub-$1,000 JavaStation
network computers. Java will also rev up demand for Sun's software
development tools and for special Sun chips that other computer
makers can use to make their machines run Java faster. The halo effect
from Java is a big reason Sun's stock has become hot (see chart).
In short, Java is outstripping its own breathless hype--and causing
headaches for Microsoft by soaking up industry resources. Already
tens of thousands of programmers are writing Java code, as hundreds
of commercial software makers and corporate information-systems
departments put their best people on Java development. Sun, IBM,
and Compaq Computer, among others, have ponied up a $100 million
venture-capital pool called the Java Fund to help seed startups. And
although it is politically incorrect for them to say so, even engineers in
the bowels of Microsoft seem jazzed about Java.
For Sun CEO Scott McNealy, it's a pipe dream come true. "We
always thought we were onto something with Java--that it was our one
big chance to challenge Microsoft and to change the economics of the
business," he says. "But I have to admit I never thought Java computing
could unfold quite this quickly, or with such universal support from
customers and competitors. It's astounding, really."
Most of us don't know (and don't want to know) the first thing
about computer languages. Yet they are the catalysts of change in
computer technology. Mainframe computers weren't of much use in the
workaday world until Cobol came along and made it easy to write
accounting and inventory programs. IBM's Fortran language made it
possible to program engineering workstations and supercomputers for
scientific analysis. It was Basic--a version of which was Microsoft's
very first product--that let hobbyist hackers program early personal
computers. Another language known as C++ streamlined development
of point-and-click graphical programs like the ones we use on
Windows PCs and Macs.
Java looks like the language best suited to Internet computing not just
because it doesn't favor or discriminate against specific machines but
because it is inherently virus-proof--the language was designed so
applets can't alter data in your computer's files or on its hard disk.
(McNealy puckishly calls using Java programs the equivalent of
"practicing safe computing.")
Java is also one of those charmed technologies--Microsoft's original
DOS operating system is another--that arrived at exactly the right
place at the right time. Since Sun introduced Java in May 1995, a
constellation of forces--other Internet innovations, software
economics, industry politics, and customer need--aligned almost
simultaneously to let Java emerge.
Adam Smith would be proud, because it is the marketplace more than
anything that is driving Java computing. Over the past decade,
companies have spent hundreds of billions of dollars on information
technology (IT) systems and software, much of it to equip virtually
every desk in white-collar America with a PC and then to link the
machines into networks.
But even as PCs get cheaper and more powerful, they grow ever more
expensive and difficult to maintain. An oft-cited Gartner Group report
estimates that companies must spend more than $6,000 a year on
hardware and software upkeep for a $2,000 PC that runs Windows
95. CIOs are finding this mind-boggling sum harder and harder to
justify, much less afford. So they are willing to try just about anything
to push down those costs.
At the same time, the industry's two near monopolies--Microsoft with
its Windows system software and Intel with its microprocessors--are
leaching more and more of the profit from the PC business.
Resentment has grown as profit margins have shrunk at companies like
IBM, Apple, Lotus, and Borland. All would like nothing better than to
take Microsoft down a peg. Customers, too, are increasingly uneasy
as the Wintel duopoly threatens competition and product choice. At a
recent FORTUNE-sponsored Internet conference in Chicago, several
IT professionals said they were rooting for Java computing if only to
keep Microsoft from being able to dictate corporate computing
technologies and strategies.
For IBM and Apple, Java may prove nothing less than a godsend. Big
Blue sells five different types of computers and operating
systems--mainframes, minicomputers, workstations, and two flavors of
PC--none of which is compatible with the others, much to customers'
frustration. Now the company is hard at work building
high-performance versions of Java into each of its operating systems so
that for the first time in its history, IBM's entire computer line will be
able to share software. (Ironically, Microsoft, which itself has fostered
several slightly incompatible versions of Windows, stands to benefit in
much the same way.) Apple, which many customers have deserted
because of the Mac's incompatibility with Wintel PCs, has a chance
with Java to be relevant again.
Likewise, Java gives software companies a way to win back some of
the business they lost to Microsoft as it methodically parlayed its
ownership of Windows into dominant positions in applications
software. Lotus, now part of IBM, was one of the biggest losers,
falling from first place in spreadsheets in the early Nineties as PC users
switched from DOS to Windows, a transition Lotus was late to spot.
Lotus foresees a similar shift now to Java computing, in large part
because Windows and the Microsoft Office word-processing and
spreadsheet programs have become so massive and feature-laden that
they bog down all but the most powerful PCs.
Lotus plans to jump into the Java business in a big way: by
reinventing its software as a host of cheap little applets. The Java
language lets programmers use software "components"-- Tinkertoy
pieces handling specific tasks, such as text editing, charting, modeling,
or business-form design. Components can be assembled quickly and
easily into all manner of customized applications, which is just why
Lotus loves them.
In the past six months, Lotus has reassigned hundreds of programmers
to develop Java versions of its $399 SmartSuite personal productivity
applications. Next year Lotus plans to start selling sets of SmartSuite
Java components that deliver the big program's most popular features
at a fraction of that price. Lotus is also converting much of its popular
Notes groupware to Java component code.
Components could change the whole economics of the software
business. Says Jeff Papows, president of Lotus: "I am the
second-biggest Java fan in the industry, behind only Scott McNealy.
Why? Java will be instrumental in loosening Gates's stranglehold on the
world."
There's more than envy at work here. Java computing will also let
corporate users fundamentally change the way they do business (see
box). That's because with Java it's easy to develop safe programs that
allow customers and suppliers to tap into each other's private
computer networks--say, to place orders or check design
specifications. Says Joseph Duncan, a senior vice president at Oracle:
"What is galvanizing support for Java is that when your customers and
suppliers can interact directly, your information systems can actually
drive sales and shorten the supply chain. That affects the bottom line,
which is something CIOs would love to be able to take credit for."
That all sounds well and good for Sun. But establishing a new software
platform that satisfies not just dozens but hundreds of die-hard
competitors isn't easy. To coordinate the effort Sun has launched a
subsidiary called JavaSoft, whose purpose isn't so much to make
money from Java as to keep Java licensees marching down the same
path. It's as much a political challenge as a technical one.
The keys to Java's success as a platform
are ubiquity and absolute compatibility
throughout the industry. To achieve
ubiquity, Sun hitched a ride on Netscape's
popular Navigator Internet browser, the
program that unleashed the whole Internet
phenomenon in the first place. Although the
early version of Java in Navigator was slow
and balky, it still created buzz in software
circles because it showed that Java applets
could indeed travel over the Net and be
used by any type of computer. The Internet
was already awash with multimedia bells and whistles, but Java
brought a way to build real programs for the corporate world.
For Java to arrive as an industrial-strength software development
platform, Sun has to vastly improve its performance so it can load and
run applets faster. The best way to accomplish this goal is to get
makers of operating systems to integrate Java into their software, like
an exotic new fruit grafted onto old rootstock. It's a sensitive matter
because software companies are finicky about their operating system
code and don't like to let outsiders muck about with it. Customer
demand is such, though, that in the coming months every major
operating system company, including Microsoft, plans to roll out
versions of their operating systems spiked with what Sun calls "Java
Virtual Machines."
Gates can thank little Netscape for putting the $9 billion software
behemoth in the extraordinary position of having to support a
technology that could badly undermine Windows. Once Gates decided
he wanted to unseat Netscape as the Internet browser king, Microsoft
had to incorporate Java into its own browser, Internet Explorer, just as
Netscape had done with Navigator. Internet users wouldn't stand for
anything less. Microsoft became a Java licensee in March, after four
months of haggling over price and other details.
Gates and his top lieutenants in Redmond, Washington, are usually
voluble when asked about threats to Windows and other Microsoft
products. But they don't seem to want to say much about Java,
perhaps because they would have to talk out of both sides of their
mouths. Microsoft will likely be the key purveyor of Java Virtual
Machine software because of its 90% share of desktop operating
systems. (JavaSoft president Alan Baratz crows that the snappiest of
all the Java Virtual Machines may well be Microsoft's, to be bundled
with Windows early next year.) But Microsoft still derides Java as
merely a "mildly interesting programming language" and is doing all it
can to torpedo Java with its own Internet software component
technology, ActiveX. Microsoft claims ActiveX uses PC hardware and
software better than Java does. But the people at Sun and IBM,
among other critics, note that only Windows PCs can take full
advantage of ActiveX. That's why they mockingly call Microsoft's
technology CaptiveX.
So far Sun seems to have done everything right. It has kept its fractious
Java allies in line and launched work on a flock of interesting Java
devices and software. Sun is developing a miniature operating system
of its own, ideal for running applets, called JavaOS. It will power Sun's
JavaStation network computers; Sun will even hard-wire parts of the
OS into microprocessors it is creating for the machines. The chips and
software will be cheap enough to go into printers, video kiosks,
set-top boxes, printers, and even cellular phones. One of the more
intriguing products under development is an NC for the seatbacks in
airliners, on which a passenger can surf the net, watch movies, or play
video games with other passengers.
While McNealy concedes that Sun hasn't made big money from Java
yet, indirect revenues could start pouring in soon. For the quarter
ended September 29, Sun's revenues grew 25%, to $1.9 billion, and
profits swelled by 45%, to $123 million, largely because of booming
sales of server hardware. Java would keep that boom going by
spurring Internet computing. Sun is also benefiting from its newfound
high profile. One of McNealy's goals is to get Sun's historically
ordinary price/earnings ratio up nearer Microsoft's P/E of 39. Sun's
has grown steadily since Java burst on the scene, and recently reached
25.
Yet the profits Sun reaps from Java will never match the heady sums
that Microsoft and Intel have made from the Wintel platform; Sun will
earn only modest sums from Java licensing fees and the sale of chips
and the JavaOS. Sun really has no choice but to give its language to
the world; all of Java's ardent backers would flee if they glimpsed the
specter of another Microsoftian monopoly.
And so it should be in the era of Internet computing, contends Irving
Wladawsky-Berger, IBM's Internet czar and chief Java strategist. "In
the past, power and success in the computer industry all boiled down
to who controlled the key technological chokepoints," he says. "That's
what IBM did in the 1960s and 1970s, and that's what Microsoft is
doing now. Customers don't want that kind of industry domination
anymore, and at this point neither do we at IBM. That's why Java is
different. Sun is leading it, but by design nobody really owns it."
Sounds nice and democratic, right? But in an industry that often
resembles a street brawl, enlightened self-interest has never counted
for much. And although Gates and Microsoft may be co-opted for
now, they won't give in easily. Remember Pearl Harbor. But the tremors
are being felt in Redmond of a 8.0 quake in the offing. |
