Sun and Microsoft end bitter feud
Sun and Microsoft end bitter feud
Someone once said "never be surprised about anything that happens in business", but even the wise old sage that first uttered those words would have raised an eyebrow at the sight of Sun's CEO Scott McNealy and his Microsoft counterpart Steve Ballmer exchanging pleasantries, as the long time adversaries shook hands on a 10-year collaboration pact that involves Microsoft making a payment of US$1.95 billion (AUD$2.58 billion) to Sun.
The deal signals the end of Sun's US$1 billion antitrust fight against Microsoft, with the software giant agreeing to pay Sun US$700 million to make that particular problem disappear. It will also pay Sun US$900 million to resolve patent issues, as well as US$350 million in royalties to use Sun's technology. Sun has also agreed to pay Microsoft royalties for when it eventually incorporates its technology into its offerings.
"This agreement launches a new relationship between Sun and Microsoft - a significant step forward that allows for cooperation while preserving customer choice," said McNealy. "It provides a framework for cooperation between Sun and Microsoft going forward."
Ballmer said of the new agreement: "Our companies will continue to compete hard, but this agreement creates a new basis for cooperation that will benefit the customers of both companies. This agreement recognises that cutting edge R&D and intellectual property protection are the foundation for the growth and success of our industry. This is a positive step forward for both Sun and Microsoft, but the real winners are the customers and developers who rely on our products and innovations."
Ballmer also rejected the idea that the deal had been driven by what happened in Europe last week, where the European Commission hit Microsoft with a massive fine for alleged antitrust breaches within its software. Sun had been one of the more vociferous complainants to the Commission, and played a key role in European regulators bringing the action against Microsoft.
"I think you need to completely separate the two things," Ballmer told the press conference, though few believe that events in Europe did not go some way towards encouraging Microsoft, who Sun's McNealy once described as the "evil empire", burying the hatchet with its long time foe.
Whether the agreement will help lift Sun out of its current malaise is even less clear, with Sun having suffered more than most since the dot com bust. Further evidence of its decline came in virtually the same breath as it announced the end to its feud with Microsoft, with Sun using the occasion to announce a further 3,300 job cuts at the company, as well as a warning that it expects its losses for the quarter just ended to be more severe than initially forecast.
Trying to put a positive sheen on this latest round of cutbacks at Sun, McNealy commented: "Now is the appropriate time to take cost out and drive productivity improvements in anticipation of returning Sun to sustained profitability.
"We are resizing the company to better align our cost structure. Network Computing solutions that solve our customers complex computing problems remains our focus. Continued execution of our strategies will pay-off in revenue generation over the long-run. We are well positioned with the strongest product portfolio in years, a substantial cash and market position, strong channels and partners, and a growing pipeline of customers who are demanding more Sun products and solutions."
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