When Sun Microsystems Inc. rolls out the latest overhaul of its flagship software for running computer networks today, executives are likely to tout enhancements such as diagnostic tools that increase productivity by a third.
But the big eyebrow raiser of Solaris 10 will be its price: Free.
The dramatic discount -- previous versions of Solaris sold for hundreds or thousands of dollars -- is a response to the growing threat that free and open-source software such as Linux poses to traditional software companies including Sun and Microsoft Corp. It’s also the center of Sun’s strategy to regain at least some of its former shine.
“It’s a brilliant strategic move,” said Bill Raduchel, Sun’s former chief strategist. “The tech world is funny -- you often give away your most valuable assets.”
Such a step has been debated within Sun for at least 10 years, said Raduchel, now chief executive of Ruckus Network Inc. It was Sun President Jonathan Schwartz, promoted this year from a position heading software strategy, who made the decision, believing the once-mighty company had little choice.
Sun could easily lose its bet, dropping revenue and hastening Solaris’ slide toward irrelevance. “For it to work, Sun must ‘execute flawlessly,’ ” said Meta Group analyst Nick Gall. “That’s often a code word for ‘doubtful.’ ”
Sun’s computer servers and software powered the Internet boom, and the Santa Clara-based company suffered particularly heavy losses when the boom went bust. Sun shares, which once traded as high as a split-adjusted $64.66 a share, have languished below $10 for more than two years. They rose 10 cents to $4.86 on Nasdaq on Friday, up from a 52-week low of $3.31 in August.
Although sales have inched up in recent quarters, Sun’s recovery has been hamstrung by the popularity of Linux. Linux and Solaris share a similar architecture -- both are descendants of decades-old Unix systems -- and similar functions -- both power big corporate computers and networks.
Solaris is still better, many say. But Linux is free and is continually improved by the volunteer efforts of thousands of programmers who examine and tinker with the underlying code. That combination makes it attractive to corporate customers who can design or commission custom applications cheaply.
Solaris’ code, highly regarded for its security, speed and stability, is still secret, but Schwartz said most of it would soon be opened up.
For years, Sun sold millions of copies of Solaris, which helped the company win the biggest share of what had been a surging market for Unix computer servers.
As Linux began taking hold several years ago with the combination of free software and cheap computers, Sun also began offering Solaris for use on other companies’ less expensive hardware.
That didn’t stem the tide. So making Solaris essentially free and releasing the code “is a natural progression,” said Ascendent Systems Inc. CEO John McFarlane, a former head of Sun’s software division.
“Sun’s belief here is that there are three operating systems left standing, still fully committed to by their respective vendors: Windows, Linux and Solaris,” Gall said. It has watched Unix variants made by IBM Corp. and Hewlett-Packard Co. decline, especially as those companies have pushed Linux on the machines they sell.
Sun has to do something different or risk having Solaris suffer the same fate, Gall said. “Otherwise, the conventional wisdom is that Solaris looks too much like the traditional Unixes, and people assume it will be replaced by Linux.”
Sun marketing Vice President Mark McClain acknowledged that it was late in the game.
“People were starting to go to Linux because it was good enough, and free, and ran on commodity hardware,” McClain said. “We’re answering on all three of those issues.”
Taking a page from the biggest companies devoted to spreading Linux -- Red Hat Inc. and Novell Inc. -- Sun will offer a variety of pricing plans, McClain said. Customers will be able to download Solaris 10 over the Internet free if they don’t need technical support.
The majority of large companies likely to seek such support can pay subscription fees according to the level of availability and the speed of the help they want. Prices were being finalized over the weekend.
The plans should cut the cost of running Solaris to about that of running Red Hat Linux, said Forrester Research analyst Frank Gillett, and in some cases it could be cheaper. Gillett was among those who were briefed on the plans and said Sun was likely to take market share away from Red Hat and Novell.
“Sun is rejuvenated with new technology, new products and new leadership,” Gillett said. “The market is underestimating Sun right now.”
Novell said it wasn’t worried.
“The Linux community is very strong; it’s been developing for many years,” said spokesman Bruce Lowry. “It would take a long time for any formerly proprietary product to develop anything like the infrastructure that surrounds Linux.”
By pricing the latest and best Solaris almost any way the customer wants it, Sun is making itself a serious competitor, analysts said. One reason is a feature of Solaris 10 that lets any application designed for Linux run easily on the new Solaris as well.
On the most crucial computers, Gall said, “you could get the open-source benefits of Linux but the industrial strength and big-company backing of Sun.”