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McNealy defends free software model

September 16, 1999
Web posted at: 12:52 p.m. EDT (1652 GMT)

by Terho Uimonen


PARIS (IDG) -- In the past week and a half, more than 250,000 people have downloaded the StarOffice productivity software suite Sun Microsystems has started giving away at its Web site, the company's CEO said.

"People are just going to our Web site and downloading it like crazy," claimed Scott McNealy, Sun's chairman and CEO, in a speech via satellite from California, here at the International Data Corp. (IDC) European IT Forum.

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Sun late last month purchased Star Division, the company behind the 65MB StarOffice software suite, to purposely offer it free to users over the Web.

The server vendor can afford to give it away, as long as it sells more servers, the "bricks" of Sun's business, McNealy noted. "This is what is exciting, StarOffice and other free software," he added, as opposed to what he called the "hairball" Office suite from arch-rival Microsoft.

"After so many years of Microsoft doing the same to companies such as [database vendor] Oracle, Sun is now trying to suck the oxygen out of Microsoft," said Frank Gens, senior vice president for Internet research at IDC.

Although enterprise users are unlikely to abandon Office for Sun's free offering, on the consumer side the move may lead to lower revenues for the software giant, Gens added.

McNealy also noted that despite the current $10 billion investment run rate in Silicon Valley, he could not remember when he last heard of a start-up betting its future on selling shrink-wrapped software.

"That was an interesting point of view, but I still think there will continue to be a market for packaged enterprise software," IDC's Gens said of McNealy's comment.

Microsoft, however, does not believe that giving away software for free is a viable business practice, said Bernard Vergnes, chairman of Microsoft Europe, in a question-and-answer session following a separate presentation he gave here. Users want a reliable product, with an upgrade path and support services, something that free products will not be able to deliver, Vergnes claimed.

Earlier, during his speech titled "Changing the World Through Software," Vergnes painted a picture of how Microsoft plans to develop new software products -- and derive significant revenues from them -- to create a more efficient office environment.

Empowered by Microsoft's software, future offices will use less paper, and staff will have fewer face-to-face meetings, resulting in substantial cost savings for businesses, Vergnes said.

Sun's McNealy, meanwhile, ended his appearance with a final snipe aimed at Microsoft. "W2K will be a bigger disaster than Y2K," said McNealy, referring to Microsoft's forthcoming Windows 2000 operating system and the issue of feared computer failures at the changeover to year 2000.

Terho Uimonen is Scandiavia bureau chief for the IDG News Service.

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