Last week, I discussed Sun’s post-Java plans to take on its nemesis, Microsoft, in two key software initiatives: a new entry in the universal authentication space, called the Liberty Alliance Project, and the StarOffice (version 6.0, now in beta) business productivity suite. Sun will have significant challenges penetrating markets where Microsoft is already first to market with its My Services authentication package or where Microsoft can leverage its huge installed base with the ubiquitous Microsoft Office.

Sun’s third major post-Java software initiative won’t just go head-to-head with the MS juggernaut; it also will run into major competition from several entrenched players. But one rival, consumer powerhouse AOL, may turn out to be the partner that Sun needs to displace Microsoft at the top of the corporate space.

Instant messaging with a corporate mind-set
Sun is developing an instant messaging (IM) component, set for an Oct. 22 announcement, for its iPlanet software line. Sun designed the software specifically for corporate users by adding serious functionality: initiating workflow actions, like approving expense reports and finding coworkers with specific expertise.

The future of IM is to become “the central nervous system of the enterprise,” says Marge Breya, vice president of the Sun Open Net Environment (Sun One) initiative, the company’s buzzword for its push into the integrated software space. Sun is counting on Sun One to change the public’s perception of the company as only a supplier of high-end servers and establish it as an enterprise software player, as well. It hopes to regain some of the mindshare that Microsoft has developed in the enterprise space with its .NET, Windows XP, and My Services (formerly HailStorm) initiatives.

Sun’s IM product is based on technology licensed from SoftBase Systems. Early betas of the product supported chat rooms, message forwarding, user surveys, group broadcasts, and integration with LDAP directories for user information. Sun’s “value-add” will be building advanced services into its IM product and focusing on the enterprise. But there’s stiff competition, not only from enterprise mainstays Microsoft (with its Exchange IM) and IBM but also from traditionally consumer-targeted products from MSN, AOL, and Yahoo. Many smaller corporations have found that using consumer-focused IM services are an inexpensive—albeit less secure—alternative to setting up and running their own internal services.

How can Sun make a big play?
Sun and AOL have a unique opportunity based on their prior financial relationship, via Sun’s acquisition of Netscape technology from AOL, and their common vision: the death of the “fat desktop.” Neither company has products that can generate serious revenues in that space. And since there’s no dominant Linux desktop distribution, there’s also no clear Linux desktop standard. Sun’s resulting task of making StarOffice ubiquitous as a locally installed application is virtually insurmountable. However, there’s nothing stopping Sun from providing StarOffice as a hosted productivity suite through AOL’s ever-fattening pipes. In fact, it makes this option Sun’s only reasonable strategy going forward.

Here’s how the overall alliance could work: AOL and Sun partner to distribute StarOffice to homes and small businesses through the AOL portal. They use a combination of the AOL desktop; Sun messaging, calendar, and collaboration servers; and StarOffice to provide a feature-rich hosted desktop to small businesses. Sun and AOL merge Magic Carpet and the Liberty Alliance Project into a single authentication standard that links businesses and the consumers they’re trying to reach. Finally, Sun and AOL build tight integration between AOL IM and Sun’s corporate IM product. This integration allows large companies not only to manage collaboration between their employees on a private network but also to use AOL’s network and the alliance’s combined authentication strategy to extend this model to partner companies and consumers.

The irony here is that Sun and AOL could attempt to unseat Microsoft by following the same strategy that Microsoft used to unseat IBM, Lotus, and WordPerfect as the standard bearers. Provide lower-cost, higher-value productivity in the small-to-medium business space and attract corporations by providing departmental applications that don’t disturb the existing corporate standards. The difference is that AOL and Sun can claim a much larger head start than Microsoft had, and they have the potential to increase their market share at a much faster pace.

Does Sun have time to execute?
There’s only one problem with this scenario: Microsoft isn’t sitting still, waiting for the “software as a service” era to start. It is, in classic Microsoft fashion, hedging its bets. Products like OfficeXP are undergoing a metamorphosis into subscription offerings. This allows Microsoft to get out of the 18-month release cycle that it relies on so heavily for revenue, and instead, charge for time usage. The mechanism for controlling usage is Microsoft’s product activation technology. Once PCs running OfficeXP (and ultimately WindowsXP) are connected to the Internet regularly, Microsoft can use product activation as a way to meter and charge for application usage on a PC or to dole out limited access in a terminal services environment. MSN or Microsoft hosting partners ante up the central servers.

Sun also can’t let its desire to compete with Microsoft in the application software space keep it from cleaning up its confusing Web Services message. Contrary to what Sun wants the industry to believe, Java and Enterprise Java Beans (EJB) were not architected for, nor are they particularly well suited for, developing Web services applications. Sun doesn’t expect to have native Web services support in Java until the next release, which is still some six to 12 months out.

Planning a long-term strategy to adopt Sun application or system-level products will require a thorough evaluation of not only its near-term product strategy but also its long-term prospects for competing successfully with Microsoft.

How likely is this alliance?

Is AOL willing to take on Microsoft and enter the corporate realm? Will this strategy to make a bigger play in the desktop space work? Send us your opinion of this plan.