Tech & Work

Sun's McNealy swings at rivals

The feisty CEO puts up his dukes in a speech that jabs at IBM, Red Hat, Microsoft and Congress.

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By Stephen Shankland

SAN FRANCISCO—Scott McNealy, the Sun Microsystems chief executive who has become something of a punching bag as his company fights back to profitability, threw some punches of his own on Tuesday.

In a keynote address at the JavaOne trade show, McNealy offered scathing criticism of Congress and legislation that would require stock option grants to be counted as expenses, and blasted several technology competitors. He voiced "outrage" over Microsoft's virus-prone software, jabbed at Red Hat for avoiding the Java Community Process that governs the software, and lambasted IBM for not releasing enough of its software to the open-source community.

"Sun's really good at finding someone to be against," and the motivation works for the company, said Illuminata analyst Jonathan Eunice. Today's behavior is in many ways a return to a company style that was thrown off course by its sudden success in the late 1990s. "They got really sloppy and arrogant when they were on top."

Sun is struggling with declining revenue despite a return to growth in the server market, and it has been labeled irrelevant by some competitors. But Sun is comfortable with underdog status and, always a fighter, never shies from bold assaults on its rivals.

The origin of McNealy's damage estimate wasn't immediately clear, but conjuring numbers for such financial effects can be something of a black art. Analyst firms have produced of virus costs, and have said events such as the Webcast of a Victoria's Secret underwear fashion show cost $120 million in lost productivity.

Sun's new chief operating officer, Jonathan Schwartz, chimed in on the security issue. "The way we architected the Java platform was on the assumption that there would be bad people out there. We needed to ensure we made it difficult for bad people and bad code to do harm to others. We haven't played this up a lot, but no one's written a virus in Java," he said.

A Microsoft representative declined to respond to Sun's specific criticism, but pointed out that Chairman Bill Gates says .

McNealy also spent some time explaining Sun's partnership with Microsoft to the Java loyalists.

As a result of the first-phase interoperability work from Sun and Microsoft, "users can sign on once and have their authentication travel across Sun and Microsoft environments," McNealy said. "This summer or late summer, I expect to have phase one announced," McNealy said. The next stage is getting Java and .Net to work together.

But Sun's loyalties still lie with Java—even when it comes to games and other taxing applications. "There is no application written in C++ in the game space that Java cannot do," said Chris Melissinos, Sun's chief gaming officer.

Taking stock
McNealy has long been a foe of plans to require companies to record stock options as an expense.

"Congress is running around, about to skewer one of the most innovative pieces of technology in America," McNealy said. "They got the accounting wrong, the valuations wrong, the motivations wrong. We can't let this world be run by accountants, for God's sake."

Ninety percent of Sun's stock options go to rank-and-file employees under the vice president level, he added. "Legislating them (stock options) out of existence is not the way to solve the bad CEO problem," he said.

Sun employees participated in a Silicon Valley last week

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