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Sun Admits Open Source Solaris, APL Have Their Downsides

The quarterly 10Q and annual 10K filings, which public companies have to file with the Securities and Exchange Commission, sometimes make for interesting reading. While public announcements about new products, initiatives, and partnerships are always full of certainty and optimism, the fear of shareholder lawsuits compels public companies to come clean and admit to the risks they face. In its recently filed 10K report, Sun Microsystems pointed out the risks it faces in taking its Solaris operating system open-source and in partnering with Fujitsu.

Sun has said repeatedly that it will release Solaris as an open source operating system by the end of this year, and it seems likely that the open-source announcement will coincide with the launch of Solaris 10 (which is expected sometime around October but could be announced on September 21, along with the next batch of quarterly Sun announcements). The exact nature of licensing and community participation of open source Solaris remains a mystery, but Sun is being careful to clarify the risks to customers and shareholders right upfront. "The competitive advantage we derive from controlling the development of our Solaris operating system may be reduced if and when we convert it to open source software," Sun said in its 10K filing. "Although open source licensing models vary, generally open source software licenses permit the liberal copying, modification and distribution of a software program allowing a diverse programming community to contribute to the software. Following any such release, there could be an impact on revenue related to our Solaris operating system and we may no longer be able to exercise control over some aspects of the future development of the Solaris operating system. As a result, following any release of the Solaris operating system to the open source community, the feature set and functionality of the Solaris operating system may diverge from those that best serve our strategic objectives, move in directions in which we do not have competitive expertise or fork into multiple, potentially incompatible variations." Obviously, going open-source could have a dramatic effect on Sun's revenues and profits.

Sun also outlined some of the specifics of its future Advanced Product Line (APL), a set of UltrasSparc and Sparc64 products that it will develop and sell with Fujitsu and its server partner, Siemens. "We anticipate that the APL will ultimately replace a large proportion of our server product line and have agreed not to sell certain products which may compete with the APL at certain times as well as to purchase certain components solely from Fujitsu at certain times," Sun stated in its filing. "In addition, the agreements contemplate that we dedicate substantial financial and human resources to this new relationship. As such, our future performance and financial condition will be substantially impacted by the success or failure of this relationship." Sun conceded that joint development and marketing of complex product lines is difficult and that there are lots risks, including component and product delays, manufacturing glitches, cost escalations, and other nightmares that both Sun and Fujitsu want to avoid but may not be able to. Sun also shed some light on the APL alliance, saying that, in the interim period of the contract, both companies have objectives and deliverables that they must make good on, and the failure to do so could put the overall alliance at risk. Sun is also making no guarantees that the APL alliance will result in a "favorable" situation for Sun.

While Sun has to say these things for legal and moral reasons, the fact remains that taking Solaris open-source and aligning server development with Fujitsu and Siemens are better strategies than the track that the company was on a year ago.

PrimePower Solaris Cluster Bests SPECjAppServer Benchmark

Database maker Oracle and server maker Fujitsu Siemens have taken the top spot in the multi-node implementation of the SPECjAppServer2002 benchmark with a new cluster running Solaris 9 and Oracle's database and middleware. The Fujitsu Siemens hardware included nine PrimePower 450 servers with 1.32 GHz Sparc64 V processors and 8 GB of main memory and running the Oracle 10g Application Server and a 56-way PrimePower 2500 database server, using 1.3 GHz Sparc64 V processors and 112 GB of main memory and also running the Oracle 10g database. This combo application server and database server was able to complete 5,992 total operations per second (TOPS) using the J2EE app server and a Java implementation of a warehousing benchmark that looks a lot like the TPC-C test. The cluster under test had a price performance of 650 euros per TOPS (about $804 per TOPS at current exchange rates).

The previous record holder on the SPECjAppServer2002 test was a cluster comprised of an Integrity Superdome server, from Hewlett-Packard, which was carved up into virtual machines to create one four-way app server, two eight-way app servers, and a 28-way database server. These virtual machines used the 1.5 GHz Itanium 2 processors and ran the HP-UX 11i operating system and the Oracle 9i database and BEA Systems' WebLogic app server. This cluster, which was tested in October 2003, was able to deliver 4,496 TOPS at a cost of $652 per TOPS on the test. With the faster Itanium 2 chips that are due any day now and have larger 9 MB caches, HP could probably reach about the same performance level as the newly tested Fujitsu Siemens iron.

Sun Gives Solaris Commissions on Non-Sun Hardware

If you want to gauge how serious Sun Microsystems is about selling Solaris on X86 iron, you need look no further than a recent Web log posting by Sun's president and chief operating officer, Jonathan Schwartz. In the posting, Schwartz said that Sun is now offering its sales reps the same commissions on sales of its Solaris operating system on X86 servers from competitors as it offers reps who sell Solaris on Sun's own Xeon and Opteron servers. Even more interesting is Schwartz's claim that Sun is compensating sales reps as if they sold the non-Sun iron as well.

Schwartz also said in his blog that Sun has a beta of Solaris running on the "Nocona" 64-bit extended Xeon chips from Intel. Presumably Sun will officially deliver 64-bit support on Xeons when it does so with Solaris 10 on Opteron processors in the next few months.

Samba Team Patches Flaws Allowing Denial-of-Service Attacks

The team of open source coders behind the Samba clone of the Windows print and file server announced this week that Samba 3.0.7 is now available. The update has 11 relatively minor bug fixes, six new features for managing Samba clients and printers, and fixes for two security vulnerabilities in the Samba server that could allow a malicious hacker to knock out a system or seriously degrade its performance through denial-of-service attacks. Neither of these flaws has been exploited by hackers to date on the Samba 3 server, which runs on Unix and Linux servers and allows them to link to Windows clients and servers.

Vintela Provides Windows Group Policy Extensions to Unix, Linux

If you can't actually have a homogenous network, making user access across heterogeneous platforms consistent is the next best thing. And this is what Vintela, a systems management software vendor based in Lindon, Utah, does. Vintela Authentication Services extends the Active Directory user access and management framework from Windows 2000 and Windows 2003 servers to Unix and Linux servers. This means system administrators can use Active Directory to manage access to Unix and Linux servers without having to know a lot about the platforms (which have very different ways of managing users).

Vintela announced this week that it has broadened its compliance with Active Directory's features by allowing Vintela Authentication Services to manage groups of users, rather than individual users. Vintela Group Policy does exactly what the name suggests: the group policy function of Active Directory can now use the group policy feature of Active Directory to manage groups of users on Unix and Linux machines. This feature is an add-on to the newly released Vintela Authentication Services 2.6, which supports AIX 5.1 and 5.2, Solaris 9 on X86, and Solaris 2.6 on Sparc. Vintela Authentication Services 2.6 also includes a software development kit that provides Unix APIs that allow LDAP, Kerberos, and GSS to link into Active Directory. Vintela Authentication Services 2.6 costs $200 per server and $25 per user account. Pricing and licensing details for Vintela Group Policy 1.0 were not announced.

SCO Negotiates Ceiling on IBM Suit Legal Fees

The SCO Group didn't mess around when it hired Boies, Schiller & Flexner to represent the company in its Unix-Linux lawsuit against IBM. But these attorneys, who are well known in the IT business (David Boies did most of the arguing for the U.S. government in the recent Microsoft antitrust lawsuit and was one of the lead attorneys for IBM at Cravath, Swaine, and Moore when Big Blue wiggled out of its antitrust consent decree), do not come cheap.

As SCO tries to boost Unix software sales, and because it needs to increase development on its core Unix products, the company cannot easily afford mounting legal bills. So SCO has worked with Boies Schiller to put a ceiling on its legal fees, while at the same time increasing the contingency fees in the event that SCO prevails and is awarded damages. SCO has spent about $15 million on the case so far, and now has a $31 million cap on fees related to the IBM case. Boies Schiller was originally contracted to get a 20 percent contingency fee if SCO wins, and now it will get fees that slide between 20 and 33 percent, varying upward as the settlement amount increases.

SCO outlined the new legal fee schedule while announcing financial results for its fiscal third quarter, ending July 31. SCO had $11.2 million in sales, down 44 percent from this time last year, when SCO sold $7.3 in Unix intellectual property licensing, compared with $678,000 in this year's third quarter. SCO would like to blame IP licensing on the drop, but both Unix software and services revenues were down in the quarter, with SCO selling $8.9 million in software (down 17 percent) and just under $2 million in services (down 19 percent). SCO reported a net loss of $7.4 million, almost exactly the same as the $7.3 million it spent on legal fees. SCO expects revenues for the fourth fiscal quarter, ending October 31, to be between $10 million and $12 million, and says that Unix IP licensing is exceedingly difficult to predict.

CEOs Who Outsource Seem to Be Profiting Nicely

The 50 largest companies engaging in outsourcing of their workforce (including offshoring) have been reaping the benefits from those moves and passing some of the benefits to their CEOs in the form of higher salaries, according to a report by United for a Fair Economy and the Institute for Policy Studies. The report, "Executive Excess 2004," found that salaries among CEOs at the 50 largest outsourcers increased by 46 percent in 2003, to an average of $10.4 million, and the report further discovered that these CEOs made an average 28 percent more than all CEOs averaged across large enterprises that year. Outsourcing clearly pays; it just doesn't happen to pay you.