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McNealy ON MICROSOFT: 'THEY'RE BIG.'
By Derrick Harris, Assistant Editor

Sun chairman and CEO Scott McNealy used this week's Sun iForce Partner Summit to discuss some recent changes at the company, including Sun's new found partnership with rival Microsoft and the appointment of Jonathan Schwartz to the position of president and chief operating officer.

As for the Microsoft deal, a rare move for the industry giant, McNealy said that both companies stand to benefit greatly. The partnership allows Sun to move into the desktop market, he said, citing the interoperability between Star Office and Microsoft Office, as well as that between Java Desktop and Windows. Microsoft, on the other hand, should be able to gain a better foothold in the enterprise IT market.

However, McNealy said, the customers also stand to gain from the partnership. While Sun has been "interoperable with just about everyone for a long time," the same cannot be said about Microsoft.

In addition, the two companies are not sitting idle. McNealy said he is in regular talks with Steve Ballmer, Microsoft's CEO, about how to take this partnership to the next level.

"We are both thrilled to death about the customer response to this," McNealy said.

He also dismissed claims by IBM senior vice president Steve Mills that the partnership between Sun and Microsoft is related to the adverse effects Linux has had on Sun.

"Steve Mills can fantasize all he wants about what this means, but what it means is our customers have a uniquely advantaged interoperability position between Sun and Microsoft products, both ways," McNealy said.

He added that while has met competitors who were upset about the partnership, he has yet to meet a customer who was upset about it.

During his Q & A session to kick off the event, McNealy reiterated that his company's deal with Microsoft has nothing to do with IBM.

"They're left out," he said.

In fact, McNealy said that he is alright with seeing Microsoft show up more on the short list for bids, so long as he sees other competitors showing up less often.

He declined to speculate on where this deal will lead, and touted the decision by both companies not to speculate before the deal was announced, which could have led to leaks within the industry or to the press.

"That has to be the biggest deal that never leaked," McNealy said.

Rumors about management changes at Sun, like the appointment of Schwartz to the position of president and COO or the possibility of McNealy splitting his title as has been done at Dell and Oracle recently, signaling greater changes within the company also were laid to rest by McNealy.

"It [splitting chairman and CEO duties] has absolutely zero impact on the quality and capabilities of our product," he said.

As for Schwartz, McNealy said he expects him to perform with integrity. Sun has a tightly managed review process when it comes to hiring executives, McNealy said, and Schwartz was simply the best person for the job.

At the end of the day, however, no matter how groundbreaking the partnership with Microsoft might be, Sun and Microsoft are still competitors, McNealy said. In fact, he said, the customers want competition and the array of choices it produces.

"They want us to compete by driving on the same side of the road," he said, "not in some sort of demolition derby."

This competitive spirit is perhaps best illustrated by McNealy's answer when asked to pay Microsoft a compliment.

Said McNealy, "They're big."

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