Sun Hits The BRICs

MENLO PARK, Calif. — If you have any doubt about the growing importance of BRIC — the common acronym for the emerging markets of Brazil, Russia, India and China — consider this: Sun Microsystems CEO Jonathan Schwartz admitted today that it was Brazil that forced Sun to open source Java.

Sun  executives were meeting with Brazilian government executives and were told in no uncertain terms that the government would not consider any technology that wasn’t open source. So word was sent back to Schwartz, and he agreed. “So the open source effort was driven by a country,” he told attendees at a briefing here at Sun’s main campus.

The briefing highlighted Sun’s efforts to enter the emerging markets, which BRIC leads. The IT spending of these countries is growing by double digits in 2007: 12.5 percent in Brazil; 16 percent in China; 18.7 percent in Russia; and 21 percent in India, according to an IDC report.

And BRIC is growing fast. By 2050 it will account for 44 percent of global GDP. Most important to Schwartz, who is looking for new customers, there are more than 4 billion Java devices in these countries.

Schwartz’s strategy is somewhat akin to the old blades and razors analogy. In Sun’s case, its software is the razor and its hardware will be the blades.

“There are two sides to our business, like the carriers and Google. Google gives search away for free and monetizes through advertisers. Our business is identical. We define the technology, brand and standards to bring as many people on line in the most affordable way.”

Schwartz said that the market is no longer being defined and driven by technology firms but by the masses, which is where the population is much larger and volume drives competition. Sun’s strategy, then, is to grow itself by growing the online population.

“The work we do is designed to bring more people online and position ourselves for an opportunity when those people go forward. At some point they will drive economic trends,” he said. He admitted that giving away OpenSolaris and Java won’t pay off overnight and pointed to JBoss and Red Hat, which had long ramp-ups before becoming economically successful.

Sun has experienced a nice reversal of fortune under Schwartz’s leadership, but the lingering question for the company has been whether it can win new customers or just keep selling to existing ones.

For a company like Sun, it’s got to sell within the U.S. and pursue these emerging markets at the same time, said principal analyst Rob Enderle of The Enderle Group.

“You don’t want to pick where you expand because you don’t want an emerging market to overlook you. Sun is still a global company and are still competing globally. If they were in trouble you’d see them pulling back to the U.S. and circle the wagons, which they aren’t doing,” he said.

However, Enderle is not convinced that giving away Java is the means to sell Sun hardware. “The world Schwartz is looking at is one where I wonder if Sun, because they tend to be far removed from commodity hardware, is a world where Sun can thrive. It’s different and at least it’s a strategy,” he said.

Also at the event was a panel discussion about talent and the international market. With Congress diddling on H1-B visas, the U.S. is suffering from a talent deficiency.

“Any time you have an inefficiency on a resource, costs go up and people realign to where resources are available. Why would any rational person limit resources they need?” asked Norm Fjeldheim, senior vice president and CIO of Qualcomm.

The solution has become to base those people in their native countries. Schwartz earlier defended putting offices in other nations not as a way to cut costs but to reduce time to market.

However, the panelists added that in the case of many Indian and Chinese programmers, they no longer have to come to America; they can stay in their native lands where the standard of living and technology has greatly improved.

Avinash Agrawal, senior director of engineering for Connected Systems, said that 75 percent of the people in Sun’s Indian datacenter are returning from the U.S., bringing a western model of education.

Fjeldheim didn’t seem crazy about that. “We bring them here, train them up, then they go home,” he said. But he added “We’ve formed a relationship with them, so it no longer feels like us and them.”

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