McNealy pushes R&D, not self assembly

Sun Microsystems CEO Scott McNealy urged CIOs to stop over engineering their databases, buy 'gift wrapped' software and containers and leave information technology to vendors.

Speaking at OracleWorld 2003, McNealy refuted Dell CEO Michael Dell's claim that research and development is overrated and that companies will move away from purchasing expensive 'proprietary systems' towards the low end server market.

'You have the choice between heaven or Dell,' McNealy quipped in a rebuttal to Dell's comment.

McNealy claimed the information technology industry was moving away from a model in which every company assembled a unique data centre with components from various different suppliers.

'Every data centre in every company is different. Name two that are alike. They're not like fingerprints. They are like different species. They don't even interoperate,' he said.

In the future, he said, most companies would buy or rent preassembled, standard computer systems and then change business processes to suit the system, not the other way around.

'It's easier to change people than software,' he said.

He also claimed IT departments would be much smaller. He used the analogy that IT departments were moving away from building their own custom airoplanes or assembling their own custom cars.

Sun was still in the low-end business, McNealy said. 'We can ship you a piston ring if you want, or we can ship you an assembled car,' McNealy told delegates.

McNealy said chief information officers were too focused on information technology instead of management. 'We are in IT. We are trying to move your organisation from IT to information management,' he said.

This was an understandable position from a company that McNealy admitted 'makes its money doing system integration in the labs.'

McNealy also had a dig at Microsoft: 'We don't sell Microsoft's Petri dish. But Michael Dell will ship you an infected computer if you need,' he said.

Despite these comments, McNealy told the media that Dell was not a competitor, but an important distribution channel for Sun. 'I just think R&D is important,' he said. 'Intel and Sun is a fair comparison, or Sun and Microsoft. Dell versus HP or white box assemblers.'

'Dell's biggest competitors isn't Sun, it's Intel,' he added.

On the question of the viability of Sun after flat growth and the departure of co-founder Bill Joy, McNealy pointed out that the company had US$5.7 billion in cash.

'We will look to make small acquisitions to fill out the pieces,' he said.

For the fiscal 2003, Sun reported a net loss of US$2.38 billion, or 75 US cents per share.

Siobhan Chapman travelled to OracleWorld 2003 in San Francisco as a guest of Oracle.