• TechnologyInnovator
• EnterpriseInnovator
• SecurityInnovator
• WirelessInnovator 

• NextInnovator(at)Live.com
• No spam, subscription newsletters, solicitations, or attachments please!
• Attn: Harold Abraham, Chief Innovator

• Advanced Transit Association
• Advanced Vehicles and Fuels Research
• Airbus A380 Revealed
• Boeing Dreamliner
• European Space Agency
• Inst. for Transportation & Develop't Policy
• NASA: Main Page
• NASA: Deep Impact Mission
• NASA: Mars Exploration Rovers
• NASA: New Horizons: Pluto-KB Mission
• Railway-Technology
• SpaceShip One
• Transportation Journal
• Transportation Planning and Technology
• Transport Research Knowledge Centre
• U. Internationale des Transports Publics
• Virgin Atlantic Global Flyer

• Over the River
• eMarketer 
• TechnologyPundits
• Security Insights Blog 
• McAfee AudioParasitics
• Strand Consult
• Ovum
• The Eye For Innovation
• Rethink Research
• Innovation Insights
• Innoblog
• Strategy and Innovation
• The Gadgeteer
• Handheld Speech
• Ghost City

• Bike & Scooter Technology Headlines
• Automotive Technology Headlines
• Train & Trolley Technology Headlines
• Marine Technology Headlines
• Air & Space Technology Headlines

 

 

 

As consumer spending slows across the world, a variety of "brick and mortar" retailers are clearly feeling the impact. Foot traffic is slowing, and it's getting harder to balance debt laden real estate portfolios and fickle consumer trends.

For consumer product manufacturers, retail distribution is key - it's how you get in front of a customer. It's why the big PC manufacturers are all working hard to score deals with big retailers (or build their own retail outlets) around the world.

But making money on PC's is tough - for most PC makers, you're remarketing someone else's operating system and someone else's microprocessor - it's not for the faint of heart (or faint of balance sheet). For Sun, our retail distribution concerns don't surround consumer hardware (we don't make PC's) as much as consumer software - the popularity of which defines our market opportunity. Said simply, if you're running Java or another open source platform, Sun can build differentiated datacenters in the clouds behind those devices. If not, it's a lot tougher (not impossible, just a lot tougher).

Consumer software, though, is defined by a virtuous cycle. Developers target popular software (like Firefox, Flash or Java). In so doing, they create applications and content that consumers use. What consumers use, they tend to use in volume (the internet's a very big place, after all). Developers notice those volumes, and target the platforms that reach the most consumers. And that defines Sun's market opportunity (someone smart once jumped up and down on stage yelling "Developers! Developers! Developers!" Amen.)

The Java runtime remains one of the world's most popular platforms used by developers - and thus, one of the world's most popular consumer software products. For the cynics about to chime in with "but I don't use it," the odds are good you do - it's become an invisible, but critical part of an enormous breadth of consumer and business services (from video uploaders on social networks, to stock market analytical tools). And as that content becomes more popular, so does the Java platform - expanding Sun's market opportunity in the corresponding datacenters. That's why we see it as a virtuous cycle.

That cycle also provides Sun with some exceptional foot traffic - just last month, we distributed more than 60,000,000 Java runtimes, to users all across the planet. The number is growing, as more content is built for Java 6 and the upcoming JavaFX, as more PC's join the network, and as more workers join the workforce (and are assigned Java-enabled laptops). At this point, I'd bet there are about 1,000,000,000 (that's a billion) Java runtimes installed on PC's around the world. With more by the day - each generating revenue for Sun.

As with most of our software products, we don't distribute products without intent - like Google, our products are both a means of acquiring customers, and generating revenue. Freely distributed software establishes a relationship with an end user - just like free search, free news or free shopping. About two years ago, we reached an agreement with Google in which they recognized the value of our relationships with Java consumers. Just as the PC makers want distribution via retail outlets, Google wanted distribution of their search technologies - via our Java update mechanism. When we present an update to a user, we may offer other sponsored software (a Google search toolbar, eg).

After a careful negotiation, we agreed, and crafted a wonderful relationship that served consumers, Google, and Sun. Last year, we renewed the agreement, and recognized even more value for all involved. This year, we decided to run an open auction, and received bids from a number of companies. It was a tough process, but given the growing volume and momentum around Java, we clearly represented just about the most popular distribution vehicle on the internet today - and Microsoft worked hard to represent the most attractive total offer.

The decision to go with Microsoft was based on overall value - it was also predicated upon their endorsement of and agreement to help promote MySQL. Stay tuned for more details on what we'll be doing together.

What's the deal worth to Sun? This deal will be one of the most valuable distribution deals ever struck in the industry - and it likely makes Microsoft one of Sun's largest customers. It'll also set the stage for an even more interesting auction next year, as more and more folks realize the value of retail distribution. Thus far, our deal with Microsoft is US only - and new auctions are in flight for international rights (alongside other non-toolbar products for the US, perhaps a browser...).

As for other high value distribution assets at Sun? I just read one analyst report questioning whether anyone actually used OpenOffice. We happen to run Sun Microsystems on OpenOffice - more importantly, it's used across the world, and we're now commercially licensing it to brand name companies wanting to save big dollars on office productivity.

To put some data around its popularity, last week, we distributed more than 3,000,000 copies of OpenOffice 3. Downloads are accelerating, giving us a reachable user base we estimate to be between 150,000,000 and 200,000,000 users - a global recession will amplify OpenOffice adoption. And 100's of millions of users drive a lot of foot traffic. An auction's afoot (no pun intended) to see who we'll be partnering with us to integrate their businesses and brands into our binary product distribution - the possibilities are limitless: people tend to print those documents, fax them, copy them, project them (and I know this annoys my friends in the free software community, but branding allows us to invest more in OO.o community and features, from which everyone benefits).

With Verizon running a similar auction to integrate a search vendor into their wireless devices, they (and their industry across the world) are seeing the same opportunity. Just because a few retailers are having trouble doesn't mean the value of reaching customers has gone away. Foot traffic still counts, but in today's economy, software distribution's a lot easier to manage and monetize than a real estate portfolio.

After all, who wouldn't want to meet a few hundred million new customers?

________________

Update: I should've clarified, above: users without any interest in toolbars can simply decline the offer during install - and receive their Java update without any sponsored software.