No. 4 looks to StarOffice for sales jolt

Sun Microsystems challenging Microsoft

Software

September 01, 1999|By BLOOMBERG NEWS

NEW YORK -- Sun Microsystems Inc., the fourth-largest seller of servers for the Internet, expects to increase sales by providing office-applications software for desktop users, said Chief Executive Officer Scott McNealy.

Yesterday, Sun introduced StarOffice -- free application software for word processing, spreadsheets and graphics that's compatible with Microsoft Corp.'s Office software, which sells for as much as $800. Microsoft is the world's biggest software company.

"We're taking an old page out of the book and kind of doing a new chapter," McNealy said.

Sun expects that, within a year or two, millions of personal-computer users will obtain their applications software from the Internet, rather than from PC manufacturers that license Microsoft Office and load it into their products.

Millions already use the World Wide Web for free e-mail, fax service and news, McNealy noted. Offering personal software is a natural extension, he said, and a means for the Palo Alto, Calif.-based company to sell more servers as the Internet expands.

Within the past week, Sun acquired Star Division Corp., a 14-year-old, closely held company in Fremont, Calif., for an amount McNealy wouldn't disclose -- "but which is enough to get our attention."

Star's software is compatible with Microsoft's, McNealy said. Moving to StarOffice would be "like switching from a Ford to a Chevy," said McNealy, whose father was an automobile executive.

Sun expects that the software will appeal to large companies with thousands of PCs that need to be upgraded. Sun is shipping the software to every U.S. university and school district to speed early adoption, McNealy said.

Companies including AT&T Corp., the No. 1 U.S. long-distance carrier; Exodus Communications Corp., a provider of Internet service; and Siebel Systems Inc., one of the top providers of customer-service software, endorsed the Sun initiative yesterday at a press conference in New York.

McNealy said he expects America Online Inc., which already works closely with Sun, to offer StarOffice to its nearly 20 million subscribers, along with other Internet service providers. Sun's "game plan" also includes asking top PC makers headed by Compaq Computer Corp. to load StarOffice into new products, he added.

McNealy said he expects Sun's revenue for the first quarter ending Sept. 30 to show "good, solid growth" compared with last year's $2.49 billion.

Sun expects "to meet or beat" analyst expectations for earnings of 31 cents a share, the average estimate carried by First Call, the CEO said.

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