Book Of The Week: Microsoft shadow hangs over the Sun shine

High Noon

By Karen Southwick,

(John Wiley, pounds 16.50)

SCOTT MCNEALY certainly celebrated the court ruling that Microsoft wields monopoly power in personal computing. As the CEO of Sun Microsystems. Mr McNealy, along with the likes of Oracle's Larry Ellison, has turned hunting Microsoft from a business strategy into a crusade. So the US Federal Court ruling must have looked like a vindication of that pursuit.

But reading Karen Southwick's rather good company biography of Sun gives the impression that, had Sun concentrated its efforts on innovating not litigating, it might have gone far further than it has. The story of growing a company from four Stanford University students in 1981 to a $100bn market capitalisation business today is hardly a study in failure. But, just as the Europe issue has paralysed the UK Conservative party, in the IT world the Gates issue appears to have distracted the likes of Sun for too long.

The most surprising aspect of the Sun story is the opportunities it missed rather than the opportunities it seized. Sun was founded in classic fashion. Those four bright, driven engineers from Stanford got together when San Francisco was undergoing a technology startup boom the like of which will never be seen in the UK. (Sun stands for Stanford University Network.) They realised many years ahead of the competition that the key to the computing industry would become common standards. With venture capital backing they started building high-end workstations that were cheaper and more compatible than their main competitors.

Through this, Sun built up a strong user base of fellow engineers, and crushed its main opposition, a far more established market leader called Apollo, eventually bought by Hewlett-Packard. Ms Southwick says that was possible only because Mr McNealy ran the company like a company, rather than like a engineering lab or a personal hobby. Sun the business was born.

Given recent events, it is ironic that Mr McNealy's posturing about Sun beating Apollo was actually far more ferocious than anything Bill G has gone on the record saying - apparently that sort of thing is OK if you're the underdog.

Sun devised a philosophy. Back in 1985, 'way before the World Wide Web was born, Sun developed a novel slogan, "The Network is The Computer". It stressed the power of networked computing (powered, of course, by Sun machines), a vision that went fully mainstream only with the arrival of the Internet and the Netscape browser. But despite having the vision, Sun missed the huge value to be created by joining up the network. Enter Cisco Systems, a fellow Silicon Valley startup which now supplies the networking equipment that runs the Internet and has a market capitalisation around three times that of Sun.

From missing the obvious, Sun has recovered remarkably by climbing up the IT food chain. It moved from selling high-end workstations, to develop micro-processors and operating systems for those machines. But coming up with the web's most important software - Java - a language that can run on any computer and any operating system was difficult for Sun.

Ms Southwick describes in excellent detail the crazy history of Java - lawyers changed the name from Silk to Java because of copyright difficulties - and the lack of business processes that enabled revolutionary software to be dreamt up by a hardware company.

Now Sun faces the challenge of serving consumers as well as businesses. It is ensuring its Java software is being used in all sorts of consumer devices, such as PCs and cable TV set-top boxes.

This strategy means Sun is hitting up against Microsoft in all its business areas. Microsoft has aggressively moved into the high end workstation market - Sun's back yard - with its Windows NT operating system. And Java is possibly the biggest threat to Microsoft's dominance of the Internet through Windows and Internet Explorer. Not only is Sun fighting like hell, but it is also in danger of cutting off its nose to spite its face.

For example, Mr McNealy insists that Sun does not use Microsoft packages, so its sales execs have to get by without using Powerpoint for presentations. Sun is pretty much the only workstation manufacturer not to run Windows NT, thereby only serving half the potential market.

But what about the book? From recent business reads, I favour well-written biographies over platitude-rich ghosted autobiographies, so finds favour. Despite being a Sun fan, the author can step back and cast a critical eye over proceedings, which she does fairly well. The biggest shame though is that Ms Southwick, has not actually met Mr McNealy, so the book errs towards providing a good synthesis of events rather than giving true insider insight.

As usual with unauthorised books, she has spoken to most other people who matter in the story. But Mr McNealy, rather than appearing centre stage as the CEO and driving force, is kept mainly in the wings, quoted mainly from newspaper articles and (even worse) annual reports, not the usual place to look for the inside story.

Another failing is, of course, that it's a book. The timeline peters out in early 1999. So events since, especially in the Microsoft case, are absent from this account. Given that Sun has more than tripled in value since the beginning of the year, it has been a crucial period.

The good news is that the power of the Internet provides readers with the ability to complete the story through news searches. Sun was right about one thing - the network is the computer.

The reviewer is a director and co-founder of Fletcher Research, a London- based Internet research company