All Things Digital

Apple is rapidly becoming a minor player in the computer business and may be swallowed up by Sun Microsystems Inc. or another rival.”

–BusinessWeek, February 1996

In the movie “Independence Day,” a PowerBook saves the Earth from destruction. Now it’s time to return the favor. Unfortunately, even devoted Mac addicts must admit that you look a little beleaguered these days: a confusing product line, little inspiration from the top, software developers fleeing.”

–“101 Ways to Save Apple,” Wired, June 1997

In 1997, shortly after Steve Jobs returned to Apple, Dell’s founder and chairman, Michael S. Dell, was asked at the Gartner Symposium and ITxpo97 how he would fix Apple, then deeply troubled financially. “What would I do?” Dell said. “I’d shut it down and give the money back to the shareholders.”

Little did he know he’d be eating those words a few years later when Apple’s market capitalization surpassed not just Dell’s, but IBM’s as well (as some observers have been predicting for a while now). After the record-breaking quarter it posted yesterday, Apple is today the most valuable computer-maker in the world. Its market capitalization now stands at nearly $162 billion, $6 billion more than that of industry heavyweight IBM. In fact, its market cap is the fourth largest among technology companies, lagging behind only Cisco ($189 billion), Google ($208 billion) and Microsoft ($290 billion). Which is obviously great news for Apple shareholders, as John Murrell notes over at my old stomping grounds, Good Morning Silicon Valley: “… while Google-watchers go gaga over its soaring share price, note that an investor who bought Apple on the same day Google stock debuted in 2004 would have, as of the close of market yesterday, made 40 percent more than if the same money had been put into the search sovereign’s shares.

Sun Microsystems, whose co-founder and Chairman Scott McNealy once described Microsoft’s Internet Information Server as “the Corvair of Web servers–unsafe at any speed” has become a Windows Server OEM.

Extending a partnership first struck in 2004, Sun will now resell and install Windows on its x86-based servers. For Sun, the deal is a way to drive broad adoption of its technologies. “One hundred percent of Sun’s customers use both Solaris and Windows,” said Sun Executive Vice President John Fowler. “We have an opportunity to extend our technology leadership in this critical area with customers that we share.”

For Microsoft, it’s a way to better compete in the virtualization market. Under the terms of today’s agreement, both companies pledged to optimize their server operating system for virtualization of the other’s software. And that’s an important issue for Microsoft. As Microsoft Watch’s Joe Wilcox notes, Windows Server 2008 and Microsoft’s next-generation Viridian virtualization technology have both been delayed. Said Wilcox, “Virtualization interoperability provides a place for Windows Server 2003 on Solaris and an opportunity to better position Windows Server 2003 for consolidation of Solaris servers.”

The laundry rooms at Sun Microsystems and Network Appliance must be on the fritz, because the two companies have begun washing their dirty laundry in public. Yesterday, NetApp sued Sun, alleging that its ZFS storage software, a key element of its Solaris operating system, violates seven NetApp patents. Dave Hitz, co-founder of NetApp, explained the rationale for the suit in a post to his blog:

Like many large technology companies, Sun has been using its patent portfolio as a profit center. About 18 months ago, Sun’s lawyers contacted NetApp with a list of patents they say we infringe, and requested that we pay them lots of money. We responded in two ways. First, we closely examined their list of patents. Second, we identified the patents in our portfolio that we believe Sun infringes.

“With respect to Sun’s patent claims, our lawsuit explains that we do not infringe, and–in fact–that they are not even valid. As a result, we don’t think we should be paying Sun millions of dollars.

“On the flip side, our suit points out that Sun’s ZFS appears to infringe several of NetApp’s WAFL patents. It looks like ZFS was a conscious reimplementation of our WAFL file system, with little regard to intellectual property rights.”

Obviously, Sun disputes NetApp’s claims. It says NetApp approached it looking to acquire the patents at issue in the case, but later decided to try to have them invalidated instead. In a post to his own blog, Sun CEO Jonathan Schwartz described NetApp’s lawsuit as an attack on the open-source community.
“First, Sun did not approach NetApps about licensing any of Sun’s patents and never filed complaints against NetApps or demanded anything,” Schwartz wrote. “NetApps first approached StorageTek behind the cover of a third-party intermediary (yes, it sounds weird, doesn’t it?) seeking to purchase STK patents. After Sun acquired STK, we were not willing to sell the patents. We’ve always been willing to license them. But instead of engaging in licensing discussions, NetApp decided to file a suit to invalidate them. To be clear, we never filed a complaint or threatened to do so, nor did anyone, to the best of my knowledge, in the ZFS community.”

Note: John Paczkowski is on vacation and won’t be writing or posting videos until he returns Monday, Aug. 27.

To keep you abreast of tech news while he’s away, we’re compiling a daily digest of 10 must-read tech stories. We’re calling it the Tech 10 and it will appear in Digital Daily.

1. Dell says it will restate financial results after an internal audit finds evidence of irregularities going back several years. The adjustment will reduce the company’s profit by $50 million to $150 million.



2. Though some Skype users report being able to log on after a major outage yesterday, many users of the VOIP service remain in connectivity limbo as the company struggles to resolve what is presumed to be a software problem.
3. Despite the lingering hangover from its board-leak counterintelligence scandal, Hewlett-Packard reports robust third-quarter earnings, based largely on lower computer-component costs.
4. Computer rivals IBM and Sun Microsystems will collaborate on server technologies. The move means Sun’s Solaris operating system will be able to run on Big Blue’s servers.
5. Sprint announces it will spend $5 billion on its upcoming WiMax service dubbed (somewhat unpronounceably) “Xohm.”
6. Crying patent infringement, Nokia wants U.S. authorities to halt imports of Qualcomm’s chips and the cellphones they’re used in. The world’s largest cellphone maker is in a legal fray with Qualcomm since a deal over patents expired on April 9. Meanwhile, Nokia has warned its handset users that defective batteries pose a potential danger, offering to replace them in a voluntary program.
7. Strong sales of its Mac and iPhone are giving Apple renewed momentum, says RBC Capital’s Mike Abramsky, who maintains that shares of the computer-maker’s stock could eventually hit $175.
8. MTV Networks will pump $500 million into video-game development based on the network’s range of shows over the next two years. The investment comes as the traditional media company attempts to gain a toehold in the $30 billion global games market.
9. It looks like there’s upheaval at Technorati. The blog-search service is reportedly laying off eight people, and CEO David Sifry is resigning.



10. Today marks the 25th anniversary of the compact disc, the format that triggered a revolution in the recording industry and one that remains the principal means for consumers to listen to music, despite the growing popularity of digital downloading.

–posted by Associate Editor John Sullivan

Value is returning to the desktop applications, and not simply through Windows Vista, but in the form of applications that are network service platforms. From the obvious, to music-sharing clients and development tools, there’s a resurgence of interest in resident software that executes on your desktop, yet connects to network services. Without a browser. Like Skype. Or Qnext. Or Google Earth. And Java? OpenOffice and StarOffice? If I were a betting man, I’d bet the world was about to change.”

–Sun CEO Jonathan Schwartz, Oct. 1, 2005

It’s been nearly two years since Sun and Google announced their “historic” partnership–“The Great Anticlimax of 2005,” as we like to refer to it around here–a union that some believed would push the Information Age off the desktop and onto the Internet. As it happened, the only thing the partnership pushed off the desktop and onto the Internet was a yawner of a press release announcing that the Google Toolbar would henceforth be available as a Java Runtime Environment download option.

But it was a first step. And now we’re finally seeing the second, which is quite a bit more substantial. Google has added Sun’s StarOffice productivity suite to Google Pack, its collection of free software applications. Now typically, the addition of a new app to Google Pack wouldn’t be particularly noteworthy. But StarOffice is a direct competitor to Microsoft Office; it’s a full suite of desktop-based office apps (and tools for Microsoft Office migration) that normally retails for $70.

And Google is reportedly paying Sun to offer it for free.

And it’s doing so at a time when many PC users are mulling an upgrade to Microsoft Office 2007. Which would seem to suggest that it does indeed have designs on Microsoft’s hugely profitable Office business, despite its “We are not in this to get Microsoft” protestations.

Let’s face it: Google probably knows more about us than the National Security Agency ever will. Over the years it has amassed a staggering amount of user data–search queries, email records, social networks, purchase histories and the like.

And now it’s adding voice data. Or rather, more voice data than what it’s already collecting with Google 411. This morning, Google announced its plans to buy GrandCentral Communications, making the universal phone service its 12th purchase in six months. No terms were disclosed; though GrandCentral reportedly fetched a bit north of $50 million.

“GrandCentral offers many features that complement the phone services you already use. If you have multiple phone numbers (e.g., home, work, cell), you get one phone number that you can set to ring all, some, or none of your phones, based on who’s calling,” Google product manager Wesley Chan wrote in the Google Blog. “This way, your phone number is tied to you, and not your location or job. The service also gives you one central voice mailbox. You can listen to your voice mails online or from any phone, forward them to anybody, add the caller to your address book, block a caller as spam, and a lot more. You can even listen in on voice mail messages from your phone while they are being recorded, or switch a call from your cellphone to your desk phone and back again. All in all, you’ll have a lot more control over your phones.”

And Google will have a lot more control over your voice data, which it will presumably harvest for future use in voice search applications, something it’s already doing with Google 411. From Google’s 411 Privacy Policy: “We also collect and store a copy of the voice commands you make to the service, so we can audit, evaluate and improve the voice-recognition capabilities of the service.”

What was it Sun Microsystems Chairman Scott McNealy once said? “You have zero privacy anyway. Get over it.”