Sun Microsystem chairman bullish on firm's fortunes despite crisis

Dubai: The last time Scott McNealy came to Dubai was 13 years ago. On Sunday, the chairman and former CEO of Sun Microsystems returned to the city to give a keynote speech on the opening day of Gitex 2008.

"It's been too long since I've been here," he said. "The emerging markets hadn't woken up at that time."

Following his keynote McNealy sat down with Gulf News to talk about how Sun is doing during the current economic crisis.

Even though McNealy recognised the economic situation - "there is no question that the US is in a recession, he says - he is still confident about growth in the region and the company's clients. "Some of our biggest clients are governments," he says, "and governments never get smaller."

And while trying to predict how the current global economic credit crisis will play out is difficult to predict, McNealy says he isn't worried about cash, either.

"We don't need money," he says. "We have cash reserves of $5.3 billion."

Being in that position means, McNealy says, Sun is not planning on cutting back on the nearly $2 billion a year it spends on research and development.

Open source platform

"We'll do everything we can do to protect R&D," he said. That means there will be no slowdown in chip production, he said, adding it takes decades to develop really good chip fabrication facilities.

And despite the crisis, McNealy is as supportive of his company's open source platform as ever. Open sourcing is the business strategy of giving away software for free and allowing companies to modify it, with few restrictions. Sun then makes money charging service fees to support the software. A number of companies, such as Microsoft and Apple, have refused to offer open source products and argued against the strategy.

McNealy, on the other hand, points to a large number of industries, including encyclopedia publishers and media companies, who have failed to successfully compete with the open source models of Wikipedia and Google

"It's called the roach motel strategy," he says. "Clients check in but they never check out."

And while McNealy says the jury is still out - long term - on how well open sourcing works as a business strategy, McNealy is so supportive of the idea that he has even used it to take on the publishers by starting a online site for k-12 textbooks, called Curriki.org.

"Do you know how much the US pays on K-12 school books every year? $4.3 billion. So why are they spending $130 on a third grade math text books?"

He said taking the open source model allows "the real value to come out."