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October 29, 1996

Sun Offering a Lower-Cost Network Computer

By STEVE LOHR

The effort to convince corporate America that the cost of computing can be drastically reduced will begin in earnest Tuesday, as Sun Microsystems Inc. announces its strategy for the so-called network computer.

The network computer is being marketed as a low-cost alternative to the personal computer. Sun's entry, called the Javastation, is priced at $742 for a basic model, and $995 with a computer keyboard, mouse and 14-inch color monitor. Later this week Oracle Corp. is expected to announce its network computer products.

They join IBM, which announced its network computer last month.

Until recently, Microsoft Corp. and Intel Corp., the dominant suppliers of personal-computer technology, had attacked the idea of the network computer as a throwback to the mainframe era, when computing power and information were centrally controlled.

But on Monday, trying to derail their rivals' network-computer drive, Microsoft and Intel announced that they would develop their own specifications for network computers closer to conventional PCs -- a set of standards called the NetPC.

To Sun, Oracle and IBM the network computer is something quite different. They, along with Netscape Communications Corp. and Apple Computer Inc., two other competitors of Microsoft and Intel, have agreed to technical standards that allow their machines to run on various chips and operating systems.

Clearly, Sun and its allies view the network computer as a means to loosen the lucrative grip of Microsoft and Intel. In characteristic style, Scott McNealy, Sun's chief executive, described the opportunity afforded by the network computer as being "to kill Microsoft -- that's the top priority for all of us."

In the network computing field, Sun is trying to capitalize on the corporate attention and interest for Java, its Internet programming language. Java enables companies to write small programs that can travel over the Internet or across private networks, called intranets, to handle all kinds of computing chores.

Sun has widely licensed its Java software, hoping as many companies as possible will use it to write tailored programs. And like other companies producing network computers, it will not make a lot of money on the low-cost machines.

"Any company can make a network computer," McNealy said. "It is the software and services to make all this work that is really the business opportunity."

In the network computing model, most of the information and programs that users need is stored in central computers, known as servers. Both Sun and IBM make servers and software, while Oracle is the leader in data-base software.

"The network computer itself is just the tip of the iceberg," said Phil Hester, vice president of network computing at IBM.

The corporate dissatisfaction with personal computers stems from their high total cost, including the costs of maintenance and help. The total five-year cost of owning a personal computer is estimated at $39,000 by the Gartner Group, a research company. Network computer makers say their less complex machines, linked to a network, can save companies up to 60 percent.

Still, the early market for network computers is expected to be as replacements, not for PCs but for some of the more than 30 million simple terminals linked to mainframes and minicomputers.

Since spring, about two dozen concerns have been using Sun network computers. On Tuesday, at a conference in New York, several companies will demonstrate how they are using the Sun machines and Java programs.


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