SAN FRANCISCO--Jonathan Schwartz, Sun Microsystems' outspoken president and chief operating officer, is a big fan of subscriptions. Sell a product as a subscription and you won't get as much money up front, but you'll get a series of payments stretching as far into the future as you can convince your customer it's worth paying.
Sun sells subscriptions for its Java Enterprise System server software and Solaris operating system, but a favored Schwartz illustration of the power of subscriptions is giving away cell phones then selling phone service.
Next up: cars. General Motors sells a subscription service called OnStar that provides navigation and emergency assistance for $19 per month. Schwartz said he asked a GM competitor how much it would have to charge to be able to give away a car for free.
"They very quickly responded, '$220.' The reason they answered so quickly is they had already done the analysis," Schwartz said during a speech at the Open Source Business Conference here this week. New communication and entertainment services such as streaming video piped into car computers could lead to this goal, he said.
Eventually, Schwartz said, he believes cars will be given for free, at least as long as you overlook the subscription costs. It's a stretch, but so was the idea of free cell phones not long ago. "Ten years ago, would you expect someone to give a huge brick portable handset away for free? No," he said.