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Sun to expand unusual pricing model

After being promoted to the No. 2 job at Sun Microsystems, Jonathan Schwartz begins spreading his unconventional pricing plans from the software group to the rest of the company.

After being promoted to the No. 2 job at Sun Microsystems, Jonathan Schwartz has begun spreading his unusual pricing plans from the software group to the rest of the company.

Schwartz, in his previous job as head of Sun's software group, introduced pricing plans by which a customer could use as much of Sun's server or desktop software as it wanted, paying according to how many employees it had. On Tuesday in Shanghai, China, the company announced similarly unconventional schemes for storage and services in the midst of many other quarterly announcements.

In the case of storage, the company will sell customers access to a top-end StorEdge 9980 system, operated and owned by Sun, for $1.95 per gigabyte per month for a three-year subscription commitment. The price includes storage management software and support services and increases by $1.50 for better management or $2 for a mirror-image storage system.

In the case of services, Sun will sell a collection of more than 100 services designed to improve operations of a company's data center. In a twist, though, Sun will audit the data center continuously, and the healthier it is, the less Sun will charge for the subscription.

"We're beginning to put some meat on the bones of the strategy around using both technology and economics to drive disruptive innovation in the enterprise," Schwartz said in an interview.

The moves come as the Santa Clara, Calif.-based company tries to recover some of the strength it had in the late 1990s, when customers were willing to pay premium prices for its high-end networked computers, called servers. Since those glory days, Sun has had three massive rounds of layoffs and continues to lose server market share, even though the market has resumed growing.

Sun now is remaking itself. It has buried the hatchet with Microsoft--partly, at least. It continues to push its own UltraSparc-based servers, but the company now sells models with "x86" processors from Advanced Micro Devices and Intel. Sun appointed new executives to manage its top server products. And it's hoping to establish a more steady revenue stream through product-service combinations that customers subscribe to rather than buy outright with one-time payments.

The changes are designed to let Sun, which for years has profited from high-end gear, adapt to a computing world dominated by good-enough technology such as Intel processors and the Linux operating system.

"There will be perpetual demand for computing infrastructure...The largest companies in the world are those that supply universal and perpetual demand for commodities," Schwartz said.

Also at Tuesday's Sun show in Shanghai, Sun launched the second version of its Java Desktop System, incorporating the Linux operating system and higher-level software for personal computers, as expected.

Sun is also launching per-citizen pricing for its Java Enterprise System server software. While the company had committed to the idea earlier, it now has begun selling it according to population and how the United Nations ranks countries as more, less or least developed. Countries with larger populations and lower development pay less per citizen.

"Governments--when delivering driver's licenses, health care or fishing permits--tend to serve massive marketplaces," Schwartz said.

Under Sun's pricing, Mexico, a less-developed country with a population of 100 million, would get to use as much Java Enterprise System software as it wants for a charge of 81 cents per citizen per year. Nations classified as "least developed" pay between 33 cents and 75 cents per citizen, while "less developed" nations pay between 33 cents and $1.95 per citizen, spokesman Russ Castronovo said.

The company will also unveil:

• Several "reference architectures," collections of servers and software geared for specific tasks, including a portal with e-mail and calendar services; a foundation for Oracle 10g database to run business accounting software; an intrusion detection system to guard against network break-ins; and a VoIP (voice over Internet Protocol) phone system using Lucent technology.

• A new four-processor UltraSparc server, the Netra 440 that's been "ruggedized" to withstand the difficult conditions such as those faced by military customers.

• Server software for companies to manage data from RFID (radio frequency identification) tags.

• The Dynamic File System, which vastly increases the amount of storage space Solaris can use, will ship with version 10 of Solaris. That operating system upgrade is due by the end of the year.

• Improvements to the Java Enterprise System, plus other server software for managing the identity and permitted activities of computers and computer users.

• The N1 Grid Console, which lets administrators control and monitor semi-independent Solaris subdivisions, called N1 Grid Containers, on a single server.

• The Java Education and Learning Community, a committee that will study computer infrastructure for schools and share its findings on Sun's Java.net Web site.