Sun and Google’s Partnership Potential
By Charlene Li
After all of the hype over the past day, the actual announcement between Sun and Google was pretty subdued. Here’s what they will work together on:
1) Google Toolbar will be distributed with Java Run Time (JRT) downloads from http://java.com. Sun reported that they get about 20 million downloads of JRT a month.
2) Google and Sun will also “explore” distributing Google Toolbar with downloads of OpenOffice (available at Openoffice.org), which has had 50 million downloads in the past year or so.
Now here is our take on it – and for this, I drew on the considerable expertise of my colleague, John Rymer.
First, JRT is used in many consumer applications, especially in music and entertainment. The fact that Windows does not ship with JRT means that each time consumers try to initiate an application that uses Java, it checks to make sure that it has the latest version. If not, the app directs the user to java.com for the download. Voila! You’ll get Google Toolbar as one of the things to download. And we understand that the Toolbar download will be “opt-out” meaning that the default will be to download Toolbar and that users have to take decline the download. Depending on how it’s actually implemented, it’s a fairly aggressive stance to take. What’s interesting is that Google will be *paying* Sun for those Toolbar downloads. It’s not clear how much, but the value is definitely flowing in Google’s direction here, so they have to pay up.
Second, is the “explore” option of attaching Toolbar to OpenOffice. John and I suspect that the reason they didn’t come right out and say that Toolbar would also be downloaded with OpenOffice is because they haven’t reached an agreement yet on how much Google should be paying Sun – or vice versa. This is because value flows in both directions in such an agreement. Google wins with OpenOffice distribution concentrated primarily in China and India, markets Google is eager to penetrate. Sun wins as its downloads have been primarily targeting techies and could benefit from further exposure and distribution to Google’s vast legions of loyal search consumers. For these reasons, we believe that there are probably more detailed conversations that need to be worked out.
Third, there’s an unspoken opportunity here for Sun’s core business – selling hardware. Google has built thousands of its own servers and is one of the biggest users of Linux. We believe that at some point, Google will be under pressure to finally outsource that server manufacturing to someone like Sun. That was probably some of the logic that drove Sun's stock price up 6.5% on Monday.
Lastly, you gotta wonder about the possibilities of the largest search engine teaming up with the largest proponent of open source. Google is eager to offer non-Windows non-Microsoft Office options that it can be a part of, while Sun needs that strong, consumer distribution to move the open source revolution out of the enterprise. I'm looking forward to Sun COO Jonathan Schwartz's speech on Thursday at Web 2.0.