Q&A With Sun Microsystems CEO Scott McNealy

If Sun CEO Scott McNealy pulls off the comeback he expects to, he'll unquestionably complete the biggest turnaround in IT since Steve Jobs rallied Apple. That's both a testament to how hard McNealy is pushing and, alas, how far his company has fallen.

Ever the crafty veteran, McNealy knows he cannot pull off this mission alone. So he's reaching out like never before. That includes to guys like yours truly, who've done their level best to make his life as challenging as possible. In a one-on-one interview and subsequent e-mail conversation, McNealy makes his case about why Sun will rise again. For more, go online to varbusiness.com.

VB: The [low-cost] pricing model for software unveiled by Sun truly is revolutionary for customers, but what about partners? How can they make money in a world where key products are priced at 100 bucks a head?
McNealy: First of all, we are really trying to create a market opportunity for the channel to go after the small to [midsize] enterprise. So, Sun sales reps are not allowed to take an order for the Java Enterprise Server stack for any companies with 1,000 or fewer employees. That's a channel market and a channel-only market. And the channel is allowed to sell directly into larger corporations. Furthermore, we'll still pay our sales reps 120 percent of commission if the channel takes the order as opposed to us. So, I don't know of any more channel-friendly, channel-focused program than that one.

VB: Drill down on that. The 1,000-employee-customer threshold you're talking about is much lower than what your worldwide sales force currently calls on.
McNealy: Right.

VB: Well, is there something that partners should be aware of? Are they more likely to see your guys knocking on doors of smaller customers?
McNealy: No, no. That's because I'm not allowing more head count in the field.VB: Hmm, all right...

McNealy: Look, unless my salespeople can find a new drug that keeps them awake all night, [they're going to have to work with partners]. But you know what? That's not going to happen...

VB: How do you create significant new value for customers without undermining the business practices of consulting partners?
McNealy: Partners do three basic activities: One, they integrate the systems' jalopy and infrastructure. Well, we think that's our job. The second thing they do is business process re-engineering and application integration. The third piece is hosting and service provisioning and utility provisioning. So two out of the three things that have typically been done by the channel we think ought to continue.

Vital Stats

Age: 48

Year Joined Company: 1982 (co-founder)
Education: B.A., economics, Harvard; M.B.A., Stanford
Outside Board Seats: None
Previous Corporate Positions: None
2003 Compensation: $100,000 in salary, plus 1 million shares exercised at $3.70 each