From Business Week (cover story):
McNealy has a plan, one that he says will lift Sun not only back to profits but to the apex of the Information Economy. At the heart of the plan is Sun’s classic franchise: heavy research and top-of-the-line computer systems. In a world of specialty players, Sun is a rare bird that designs its own chips and writes its own server software and computer chips. And McNealy’s sticking to his integrated model. He’s pouring research dollars into network software. His goal, stunningly ambitious, is to have Sun servers and Sun software running superefficient networks of the future–marvels that run virtually free of human attention.
At the heart of McNealy’s vision is an ambitious software project called N1. Sun’s software developers have been working on the technology for two years, tucked away in a space-age data center at Sun’s Sunnyvale (Calif.) facility. The idea is to create vast networks in which the software administers itself. If one computer runs out of memory, the software seeks spare capacity elsewhere on the network. If the software develops a glitch, the program itself will work to fix it, without calling on costly human administrators. Sun will be releasing the first components of the program by the end of the year.
The trouble is, McNealy must invest heavily in N1 just to stay in step with competitors. IBM and HP are hard at work on very similar systems. On Oct. 30, IBM CEO Samuel J. Palmisano told customers that he was betting the future of his company on a vast, N1-type project called “on-demand computing.” He’s investing billions to develop new products and will spend $800 million on the marketing. And although HP CEO Carleton S. Fiorina keeps it quiet, HP’s version of N1, called Utility Data Center, already has 450 engineers behind it and 10 customers in pilot projects.