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Bret Busby
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Sun buying Microsoft Office competitor 
      By Stephen Shankland
      Staff Writer, CNET News.com
      August 20, 1999, 1:30 p.m. PT 

      Sun Microsystems is finalizing a deal to buy Star Division, a maker of a
software suite similar to
      Microsoft Office, and it appears that it is off on a second attempt for
desktop glory.

      A deal to purchase Star Division was signed August 11, and an announcement
is expected August 31,
      sources familiar with the plan said. Star Division makes two types of its
StarOffice software, one type
      that runs on Linux, Solaris, Windows, OS2, and Mac OS, and the other, a
thin client version of the
      software that runs on Java-enabled devices. The purchase price for Star is
unknown at present. 

                              Assuming the deal doesn't go awry, the acquisition
of the German
                              company would put Sun into more direct competition
with longtime
                              foe Microsoft. Microsoft's office suite is
dominant on computers
                              running Windows and Mac OS, whereas Sun's strength
has been
                              not with end-user software but with server
hardware and software.

                              The deal would also lay important groundwork for a
second attempt
                              by Sun to get back into desktop computing. On
September 8, Sun is
                              slated to unveil a new line of "thin client"
desktops which are similar
                              but more robust than its ill-fated Javastation,
according to sources.
                              Star Division's software would essentially give
Sun the applications
                              that would make these desktops more attractive and
useful.
                              Currently, Sun makes workstations but not desktop
computing units
                              intended for office workers. 

                              StarOffice, available as a free download over the
Web for personal
                              use, includes a word processor, spreadsheet,
graphics editor,
                              desktop database, presentation program, and
calendar. Sun uses
                              StarOffice internally and in November entered into
an alliance with
                              Star Division to promote its software for the
education market
                              along with Sun's Solaris operating system. 

      A Sun acquisition of Star Division makes sense for Sun on two fronts,
industry observers said. First, it
      bolsters non-Microsoft operating systems, because it puts financial and
marketing muscle behind
      applications for alternative OSes. Second, it furthers Sun's effort to
support its computing model based
      on powerful centralized servers accessed by stripped-down "thin clients." 

      Microsoft's dominance in Office software is secure at present, said Phil
Rueppel, a financial analyst at
      Deutsche Bank Alex. Brown. "I don't think Star software is going to pose
too much of an issue for the
      office-suite success Microsoft has had," he said. "But it does provide
more and more functionality to the
      alternative to the Microsoft architecture." 

      A Sun spokesperson declined to comment on the deal. Star Division
representatives did not return
      phone calls. 

      Star Division was founded in 1985 in Hamburg, Germany, but moved its
headquarters to Fremont,
      California, in March 1998, the company said. The company had said in
earlier news releases that it
      planned to begin selling stock publicly in 1999, but it omitted mention of
that plan in more recent
      releases. 

      The thin client connection
      The Star Division announcement will dovetail with Sun's rollout of its
next-generation thin client,
      code-named Corona, expected September 8 at Sun's Enterprise Computing
Forum, sources said. 

      The deal gives Sun software that could fill what analysts said was the
biggest gap with its first attempt to
      promote thin clients, namely, smoothly functioning applications. In July,
Sun's chief operating officer Ed
      Zander acknowledged that the company's first attempt at thin clients years
ago wasn't good enough and
      said it was refreshing its effort. 

      "Sun has always been a proponent of server-centric computing. What has
always gotten in the way...has
      been a lack of compatible applications," said International Data
Corporation analyst Dan Kusnetzky.
      Kusnetzky said adding better client software could help Sun spread the
thin client plan into new markets. 

      Thin clients are desktop computers, such as the Javastation or the "NC,"
that hand off storage and many
      computing tasks to powerful servers. Thin client computing cuts down many
of the costs associated with
      managing large networks of computers. Nonetheless, the concept has yet to
catch fire with buyers. 

      Another company betting on thin clients is GraphOn, which sells software
that can turn ordinary office
      applications such as Corel WordPerfect into software that runs on a server
for thin clients to access. 

      But after losing round one of the thin client push, Sun will have a harder
sell the next time around,
      Reuppel said. "The popular momentum and excitement about thin clients is
certainly passed. Now real
      benefits have to be demonstrated before customers adopt it," Rueppel said.
"There's a long way to go." 

      The appeal of thin clients is that companies wouldn't need to spend as
much on computer administrators,
      because such computers are centrally controlled and not very complex,
Kusnetzky said. Nonetheless, that
      advantage has been shaved by declining PC prices and improvements in PC
management over the past
      two years. 

      Will Sun keep all Star software?
      The biggest question raised by the acquisition is what will happen with
the Windows and Linux versions
      of the software. 

      On the one hand, Sun isn't known for advocating Windows software, although
some Java and
      Sun-Netscape Alliance products work on Windows. On the other hand, an
office suite that
      works the same on many different computers would be a useful feature for
companies
      considering adding non-Windows systems into their networks. 

      Sun has recognized the ubiquity of Microsoft Office, offering add-in cards
that let Sun
      computers also run Windows and its software, points out Technology
Business Research analyst
      Joe Ferlazzo. 

      Linux is another question mark. While Sun and others are happy with Linux,
Kusnetzky said it
      appears Sun is ambivalent about the upstart Unix clone. 

      "I'm not sure that Sun has the interests of the Linux community at heart,
except to convince
      them that there's some level of compatibility between the Linux and
Solaris community,"
      Kusnetzky said. "My sense is sun is trying to position themselves as
Linux's big brother. When
      you outgrow Linux, come to us, and we'll make it all work." 

      Rueppel says Sun seems to be of two minds about Linux. "Sun publicly
endorses the
      open-source software model, but they still want people to purchase
licenses of Solaris," Sun's
      Unix operating system. "The debate runs far and wide within Sun." 

      Department of Justice
      Observers suspected Microsoft was likely to try to raise the issue to its
advantage in its trial with
      the Justice Department. 

      But Rueppel didn't think the Star Division acquisition is relevant to the
case. "Microsoft does
      have a case that there is competition, but the DOJ issue is much broader.
It's about the tactics
      Microsoft used to allegedly stifle competition," he said. 
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