• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Google, Sun Make 'Big Deal' Together

Posted on: Wednesday, 5 October 2005, 06:00 CDT

By Michelle Kessler and Byron Acohido

MOUNTAIN VIEW, Calif. -- Silicon Valley giants Sun Microsystems and Google announced a partnership Tuesday that could be the first step in an assault against Microsoft.

The specific plans of the computer maker and the search engine giant remain unclear, however. At a press conference, Sun CEO Scott McNealy and Google CEO Eric Schmidt made only vague announcements.

What is known: Google is buying computers from Sun. Sun is buying ads from Google. And the companies are bundling Google's Toolbar and Sun's Java, both pieces of free software designed to improve the Web-surfing experience. Terms of the deals were not disclosed.

That didn't wow tech analysts. "We were all expecting a little bit more," says independent technology analyst Rob Enderle.

But Enderle and others say the partnership could get interesting if Sun and Google combine their might to take on Microsoft, which has a seemingly unshakeable 90% market share of desktop software.

Both Sun and Google have long been interested in delivering applications via the Web. Programs sent that way, such as Google's Gmail e-mail system, can be accessed by any connected PC.

If the two create Web-based word processing, spreadsheet or other programs similar to Microsoft's popular Office suite, they could chip away at its dominance, tech analysts say. "Google could open a crack in Microsoft's Office armor that is likely to be hurtful, though not fatal," says Charles King, principal analyst at Pund-IT Research.

McNealy ducked questions about Microsoft but touted the partnership as "natural" and "a big deal."

That was enough to boost Sun shares slightly Tuesday, allowing the stock to hang on to a 7% gain it posted Monday on rumors of the news. Microsoft shares fell 2%.

But it is far from certain that Microsoft is at risk. Google is focusing on communications projects, such as Wi-Fi, not desktop software, Enderle says. Troubled Sun has spent the past four years trying to recover from the dot-com bust.

And Microsoft is a formidable foe. It has spent billions on online offerings, such as the MSN portal and Xbox Live gaming service. And it is one of the best consumer-marketing companies in tech.

"We certainly see where this strategic relationship could benefit over time," says equity analyst Brent Bracelin at Pacific Crest Securities.

"But the near-term implications don't look that meaningful."

Acohido reported from Seattle.

(c) Copyright 2005 USA TODAY, a division of Gannett Co. Inc.

Source: USA TODAY

More News in this Category