22:17:57 on 10-5-2004   http://pasta.cantbedone.org
SarbOx emerges. Mergers and acquisitions occur. I've got interoperability requirements across businesses. I've got be
 to be able to attest to them. I've got to be 404 compliant. I don't know how to do that. Can you help me? And these
 are all things that had nothing to do with what we were doing, in all honesty, in the year 2000 - 2001. We were too
 busy growing. And so what ended up happening is you gave us basically a shopping list. And this was what was on the
 shopping list. I want to you ensure that Solaris runs on non-SPARC platforms. Please make it available wherever I have
 bought machines, because I've got machines laying foul, I want to put an OS on them, and I love your OS, love Solaris.
 But it it's got to come unlocked from SPARC. Second thing, industry standard hardware, X 86 systems. I got a lot of
 it. I need you to run your infrastructure there. I'd also like to you start innovating there, because it is just a
 fact of life and price performance on a 1-way box is different in that world than on a SPARC box. And you all have
 got to understand that and got to figure out how to innovate.Third on the list, would you stop being an island? Your
 rhetoric is of a company that views itself as an island. You've been isolated. And our businesses are fundamentally
 not isolated. They used to be. They're not anymore. We've got to talk to other people. We've got to interoperate in
 mixed environments. We've got to deal with legacies. Sorry, they exist. We can't walk away from them. JONATHAN SCHWARTZ,
 PRESIDENT & COO, SUN MICROSYSTEMS: Good morning, everybody. And next time I think we will get a bigger room. But thank
 you all for coming. It's much appreciated. What I would like to do is spend about an hour talking to you about some
 of the changes that are going on inside Sun. Why we're driving some of those changes. And moreover, bring you a little
 bit back to the future. And the way I want to start that is by reminding everybody here of a couple of things. One,
 you may not know what SUNW stands for, but it stands for Stanford University Network Work Station. And the history
 of that workstation is an interesting one. And as I say with all due affection, Wall Street is the swamp from which
 we spawned. And just to give you an idea of what that history is, this is it. This is the first workstation that we
 ever delivered. This is called the A100. And for those of you that don't remember this history, let me give you some
 details. It was built with off-the-shelf parts, and irony of ironies, with an open source operating system.

And what happened with that? History 101, we were born here, because a lot of folks on Wall Street took that workstation,
 took the monitor of it, stacked the little CPUs, one atop one another, which gave us a problem of having to learn how
 to write an operating system that spanned over multiple CPUs. Thus a server business began. So we know full well that
 - little devil there by the way is BSD, from pre-BSD - and Sun equaled systems innovation. We brought together components,
 we actually ended up combining technologies based on volumes in the industry to go deliver disruptive innovation to
 the marketplace. Wall Street really responded. Why? Because, if there is one industry on earth for whom IT matters,
 it's Wall Street. Financial services community operates in a commodity market and delivers huge, huge returns based
 on technology as a competitive advantage. And so our history is actually with these companies, but all of these companies
 have different names today than they did 10 or 15 years ago, because there has been a little bit of consolidation going
 on. But this is the spawning grounds for Sun. And make no mistake, this is exactly the place where we believe we need
 to return, to understand where the next generation of IT innovation is going to occur and how folks want to spend money
 to go achieve the advantage of from it.

So just to give you a little bit of more modern history, you all remember these days? [Laughter ] And you know, NASDAQ
 5,000, that was a good time. And you know, I think all of us enjoyed it. And as I say, while the fish were jumping
 in the boat, we weren't worrying about where the boat was headed, and we were throwing the poles away and didn't care
 about the navigation map. Just sit back and let them jump in the boat. And growing 60% quarter-over-quarter was fabulous.
 And then what happened? Then this happened. Your world changed. People figured out that a sock puppet wasn't going
 to go reinvent the world. And business ethics, and compliance started becoming issues that people worried about. And
 9/11 didn't help. And all of a sudden, you had some new priorities that we needed to respond to. And those priorities
 weren't "give me the fastest systems possible." The priorities ended up being more like these priorities. I've got
 a budget crisis, my budget has been set back in the year 2001 to 1993. What can you do for me? All of a sudden, I've
 got competition I never even thought I would have. I am under incredible competitive pressure. My margins are declining.
 What you can do for me?

SarbOx emerges. Mergers and acquisitions occur. I've got interoperability requirements across businesses. I've got be
 to be able to attest to them. I've got to be 404 compliant. I don't know how to do that. Can you help me? And these
 are all things that had nothing to do with what we were doing, in all honesty, in the year 2000 - 2001. We were too
 busy growing. And so what ended up happening is you gave us basically a shopping list. And this was what was on the
 shopping list. I want to you ensure that Solaris runs on non-SPARC platforms. Please make it available wherever I have
 bought machines, because I've got machines laying foul, I want to put an OS on them, and I love your OS, love Solaris.
 But it it's got to come unlocked from SPARC. Second thing, industry standard hardware, X 86 systems. I got a lot of
 it. I need you to run your infrastructure there. I'd also like to you start innovating there, because it is just a
 fact of life and price performance on a 1-way box is different in that world than on a SPARC box. And you all have
 got to understand that and got to figure out how to innovate.

Third on the list, would you stop being an island? Your rhetoric is of a company that views itself as an island. You've
 been isolated. And our businesses are fundamentally not isolated. They used to be. They're not anymore. We've got to
 talk to other people. We've got to interoperate in mixed environments. We've got to deal with legacies. Sorry, they
 exist. We can't walk away from them. And that level of choice, not only needed to be a priority in R&D, it needed to
 be a priority in the culture of the Company. And then lastly on the list, you've got to get back to your roots. Because
 operating at, you know, nice big gross margins, on systems that aren't necessarily going to deliver price performance,
 is going to be a short-term phenomenon. And you've got to come back and prove that you can continue innovating. And
 so that machine is actually an interesting one, because when you spool forward and say these are the 4 things you asked
 for, what did we give you? Our shelves, in all honesty, were empty. We just didn't have much. So you came a knocking,
 and we didn't have much to deliver. And what did you do as a result? Many of you were very public and some very interesting
 media, in delivering messages that sounded a lot like this. And the one that was actually the easiest to fix, was the
 bottom one. We didn't listen. So what do we start doing? We started listening. What's a great way to get our attention?
 Direct your purchase orders to someone else. And guess what? And this is just a subsegment of some of our financial
 services customers, we declined year-over-year, for a few years. And then what happened? Well, look over there. 2003
 to 2004, all of a sudden, there is a light on the horizon. And it wasn't from a Sun setting. It is from a Sun rising.


And so what we've been doing for the past 3 years is getting back to our roots. And not our fashion from back then,
 not our haircuts from back then, but really returning to lots and lots of people who understand what it takes to run
 a business, who understand network work loads, who understand how to innovate with both off the shelf components as
 well as design components, to make sure that we can deliver real systems innovation to you. And what did that innovation
 have to look like? What are the real themes that drive this? Again, think back to who Sun was when we first delivered
 those workstations. It was innovation based on industry volumes. The volumes that were out there. Why? Because that
 means we can drive our costs down and therefore your costs down. Secondly, we had to be more open than open, and you
 know there is a lot of rhetoric in the marketplace right now about open source equals open standards. And you all now
 know that is not true. So we had to actually deliver open standards in open architectures that gave customers choice.
 That is what open is all about. Customers define open in my mind.

Thirdly, it's a quote from, I don't remember if it was BusinessWeek, it was a long, long, long time ago, 20 years ago.
 And they looked at Sun and said, "Sun is a Company that builds a Ferrari out of spare parts." We build massive performance
 engines out of things you can just buy out of the catalog, and increasingly we are looking at how we will reinvent
 our business that way, because we do not want to be in the business of designing lots of things that you just don't
 care about. And then lastly, the focus more than anything else in an era right now when lots and lots of people are
 talking about decomposing systems, and buying parts from this vendor and that vendor, and while we have some customers
 who I will tell you about in a minute that are in a very interesting way continuing to go, you know, build their own
 components and build their own parts, the value we can bring, is we can be the Systems Company. We can bring together
 the hardware and the networking and the storage and the software, and we can innovate more rapidly, because we focused
 on the real value-add, than saddling our business with a bunch of commodity parts that won't differentiate ourselves
 to you, and certainly won't differentiate ourselves against our competition. So to me, Sun is all about being a Systems
 Company. About being a Company that can leverage all of the parts to fundamentally differ -- deliver differentiable
 value to customers.

So back to our shopping list. Let's go blow through these quickly, because I want to get them behind us. Number one,
 would you please deliver Solaris on non-Sun platforms. We said good, last count, as of last night, 249 systems are
 now qualified to run Solaris on x86. So we had a dinner last night with about 20 CIOs from around Wall Street. And
 it was interesting, one of them said, "250 systems is great, it is probably too many, we only really want 4." And I
 said, "You know, it is nice that you only want 4 but the 4 you want are sadly, not the 4 that my Asian customers want."
 And so to any of you in this room care about ching wah tong thing(ph)? No, if you're in Asia you care about ching wah
 tong thing. So, we've got to have a lot of systems. Why? Because it's giving you a lot of choice. And we've got to
 learn how to make sure that we can support the OEMs who will support our operating system, so that you can ultimately
 buy any system you want, and run Solaris on it. That is the first part of unhooking the legacy of locking innovation
 into one box. Secondly, just because you make it available, doesn't necessarily mean your sales force is going to want
 to deliver it. And I will give you a perfect example of this. I was with a sales rep not too long ago, and with a CIO
 of another big investment bank, and the CIO was telling me, "Look I just bought 4,000 Dell servers. And so I can't
 use your stuff." And I said, "No, of course you can, we can run Solaris on your Dell systems." And we had a very good
 discussion about choice and competition and we left the room. And the sales rep took me aside and said, "What the hell
 are you doing? I'm not going to the get the revenue for that." So, what did we do? We went back and we changed the
 comp plan, and we said if one of our sales reps sells Solaris running on Dell, we will comp them as if he sold the
 Dell box, as if he sold the hardware. Why? Because it makes him neutral to you. You can look to them as having your
 best interest at heart, no matter what your hardware choice is. This is a fundamental culture shift in Sun.

And a fundamental culture shift in our finance organization that is figuring out how to adapt to this. But it represents
 an opportunity for us to reach more broadly into the marketplace. There are vastly more Solaris licenses in the world,
 than there are Sun systems running them delivered by Sun. Because they run on every other system out there, and we've
 got to learn how to use that as a competitive advantage and not think of that as a threat to Sun. Now, in addition
 to this, you know, there was always a question about Solaris performance. And the fact when John Fowler was in the
 software organization, he is now responsible for the Network Systems Group at Sun, he helped performance reviews of
 the Solaris team, called Slolaris performance reviews, to make sure the folks in the organization were appropriately
 motivated to get back and make sure we were delivering real breakthrough performance. Because at the end of the day,
 performance matters to you all, because throughput matters to you, because business results matter to you. And so we
 know that we had to get back to rewriting the fundamental infrastructure that allowed Solaris to run not well on a
 100-way system, and not just well on a 100-way system, but really well on a 1-way system and on a 2-way system because
 there are an awful lot of them in the world. And, so what I would like to do is invite up Miriam Soza, who is the Senior
 Vice President for Systems Development, to tell us a little bit about Thomson, and how she has been using Solaris on
 Opteron. Miriam, thanks for joining us today. Much appreciated. So, why don't you tell us a little bit about Thomson
 Financial?