Google, Sun Partner Up

Sun Microsystems (Nasdaq: JAVA) and Google (Nasdaq: GOOG) Tuesday announced a multi-year deal to promote each other's software, a deal seen by many as the possible groundwork for a direct attack on Microsoft's (Nasdaq: MSFT) market dominance in the desktop productivity software space.

Under the terms, financial terms of which were not disclosed, Google will make Sun's Java Runtime Environment technology available along with downloads of its Google toolbar and Google toolbar will be bundled into Java downloads available directly from Sun. Google will also promote the OpenOffice.org platform, though exactly how was not disclosed.

The desktop version of Java is necessary to enable PCs to run applications written in the language, including OpenOffice and other Sun products, many of which are available for free.

Analysts said the longer-term implications may be the most important: Having Java on their desktops will in turn make it easier for users to download and use the OpenOffice platform, Sun's open-source answer to Microsoft's dominant Office productivity suite. And because it is a programming environment, spreading Java in conjunction with Google's toolbar could lead to more applications built to work with both.

"Working with Google will make our technologies more available more broadly, increase options for users, lower barriers and expand participation worldwide," said Sun CEO Scott McNealy.

Google CEO Eric Schmidt said the vast market that Java reaches, which includes millions of mobile devices as well as desktop computers will mesh well with the toolbar.

"Toolbar users are more sophisticated, use advertisers in more sophisticated ways," Schmidt said. That in turn leads to more opportunities to monetize the toolbar usage through advertising and other means.

"Google and Java are two of the most widely recognized technology brands because they provide users with online tools that enhance their lives on a day to day basis," Schmidt added. "We look forward to exploring other areas of collaboration."

Scratching Each Others' Backs

Though they did not disclose the structure of the deal, McNealy said there would be "a lot of money flowing both ways if we do this right."

Before the announcement, the two companies sparked a spasm of speculation about what they might unveil at the press event, with most predictions focusing on something that would take direct aim at Microsoft. One idea floated was for a Google-branded version of the open office suite, that could be downloaded along with other Google tools, but the real partnership stops well short of that level of collaboration -- at least so far.

While fielding press questions, McNealy dodged a query about whether the Google partnership was about battling Microsoft.

"It's giving the customer choice," he said. "There are lots of choices out there."

McNealy and Schmidt also resisted questions about the future of the alliance between the two companies, which may only have led to more speculation about the eventual end game and whether it will include more direct runs at Microsoft.

"Why Google would want to poke Microsoft in the eye is beyond me," search analyst and Google book author John Battelle wrote in his blog.

Hardly Significant

Cherry Hill Research president and former Merrill Lynch (NYSE: MER) Internet analyst Henry Blodget described the Sun-Google announcement in his blog as a "non-event" and said it should be a relief to Google fans that the search firm isn't trying to topple Microsoft.

"Free or nearly free office suites have been available for years, and, on its face, [this] partnership will merely make one of them more available," Blodget wrote. Such suites are "likely to appeal to only a tiny segment of the office productivity market--mainly consumers working at home who don't mind using a stripped down product--and no distribution deal is likely to change this."

Blodget believes Google would be foolish to try and fight Microsoft on its own tuft, especially when it already has a comfortable lead on it in the Internet search space. "Microsoft's best chance to win with MSN is to merge it with AOL and spin it off," he said. "This would be extraordinarily challenging, and it would not guarantee success: the merged company would still run third behind Google and Yahoo."

Google and Sun are hardly strangers. In addition to Google having a number of former Sun engineers on its staff, the two also shared early stage investors. And Google's CEO, Schmidt, was a longtime Sun employee.

The timing may be good for Sun, which is riding some momentum as far as public support for its open approach to the document production and management arena. The Commonwealth of Massachusetts recently announced plans to shift away from the proprietary Microsoft Office to an open-source friendly approach and is requiring agencies to employ StarOffice or other programs that allow more interoperability.