Today at the National Press Club, one of the most influential figures in contemporary Information Technology, Scott McNealy. He is President of Sun Microsystems, among America's fastest growing computer companies. We take you now to the National Press Club in Canberra.
LAURIE WILSON:
Ladies and Gentlemen, welcome to today's National Press Club Telstra address and our guest today is Scott McNealy, President, CEO and one of the founders of Sun Microsystems. It will be a controversial address, I think today. I'll just mention that there was a photo of a certain gentleman hanging in our Boardroom today which, Scott remarked upon and if I thought today was going to be an interesting speech, then I certainly know it was after I saw his reaction to that particular gentleman, who was a guest here some years ago, on a similar but certainly not the same, subject. I'd like to mention at the outset that Scott will be having a special briefing after this luncheon with IT journalists and on that basis, what we are going to do today is actually open up, we are going to take the unusual step, because we normally don't do this, but open up today's lunch to our other guests here, our non-media members. So if you have a question which occurs to you, and I am sure you will, through the course of today's lunch, please don't hesitate to put your hand up after the lunch and after the address, and we will take that from you.
Scott McNealy, thank you for coming to the Club.
Scott McNealy:
Thank you. I am pretty excited to be here. It is my first trip here to Australia. I have to say that I was kind of surprised when I saw the picture of Darth Vader in there. I thought that was a fabricated character but, I probably will take a fairly controversial approach. I don't know if that is typical in Australia, but it is atypical in America. I am just not so normal that way, so. I also saw there Š there was some title about electronic commerce being a mouse click away Š or whatever. I seldom pay attention to any title of any talk that I give, so, if you want to hear about electronic commerce, ask a question later, because I am not sure I'll touch on that. Half of the people are going to leave now. I really don't know where to begin - how in thirty minutes to kind of explain where the computer business is going. I promise not to make a Sun sales pitch out of this, unlike some of my predecessors have done in the past. It is kind of an interesting moment in time. You have all heard about the internet and how the convergence and how deregulation of the, of the telephone industry and what's happening with entertainment and all of a sudden across one wire you are going to have dial tone, video tone, data and web tone and your cell tone - all of a sudden, the world is converging and you can't get away from the network any more. I mean, the phone now rings on your airplane seat. Does that bum you out? There is just no place to hide any more. It is creating a fairly interesting change in the balance of power in who's in charge and its changing a lot of industries in some fairly significant ways - for instance, education. All of sudden now the best professor, the best teacher, can now go on-line and do distance training and you don't have to use the best local teacher - you can use the best teacher.
The press is an interesting challenge and an interesting change. In the old days, publishers were in charge and I grew up in California. We had a fairly well-known publisher, known as William Randolph Hearst. This person happened to be very successful because they had huge printing presses, pulp mills, forests, delivery trucks and got a two hundred thousand users and were incredibly powerful. And the reporters had been in a lot of reporter's rooms, boy oh boy you have lousy digs. You know they were not important, right. You were just a content creator - so publishers were in charge. What has happened now at the internet is the authors are in charge. The content creators are becoming in charge and in fact what is happening, for instance in the computer industry, is a lot of the great authors are leaving their publishers and setting up shop on the internet. They set up a web page and do their own advertising or they create their own subscription list and charge a subscription fee. They're better editors and their more focused and I can get my better authors on-line, electronically, immediately, at speed as opposed to having to read my own clipping service by flipping through every other trade magazine out there. It is an interesting and quite significant change in the structure of that business.
Banking, obviously is going to get changed. Intermediaries are getting dis-intermediated. Do we really need to have a travel agent? Why can't I just click on Qantas, click on a couple of places on the map that I want to go to, see three pictures of an airplane that leave at different times, click on that airplane, see what seats are empty, pick a seat, tells me what it is, type in my credit card number and away we go. All of the technology is there to go do that. And I can actually see a video of the hotel lobby and the first tee of the golf course at the place that I want to go look at. All of that is available. All of that is totally capable.
Now we need some computer technology to get us to these environments that is easy, capable and all the rest of it. Excuse the history lesson, but there has really been three phases of the computer industry. We started off with mainframes and mini-computers that was the host-based computing era. Think of it as buses and trains - very large, centralised, leave on time, arrive late, you didn't own one personally, when there was a train wreck - you know, you would all run out and cover it with TV cameras because there was a big deal. I mean, when the mainframe went down the CEO heard about it, somebody got fired and we moved on. Right, it was a single-source of failure. I call it a host-based centralised hairball computing environment. The world didn't like that and so we went out and created the bicycle of computing - its called the PC. So this is why I don't get any more Christmas cards from Microsoft.
You think about the personal computer - it's a lot like the PC - it's like a mountain bike. It is a personal activity generator. It was a brilliant stroke to call it a personal productivity tool. But I will argue that when the anthropologists look back on the 1980s and 1990s and do the archaeological digs and they get their callipers and brooms and microscopes out, they're going to blame the massive reduction in productivity and lowering and slow-down in the standard of living during the 1980s and 1990s that we are living through right now - they're going to blame it entirely on Microsoft Office.
What CEOs, CIOs and administrations and universities world-wide have been doing at a fabulous rate, a stunning rate, an embarrassing rate, is give everybody their own mountain bike. You leave here, you go all around places on the network, you come back here after destroying the environment, exhausted, going "boy, I want go do that again".
Next to Darth Vader in the boardroom, I saw a picture of a previous group of press people around some old typewriters. We would be far more productive if we could go back to that environment. Think about having a four-feature word processor only - that's all I've ever used - backspace, delete, cut and paste and print - and you know what - it works perfectly. Its incredibly fast, efficient, effective, it doesn't use network bandwidth, it uses ASCII. It can be read by every computer on the planet. You don't have to wonder whether you had the latest version of Word, whether you have enough bandwidth, whether you have enough disk drive to manage it, you don't have to worry about whether the end-user has the latest version of Windows to deal with it, or even has Windows at all. Can you imagine a 4,000 feature Word Processor? I have told General Motors that if they could eliminate Microsoft Office from their company today, that they could ship next year the 1999 cars at half-price. I just don't know how embedding audio on your spreadsheet is really going to make matters better.
So this is the big problem. When we move to this second stage of computing. It is fun. It is valuable. It is exciting. But two things that it's not - is compatible and it is not easy to use. Let me explode these two myths right away.
Easy to use. Have any of you ever tried to set up a PC at home? All right, yeah, sorry, have some wine. If you want to keep your teenager off drugs, go buy a new pentium, get an NT and a printer and a fax modem and tell your kid, "I'll bet you can't download anything off the net and print it". Six months later that kid is going to be totally drug free, and still screaming at that thing.
Think about the person sentries that have been tied up administering. We have made every user become a CIO - a Chief Information Officer - a Systems Administrator. Think about giving everybody on the planet, instead of a telephone, a switch and a telephone. And ask every user to program the switch, back up the switch, load software on the switch, just configure and deal with that switch on a personal configuration basis, and then ask that person to make a phone call to another buddy who's got their own personal switch reconfigured their own way. Can you imagine ever connecting on a phone switch basis like that? This is the model we have done - we have given everybody their own personal mainframe. This is an incredible activity generator. Not a great use of our time if we're trying to get stuff done. So, you know, ease of use is just not there.
Compatibility is another one. I am going to challenge you with a, I mean, this is a hypothetical situation. You do something bad. The judge slams the gavel down and says, "You're guilty - but I am going to give you a break. You have a choice and you don't necessarily have to die. You can grab this gun that has one bullet in it and play Russian roulette, and if nothing happens - you can walk - if something does happen - bummer - or, you can allow me as a judge to grant any random PC floppy on the planet and stick it into any random Microsoft PC anywhere on the planet. If it works - you walk." What would you do?
So we are running around with this myth of 'easy to use' and 'compatible' - it is neither. Also this bicycle world happens to be one of the most insecure environments on the planet. I don't know if it's reached the levels that it has in the silicone valley. I call Windows the petrie dish of choice on the internet. If you want to load a virus down on, Š a science project that grow on your computer, just hook up to the internet and start downloading some things. In fact, in the silicone valley a couple of weeks ago, they announced the Hari Krishna virus on the radio show - they have these news shows actually announce what viruses are going to hit your computer this week - it's just like topical news. They basically explain what has happened to you after the fact and they say, if this happens, call your MIS department, you're in deep trouble. So the whole concept of doing electronic commerce with this kind of very unsafe computing model is very difficult.
We are now moving to a third phase of computing. It's called network computing. And the internet, the intranet, this whole wave of using computing not to be active, and not in a centralised host-based hairball mainframe kind of computing environment is what the internet is all about. Its all about communication. Its all about innovation. Its all about having an open, written and spoken language of computers that we can all work. Now, in the mainframe world, IBM owned everything. In the bicycle world, Microsoft owns the language. In the network world, nobody owns the written and spoken language and that's why you see Š if you don't think that the anthropologists are going to look back on the 1980s and 90s and say there was no innovation, say there was no innovation during that time, think about how similar a 1980 DOS Lotus 1-2-3 computer is, in terms of productivity, with your current full-blown Pentium Pro NT Microsoft Word computer. They are within a percent of each other in terms of utility and functionality. It just happens that the new one has 10 million lines of code to have bugs in it and the older one only had a few K bites of code to have bugs and it was probably far more reliable. That's how far we have come with innovation. I think we have gone backwards on the desktop in terms of what we have been able to deliver in terms of actual utility. Lots of activity - but not a lot of utility on the desktop. What has happened in the last two years in the way of innovation has been though with what's going on the net. With the internet, the intranet, with all of the new technologies that have taken off and, because we have open interfaces, its because we are moving from the proprietary IBM world and the proprietary Microsoft world to an open network world where the written and spoken language of computing is not owned by a company, but owned by the planet, in the same way that English is not owned. I have used this analogy before. I have talked about how Š the only way I know how to become the richest person on the planet is to hire a bunch of really bright linguists and mathematicians and create a new written and spoken language for all people - I am going to call it Skottish - with a 'k' so that I don't get sued - and I am going to get all governments to adopt it because it is easier to read, write, speak, teach and learn. You know, solve the illiteracy and reading, writing and arithmetic problems that we're all facing. And you all agree to adopt it. Now there's only one minor problem. I own Skottish and I am going to charge you a $149 right-to-use licence - to speak it, to write it, to teach it, to learn it, whatever, and oh, by the way I am going to charge you upgrades every year, and I am going to create new alphabet characters, like 'n' and 't'. And I am going to keep some of the grammar and syntax secret so that only my books are readable. Hah. Does that sound familiar? The written/spoken language of computers on the desktop has been owned and controlled by one company. You don't get to be the richest person on the planet by the age of 40 because you are in to market economies. Think about it. The web is a chance to break away and move out of this incompatible, incredibly hard to use, locked into one vendor, huge Š now I always had a Š now I've actually spent some time here in your wonderful capital talking to some of your leaders in the political arena and I have to tell you as an American, I want to say thank you - as a Sun employee, I want to say 'watch out'. As an American, I appreciate the fact that every child in Australia when they become written and spoken language of the computer literate, and start using Windows, start on this annual $150 - whether you want to or not - upgrade and right-to-use licence tax to Microsoft. The beauty of Microsoft is that is an American company, owned and controlled by Americans, who are going face what we all face - the grim reaper. Now the grim reaper basically brings on Š what's even worse, the US Government, in the form of inheritance taxes, and I have to thank you on behalf of all Americans, because my little boy's going to grow up and not face a budget deficit. We are going to have great roads, great schools, no budget deficit - it's going to be a wonderful place to live because the entire world is paying $150 per citizen, tax, to our inheritance taxes - that's wonderful, I thank you on behalf of all Americans for that. There is a better way and there is a new Š that sounds ridiculous, but that is in their business model. I don't think he'd admit that to you, but it is in their business model. That's the way they grow their revenues is to get more citizens on the planet to become written and spoken Š I mean its really hard to switch to a native language, once you have learned Windows. I mean, once you have learned English, do you want to like go to German as your native language? And think about the switching costs. The opportunity now is to go to the open written and spoken language interfaces of network computing and these are cutting across all industries, all companies, all countries, all Š its just a global effort, and in fact, the network is something that has really forced Microsoft to do something they have never done before since I've been watching them - and that is they licensed software from Sun, from another company, without buying them. They licensed Java from us. We got their cheque, we didn't know whether to frame it or cash it. Well, it took about three seconds to figure that one out.
You can see that the net is really where the standards are being set, where the language is being created and where the power has moved to Š and I think, its a good move, I think its a big opportunity. Now that, fundamentally, requires universities, governments and businesses to rethink their corporate IT architecture. There are two major investments that are going to be happening in the computer industry that I think the world needs to think about before we go off and spend it.
The first investment is a 600 billion dollar investment in the 'Year 2000' problem. Most applications in computers can't deal with a date that starts with 2000. Its just a problem. You know if you put 00 in there, they think its 1900, not 2000 and it messes everything up. They're going to spend 600 billion dollars - that's a 'b' - US dollars - on what will be an exactly zero return on investment - if we do it perfectly. Because the whole idea of spending 600 billion dollars to have the identical environment on January 1st that you had on December 31st - doesn't sound like a very good investment to me.
The second big investment is to upgrade your PC. I don't have any reason why we would want to do that, but, think about it - do we really need more spreadsheets? Do we really need more word processors? I just Š we did a survey at Sun. We had 12.9 gigabytes of Powerpoint slides in storage on our disk drives. Ha ha ha. It freaks me out just to think about. Do you how many person sentries that is? Of clip-art manipulations? I banned Powerpoint from our company - I just edicted it. That's cool - I'm chairman, President, founder, you know, chief cook and bottle washer there and I just edicted it - I just said "out". I think we are going to have a pretty good quarter because of that. I can't say for sure, but I guarantee you - if I just gave everybody overheads, you know, blank Mila overheads with all the free pens they wanted - I could drive productivity through the roof, as opposed to having - I mean you've all seen these overheads that have 14 pieces of clipart, 13 fonts, right hand justified, spell-check, 13 colours and you know your employee is exhausted by the time it finally comes off the printer. And do they communicate anything? No. This is the productivity drain that we see out there in the marketplace, so the goal here is to not upgrade your PC to get more Š I mean we're going to spend hundreds of billions of dollars for what is not a zero ROI but a negative ROI. I guarantee you, your user base will be far more active and far less productive when you get NT on every desktop. Its a promise. Its a guarantee. That's the whole deal. Now the problem with taking your Š you can't take the PC away - I mean you should, but you can't. If you took the PC away from some of the folks in here, they wouldn't know what to do. They'd come in the office and stare at the wall. Right. Then what would you Š the morale would dip so badly if you took Office away from your employees Š think about it Š what would they do Š they would have to like stand up and present - instead of, you know, point at clipart. And I don't know how we are going to break through this, but I think those are the two big investments that people are making that ought to be applied to creating a great network. Because the network allows you to stand on the shoulders of all of the collective wisdom of the planet, of your organisation, of your business, of your university, or whatever - and that's a big win. Its communication. The network is all about asynchronous, in-parallel, at speed communications. A telephone call is serial, synchronous and it takes a long time to get the phone call to actually happen - but when you move on to the net and you publish your information and you publish your applications and you communicate via email, you all of a sudden, re-engineer your business in a very, very significant and profound way.
Let me try and finish here with kind of a list of some of the big rules that I am telling all organisations, all countries, all governments, all universities, all businesses to go do in terms of building an investment for the internet world - and the internet world is, you know, its like dog years. You're on internet time and it all happening so fast.
No more mainframes. Keep the ones you got. Don't buy another one. There's more mainframes on this planet than we need if there is never another one shipped.
Do not upgrade your PCs. Sidegrade them. Sidegrade them by moving to the open languages, by putting the Java-based browser on your desktop. That'll cost you ten bucks a shot instead of six thousand dollars.
Do not spend money on the 'Year 2000' - put it into your network. Grow your network. Create a TCPIP network. Some of you understand what that means. If you don't - don't worry about it. Its OK. Just tell your MIS types do a TCPIP network. They'll be blown away when you say that. They'll just say Š OK, OK.
The next thing you need to do is set up the killer application of the network. There are two kinds of killer applications. There is Office, which is truly a killer ap, and then there's email. If you don't do it - you're going to get killed. Probably the most important thing is to get the leader of your organisation to take typing lessons - the CEO, the Prime Minister, whoever - get them to start using email because that is when you start working in parallel at speed, in an asynchronous model - and that's how you take time out of all the business practice - and so you have got to use email as the core environment for higher in your organisation. You can't do voice mail - I mean, you can't speed read voice mail - you can't cut and paste voice mail, you can't file voice mail, you can't sort and search voice mail - it's a disaster. And people blather. There is no filter from brain to mouth. You're witnessing that right now. There's a huge filter from brain to finger tip. I don't know why but it works. I think it is called muscle cramps. And so, email is absolutely need to use. I'm MAP4 for the IT types here. Its the Internet Mail Standard.
The next thing you should do, is you should ban publishing any information in any format other than HTML in your organisation. HTML is hypertext markup language - it is the language of the internet - it runs on every computer on the planet. If you allow your information to get locked up in a Word format - you need Word to deal with it - which means you need to buy Windows - which means you need to buy a pentium computer. You have fundamentally solved the US budget deficit by doing that. But if you put it in HTML - you can fundamentally view it from any computer on the planet. You own the data, not your supplier - and that is an important message. The same is true with Java. Write your applications in Java. Its supported on every computer in the planet and Java will run on your self-owned, your set-top boxes, your game machines, hubs router drivers, switches, printers, copiers, TVs, automobiles, all of your computers - your nomadics - it will be on your airplane. That is the first architecture - programming architecture - that you can write to that will be on everything. Anything with a microprocessor. The self-owner is a perfect Java computer. It has a keyboard, a display, a speaker and microphone, a network port, a power supply, a microprocessor and a million lines of code already. This is what computing is going to be all about. Nortel is shipping a Java-based phone. You just plug it into the network. It allows you to create what we call the zero-administration client. No disks. No CD. No floppy. No Microsoft operating system. I mean most of you are mere mortals. You shouldn't have an operating system - just like you shouldn't have a switch. You know most phone companies will guard their switches from people like us. We should be guarding ourselves from computers. You want a Java client that is just a microprocessor. Download your applications. We are going to be introducing very soon, a Java computer which you just turn on - up pops a browser and you just click away. You don't have to administer, you don't have to backup - people say, "Oh my gosh, I don't dare not have a local disk. I've got to store my own data." Those are the people that stick their money in a mattress instead of a bank. Have you ever lost money in a bank? How much Š how many Š have you ever lost data on your local disk drive? No, of course you haven't. Nobody ever loses data on their local disk. This whole new model of computing. Why do we give everybody a CD and a floppy in organisations, in governments? Do you know what a CD is for? So that you can add a virus to your network. Do you know what a floppy is for? So you can steal information from your company. Go right around the firewall through the door. Why do we do this? There's a new model of computing coming. My mother will never work an NT computer. She will work a Java client, because you just click - down comes your application, its verified, its safe, it runs. This is how it will all work. This is every software developer on the planet today is writing in Java. All the ISVs are moving to Java because it runs on everything. Its a huge superset. I worry sometimes whether Microsoft has unit volume, because Java has all the Windows unit volume. Its contractually embedded into all of the Š into the Windows environment, Novel, Macintosh, OS2, Unix, all the IBM operating systems, you name it, all the NCs, consumer electronics equipment, all the rest of it. So go Java with your environment.
And probably another message I should share with you all, is go ASCI. ASCI is the basically, the most simple format, for formatting characters. Its just what your keyboard does and Š I don't want people to send me a Word document on an email Š I want them to send me in ASCI - with typos, not right-hand justified, no special fonts, no colours - any information that they want me to get, because I don't have the time to wait for them to format and then use up network bandwidths to send it to me and then I got to decrypt it. I mean Word is like, encryption, to me. And then I got to decrypt it somehow. Its a disaster. If you've got something to say to me, send it to me with typos. By the way, people say "you can't, you don't communicate with your customers, without formatting, right hand justified and spell checking" and I say "Yes, I do". Because I don't have time. I do a couple of hundred emails a day and oh, by the way, when it has a typo - they know it came from me. I don't have spell checker - I spell 'wrecker'. Its a personalised email from me every time.
So anyhow, the last message is, the net is open, its multi-vendor, but there are companies out there trying to hijack HTML, trying to hijack the browser, trying to hijack the interface, they're trying to hijack Java. They're Š the way to keep yourself from getting hijacked is, in your organisation, make sure you, before you publish a page on the network, and before you publish an application in Java on the network, test it on three browser - Explorer, Navigator and Hot Java. If it runs on those three browsers equally well, you know it will run on every computer on the planet and you have not used any proprietary interfaces, hooks or trapdoors or, you know, barbed hooks that the vendors are trying to get you to lock into. So anyhow, I'm sure I have generated a few questions here in the quick thirty minutes that I want to spend with this, so I would like to turn it over to Š because I was warned, I was warned on your capital hill - they said "be guaranteed, the press is going to grab some minor, throw away participle or dangling participle, or phrase, and feature that, so I'll say whatever I want and know that it won't matter anyhow, so Š let her rip.
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