Jonathan Schwartz is certainly good at poor analogies. He likens Sun making money from Java to electricity:
When Thomas Edison first introduced the lightbulb, he held patents he tried to wield against potential competitors - he wanted to own the client (the bulb) and the server (the dynamo). He failed. Standards emerged around voltage and plugs, and GE Energy (formerly, Edison General Electric), to this day, remains one of the most profitable and interesting businesses around. How big would the power business be today if you could only buy bulbs and appliances from one company? A far sight smaller, I'd imagine. Standards grew markets and value.
Then there was the civil war era in the US, when locomotive companies all had their own railroad widths and shapes - designed only to work with their rail cars and steam engines. How'd they fare? They failed, standards emerged that unified railways and rail lines, and that era created massive wealth, connecting economies within economies. Standards grew markets and value.
Here's the thing. For electricity, someone made money selling the power that ran the lightbulbs. Never mind that Edison's mistake had more to do a fixation on DC over AC - the point is, there was money for the power company in selling the power. The same goes for the rail system - there was money for the rail companies in selling access to the rails - for moving people and goods. Why are these poor analogies for Sun? Simple - they don't own the delivery system for the network, and they've come out strongly against making money off any of the enabling technologies.
Let's look at the Java business - Sun doesn't make money from development tools, from deployment by others of Java based systems, or from the application servers - they give all those things away. Is this a razor and blades thing? Hardly - Java, being cross platform, destroys any rationale a company might have for buying Sun hardware. Why buy an expensive SPARC box when you can buy a much cheaper x86? Heck, now that Sun is giving away Solaris, you could run that instead of Linux and still not owe Sun a dime. The fact that Microsoft is steadily selling more servers is not a sign that this strategy is working out for Sun.
Schwartz' confusion is deeper though. Consider:
So if you want to know how I feel about Java, my view is it's changing the world - standardizing the plugs and rail gauges and containers used by global internet players. Its momentum, in my view, is unstoppable. What's that worth to Sun? Give it your best shot. When I do, I say most of our revenue is derived from Java. Just like most of Verizon's revenue comes from handsets. Even though the economics of the handset look baffling (but I dare you to recommend to Verizon that they stop selling them). Those that believe free software or service yields lower revenue don't understand the economics or dynamics of the software industry. Think Google or Yahoo!, not Maytag.
When I get a mobile phone, I have to sign a two year license with the vendor (Verizon, in this case) - and commit to paying them some kind of usage fee for those two years. If I cancel, there's a penalty. It's likely that I'll renew as well - inertia will see to that. Verizon lets someone else make the phones, even subsidizes the cost of buying one - in exchange for a 2 year lock-in. Now consider Sun and Java. Where do they get any revenue? It's clear where the mobile vendor cashes in - the subscriber license. Even if Java's momentum is what it was in 1998 (and it's not), it doesn't matter - at no point in the value chain do any of the users of Java owe Sun so much as a cent. If Schwartz thinks that Java actually drives revenue for Sun, then let's see if he can convince any of the mobile providers to mimic his *cough* plan *cough* - see if they'll make all calls free, and ask subscribers to pay for support, if they feel like it.
Yeah - there's a plan. Good luck pitching that one. It does become clear why Schwartz calls the economics of this baffling though - the mobile provider is making money, and that's simply baffling to Schwartz. It's not as if he knows how to do that.