In a move that has shocked the global IT industry to its roots, Sun Microsystems, the global provider of hardware, software and services, patched its differences with Microsoft. In a deal that was made public by Scott McNealy, CEO of Sun and Steve Ballmer, CEO of Microsoft, the latter agreed to pay $700 million to Sun to resolve pending antitrust issues and $900 million to resolve patent issues. In addition, Sun and Microsoft have agreed to pay royalties for use of each other’s technology, with Microsoft making an up-front payment of $350 million and Sun making payments when this technology is incorporated into its server products.

The companies also agreed to collaborate on each other’s technology fronts to make them more interoperable. Though the companies said they would continue to compete with each other, their new combine is expected to give mutual foes IBM and Linux a run for its money by offering a more formidable rival front.

The agreement, which purportedly brings to an end the biggest and most public feud of the IT industry, has given rise to mixed reactions from the industry. Most have been unable to digest the fact that Sun and its CEO, who had made a hobby of insulting Microsoft, calling it ‘the evil empire’ and coming out with one liners like ‘its really mankind against Microsoft’ could agree to bury the hatchet for a handout. Sun’s laying down of arms and signing truce is seen by many as a desperate attempt to acquire cash. The IT company, which had its best times during the boom days, has been registering losses for the last 11 quarters, with IBM and Microsoft both eating into its business potentials.

The pact has also thrown many of the world’s developers into a flurry. It is not clear about Sun’s stand on the recent antitrust ruling by the EC. But whether this new-found love between David and Goliath will survive and flourish to fight a common enemy has to be seen.

Sathya Mithra Ashok in Bangalore

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