Sun enters Google orbit

Google and Sun already have ties. Among them: Schmidt was Sun's chief technology officer in the 1990s. John Doerr, a venture capitalist at Kleiner Perkins Caufield & Byers, is on the board of both companies. Andy Bechtolsheim, a Sun co-founder who returned to the company to launch its Galaxy servers, wrote a check for $100,000 that helped get Google started.

The financial terms of the deal weren't disclosed, but McNealy indicated that sizable sums could become involved. "There's going to be a lot of money flowing both ways, if we do this thing right," he said.

One area of potential investment is in the purchase of Sun servers. Sun wants once again to be the "dot" in "dot-com," McNealy said, and because customers tend to follow influential leaders, the Google deal will be significant. "If you go to the eBay Web site, you see 'Powered by Sun.' SalesForce.com runs on Sun. Now we have a partnership with Google. That sends a very clear message to the Web sites," McNealy said.

No shopping list
Schmidt wouldn't outline what Sun hardware Google planned to purchase. "We're already a Sun systems customer, and we're going to extend that quite significantly," he said.

One question is how the partnership will help advance Sun's vision that "the network is the computer." Google has a powerful data center packed with computers and a personal connection to millions of computer users, making it a powerful ally for Sun in the idea of moving computing applications off desktop PCs and onto central servers. In addition, Google is a developer of AJAX, which gives Web browsers a more sophisticated user interface.

That networked vision, of course, would make Google more of a threat to Microsoft than it already is.

Office productivity software such as Microsoft Office is very different from the tools used for Web services tasks such as search, e-mail and Web site authoring, Schmidt said. But he added, "It makes sense from my perspective that these boundaries become less obvious as these technologies improve."

Sun once had a Java-based version of StarOffice called StarPortal that was geared to run across the network. The product aimed to help a network service company compete more directly with Microsoft, but the company canceled it. Schwartz said he has no regrets: "Is AJAX or a browser an appropriate vehicle for heavyweight office productivity software? Absolutely not," he said.

Mark Mahaney, an analyst for Citigroup Research, wrote in a research note that "for many years, Scott McNealy, the CEO of Sun Microsystems, talked about the network replacing the PC as the platform. In hindsight his pitch was much too early...However, today's announcement indicates that perhaps the Internet can become the platform for applications delivery."

For Google, the deal could boost revenue, Mahaney said. "The simple point is that a potential offering of a network-based application suite could lead to long-term incremental revenue for Google."

The announcement appears to bolster the prediction made by Stephen Arnold, author of "The Google Legacy: How Google's Internet Search is Transforming Application Software" that Google aims to become a hosted applications provider.

"This is the first step on the road that leads directly to Google and Sun trying to take Microsoft's application and server revenue," Arnold said in an interview. "It's the foothills expressway to money; that's the goal."

The partnership will undoubtedly please the Unix developer community, he said. "The 40-year-old who really understands Unix and Solaris and doesn't feel comfortable with the security vulnerabilities of a Microsoft Office. Suddenly there's the promise of a new land ahead," Arnold said.

Microsoft executives declined to comment on Tuesday's announcement.

CNET News.com's Elinor Mills contributed to this report.