Bowie on track to beat Sun chief in cyberspace

By Alan Deans

What does rock star David Bowie know that Silicon Valley supremo Scott McNealy doesn't?

How to write and perform songs, wear make-up and maintain an image of perpetual youth are several obvious answers.

But can he really show the controversial chief executive of Sun Microsystems how to succeed at his own game - making money from the internet?

That is the point many wired operators are pondering, because Bowie and McNealy are pursuing diametrically opposed strategies for making riches from one of the toughest industries in the world.

If Ziggy Stardust's alter ego proves the smarter of the two, he might be tempted to desert the recording studio and seek greater fortune in the boardroom.

Bowie is about to become the first rocker to sell an entire album over the internet.

His new "hours ..." recording will be offered for a limited time from the start of October on the web sites of about 50 music retailers. Virgin, HMV and others hope that fans will flock to their sites and click on the download button, enticed by the fact that they will hear Bowie's new tracks several days before they are released in their stores.

But Bowie and his studio, EMI, want retailers to pay the usual cut for every recording sold. That means that internet users, accustomed to buying cut-price CDs from the likes of CD Now and pirating offerings through many MP3 sites, will have to shell out the full retail price. They will get a bonus song that their unhip counterparts won't get, but they will miss out on the CD packaging, sleeve notes and artwork.

It is a bold move. The music industry is backing a huge initiative to preserve their copyright and revenue streams by embracing software encryption that is aimed to stamp out piracy and give them a lucrative new distribution channel.

But will Bowie's legions of 40-something followers embrace his vision and pay full price for something they cannot see?

Scott McNealy is banking the future of Sun Microsystems on the fact that internet users will continue their anarchistic ways and resist everything that isn't free. That is why he has just bought a small software company called Star Division Corp.

Star has what it calls a suite of office productivity programs - word processing, spread sheets, e-mail, graphics, web publishing and databases - that it reckons are as good as those offered by its biggest rival, Microsoft. Trouble is, Star is a minnow trying to flog something in a sector of the market where Microsoft's Office 2000 has 100 million clients stitched up.

McNealy, however, is taking a leaf from Microsoft in battling his old foe when it gave away its Internet Explorer browser to drive industry leader Netscape to the brink of oblivion. Microsoft charges about $US210 for the standard edition of its new Office 2000 software, and twice that sum for the edition with bells and whistles. StarOffice costs nothing.

It claims to be every bit as user friendly as Microsoft's Word, Excel and Powerpoint products, doing all of the tricks of its larger rival and also being compatible. What is more, StarOffice runs on a range of operating systems including Windows 95, 98, NT, Linux, OS/2 and Solaris.

McNealy reckons he is backing a no-brainer. Who wants to pay for something you can get for nothing? Consumers can already get free e-mail, download an operating system for gratis and sign up for a free PC, so why continue to put money into Bill Gates' pockets? This question is especially pertinent when asked of corporate IT officers.

Writing this week about the move, McNealy says that people won't buy computers in the future, and neither will they buy as much software. Instead, they will rent resources from a service provider. Just like the Linux operating system, which is available free and can be modified by any computer nerd because its source codes are freely available, so StarOffice plans to grow.

Sun Microsystems would profit by charging for services and support. Having trouble downloading or getting a program to operate properly? No worries. Just go to StarOffice's web site and it will tell you what to do - for a small fee. Access to a list of frequently asked questions, chat rooms or on-site service will cost money.

It is a popular new business model. Companies like Red Hat, Applix, Corel and Ariel that market and service Linux software are in strong demand.

The initial market reaction to McNealy's move has been to push Sun Microsystem's shares above $US80 each for the first time, and force down Microsoft's.

McNealy needs to gain millions of new customers before he can claim to have a winner, whereas Bowie has little to lose if no one points and clicks. But one wonders if McNealy will reconsider his plan if an old rocker gets it right.

* Alan Deans is the New York correspondent for the Australian Financial Review.