Sun Microsystems' deal to buy Star Division Corp., which was announced this week, is a bid to transform the way basic software packages such as electronic mail and spreadsheets are used and procured.
Sun said it intends to make Star's office software available for free over the Internet. Microsoft Corp., the dominant provider in the field, charges $400 to $800 for each user of its Microsoft Office software.
Star is a privately held company based in Hamburg, Germany, and Fremont, Calif., with four million users. It offers word processing, presentation graphics, spreadsheets, e-mail, a calendar, and other tools. Versions of StarOffice that can be downloaded via the Web will be available by October, with general distribution beginning next spring. Eventually the office applications will be available on portable devices as well.
The advantages are lower costs, ease of deployment, and support for a large set of users, said Larry Sikon, managing director of technology at Bank of America Securities.
"As we use more browser-based technology, StarOffice may be useful," he said.
But Eric Meredith, manager of advanced technology at PNC Bank Corp., cited the "tremendous costs" of moving from one office software package to another. These include training, document conversion, and systems integration.
PNC has scaled down the number of office software products it uses from four vendors with five versions to two vendors with one version each -- Microsoft Office and Lotus SmartSuite Office.
"We're not looking to add a third one," Mr. Meredith said. "Only total cost of ownership would make us switch. From our perspective, Sun would have an uphill battle."
Robert King, senior vice president of information systems at First Tennessee Bank, agreed that "Sun will need to do strong selling to take away the commanding lead and power base that Microsoft has captured."
The Memphis-based, $17 billion-asset bank tried Sun's Java but for performance reasons stayed with Microsoft. The Microsoft environment "gives us more latitude," Mr. King said, since many software companies and service providers the bank works with use it.
James B. Moore, vice president of financial services at GartnerGroup, said he believes banks would be reluctant to buy into Internet-based utility software. "I think Sun is probably ahead of its time," he said.
Banks are more focused, he said, on building intranets and extranets, which are private networks that take advantage of Internet protocols. Eighty-nine percent of banks with more than $4 billion of assets planned to build intranets this year, and 43% planned to build extranets, according to a survey GartnerGroup did at the end of 1998.
"Intranets are ready for prime time and are being adopted increasingly by banks," Mr. Moore said.
Software such as StarOffice does not cover mission-critical applications, and therefore "the compelling reason for bankers to shift" from Microsoft "is lacking," Mr. Moore said.
Security is another obstacle, he said.
A shift from desktop to network computing is inevitable, however, Mr. Moore said. He said he expects the migration to occur over the next three years.
"Sun is continually thinking about where the industry is going," said Edward J. Zander, Sun Microsystems' president and chief operating officer.
The company says its ultimate goals are to move services and applications to the Internet and to browser-enable every device with a microprocessor. "So why not office productivity applications?" Mr. Zander asked.
Marco Boerries, who founded Star Division in 1985, when he was 16, is to become a Sun vice president and general manager of its software applications unit.
"We share the same vision as Sun -- the network is the computer," Mr. Boerries said.
StarOffice runs on the Linux, Windows NT, Sun Solaris, and IBM OS/2 operating systems.
