Sun Microsystems on Monday promoted 17-year company veteran John Loiacono to head its software business to replace Jonathan Schwartz, who was elevated last week to president and chief operating officer.

Loiacono will spearhead Sun's software efforts, which have become increasingly strategic to the company as it tries to revive its struggling hardware businesses. In an interview, he said he will strive to execute key software strategies Sun put in place in the past year.

``We've had a lot of fanfare about the changes we've been making,'' said Loiacono, who will become executive vice president for software. ``We've got customers calling and asking for price quotes. Now it's my job to execute on that. There is no honeymoon here.''

Sun made its name as a hardware company and it doesn't even break out its software revenues. But software has become key to its fate as it tackles challenges such as the threat of low-cost Linux software running on servers with Intel chips. In the past two years, Sun has moved to embrace Linux, converted its Solaris operating system to run on Intel machines, and begun selling software subscriptions for its corporate software applications.

Can't compare

``The thing that is capturing attention and bringing new customers in the door is the software strategy,'' said Mark Stahlman, an analyst at Caris & Co. in New York, who does not own stock in Sun and whose company does not have a banking relationship with Sun. Referring to Sun's software pricing, Stahlman said, ``Nobody has anything that compares.''

Sun has simplified its software sales by bundling all of its corporate software applications into a product dubbed the Java Enterprise System, which it sells to customers based on how many employees they have, or about $100 per employee per year. Likewise, it sells a Linux-based software suite, the Java Desktop System, for as little as $50 per employee per year. Those prices are aimed at undercutting rivals and allowing Sun to get into the door with customers so it can sell them hardware systems and services.

While promising, the software initiatives have yet to be translated into noticeable revenue, Stahlman said.

Loiacono, 43, grew up in San Jose, where his grandparents grew apricots and prunes. He has been at Sun for 17 years in a variety of marketing jobs. He helped launch most of its big products and was chief marketing officer before he was appointed to run the operating systems group 18 months ago.

When Loiacono took over that job, he had to deal with a small group of hard-core customers who wanted Sun to convert its Solaris operating system to run on standard computers with Intel chips. At first, Sun refused. But Loiacono decided to go forward with the move, not because the fans were running ads in newspapers denigrating Sun, but because it started to make more business sense as customers favored reducing costs and complexity.

Creating teams

The software group has 4,000 employees, but the division will be stretched thin as it is asked to execute new software initiatives at the same time it faces layoffs. Sun said Friday that it plans to lay off 3,300 employees, or 9 percent of its workforce, as part of a move to cut costs by $500 million during its next fiscal year.

Loiacono said Sun will be putting together teams so that it can work with Microsoft, with whom it struck a broad, 10-year cross-licensing agreement Friday. Sun also settled its antitrust and patent lawsuits in exchange for a $1.95 billion payment from Microsoft.

``People have asked me what the world is coming to,'' he said. ``It was the Hatfields and the McCoys, and now it's the best of buddies. Times change, and so does the maturity level in each company.''

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