Making Peace with Redmond
By Erick Schonfeld; Greg Papadopoulos

(Business 2.0) – Times are tough for Sun Microsystems, which in April reported a $760 million third-quarter loss and its 12th straight quarterly revenue decline. But in one area, at least, the future looks less turbulent. Microsoft and Sun recently announced a truce in which Microsoft paid Sun $2 billion to settle litigation and license some of Sun's technology. Sun CTO Greg Papadopoulos met periodically with Bill Gates for a year to iron out the agreement, so we asked him to explain why the once-bitter rivals have decided to play nice. -- ERICK SCHONFELD

What was it like to negotiate with Bill Gates?

There was a lot of venting at first. But that gave way to the fact that we're both geeks. We have a lot of common ideas about technology. As companies, we've both been in denial about the fact that neither of our platforms is going away. And frankly, the bickering has been pissing off our customers.

Where's the common ground between Sun and Microsoft?

A transformation is taking place--away from programming software for stand-alone boxes and toward the goal of delivering services to millions of network devices. Gates will tell you the same thing. We're both in search of the new computer and its ecosystem.

If Microsoft is no longer your nemesis, what does Sun stand for now?

There are only a few companies that can make all the pieces of the network fit together: Sun, Microsoft, and IBM. Of those, only two have developer franchises: Microsoft and us. I'd like nothing more than to put an IBM consultant out on the street because we eliminated a lot of gratuitous incompatibilities.