Tags: CES, BlogHaus, CESBlogHaus, CNET, journalism, Marketing Voices, Rafe Needleman

Tags: Brandy Schaffels, C. Scott Miller, Donna Schwartz Mills, John O’Dell, Mark Durham, Kristin Underwood, Laura Burstein, Bob Lutz

Tags: CNET, Rafe Needleman, Jeremiah, WebWare

Tags: Internet Strategy Forum Summit, CNET, Erik Kokkonen, online media

Learn from Cammie as she discusses the current Internet marketing approaches that marketers are taking in this new movement. The two most important themes? 1) focusing hard on the needs of the consumer and 2) integrated within a company’s marketing. The internet has become tightly focused, and small vertical niches are often more effective than large “blanket” efforts.
Cammie will be one of the notable speakers at the Internet Strategy Forum taking place in Portland, Oregon this July 19-20th 2007. Conference attendees will engage with executive speakers from Yahoo!, CNET, FedEx, IBM, WebTrends, PodTech.net, Intel, Adobe, One Economy Corp. and more, who will share their insights and ideas on how to best leverage the Internet and integrate it into overall business strategy.

Tags: John Furrier, Cammie Dunaway, Yahoo, Internet Strategy, Web 2.0, Social Media, CNET, FedEx, IBM, WebTrends, Intel, Adobe, One Economy

Tags: Consumating, Ben Brown, dating, Consumeetings

Jeremiah’s notes from the event can be found at Web Strategy.

Tags: Jeremiah Owyang, Mobile Identiy Workshop, Berkman Center

This podcast is brought to you by Rocky Mountain Voices.

Transcript:

Host: Brad Baldwin – Rocky Mountain Voices
Guest: Kim Anthony Parker – iPort
Guest: Kip Meacham - Card Access
Guest: Gina Lutkus – Somfy
Guest: Key Digital Systems - Speaker
Guest: Thomas Pickral - Home Automation Incorporated
Guest: Dave Froerer – VisionArt
Guest: David Richard – Eaton Home Heartbeat
Guest: Wade Smith – WellSpring Wireless
Guest: Abbas – DSC
Guest: Terry Hoffmann – Johnson Controls
Guest: Nick Finamore – Ember Corporation

Dave Froerer – VisionArt
Hello, my name is Dave Froerer with VisionArt. VisionArt is a system that we manufacture to conceal plasma TVs and flat panel, any flat panel TV that’s mounted either inside the wall like this one is, or can also be mounted - surface mounted on the outside of the wall. We have about 300 pieces of art and about 40 frames. You can also do custom art; you can also do custom frames. So, these are clay prints and it is rolling up and down, so the whole frame doesn’t move. So, you have a beautiful piece of art and instead of watching the TV — and then when you want to watch TV, you hit the ‘TV On’ on your Control4 remote of course and the art rolls up into the top of the frame. We make every single one of them one at a time for every plasma TV and flat panel on the market. So you tell us what TV you have, and we make it for that exact TV dimensions. We also have a cooling system - if you put it inside the wall so that you don’t have to worry about burning up the TV or the LCD. We have about 300 pieces of art; so we have books like this that are available or everything is on our website, it is visionartgalleries.com. There’s also a link on the Control4 site on the vendor partner area back to our website. So you can view all the frames on our site and all the art. You can also click the frame and it will go around the art for you. You can go to another section of our website and you can play with the wall color after you’ve pictured art and your frames.

Kip Meacham - Card Access
Hi my name is Kip Meacham. I’m the Vice President of marketing for Card Access. We are an ecosystems partner with Control4 and have actually produced some of the first products designed specifically for the Control4 Home Automation Platform. For example, this device introduced in November is our in home wireless contact switch. It allows you to interface multiple contacts including an integrated magnetic contact and two external contacts of the installers choosing into a single wireless device. It will also measure temperature internally and externally and when powered by DC power, will act as a ZigBee repeater in the ZigBee mesh. We’re announcing at this show, a wireless contact relay allowing us, as you’ll note on this little functional fountain, our ability to turn that fountain on and off wirelessly, again using the Control4 Home Automation Platform. What Card Access has done, is building a variety of wireless products, our expertise being in developing high performance Wi-Fi and other wireless technology radios; and we are integrating that wisdom into the products that we’re delivering to the marketplace.

Gina Lutkus – Somfy
Hi, how you doing? My name is Gina Lutkus from Somfy Systems. Somfy systems is a manufacturer of tubular motors for window treatments. As you can see here we have teamed up with Control4 and we have a device called RTS 2 R232 and how that works is, whether we are using a battery operated shade, a low voltage or hard wired motor, we are able to tie it into a Control4 system. You can see on the Control4 system, this is the main screen, we type in — we have it on the blind shade, we want to bring the blinds up, we touch the upper end, the blinds go up and the light goes off. That’s one scenario that you can have in your house. You can also bring the shades down as well; the shade comes down, the light goes on. It’s another option or scenario that you could have in your house. Like I said before, if somebody offers a battery operated low voltage and hard wired systems, our radio brand name is called RTS which stands for Radio Technology Somfy. So the device that we would use to connect to the Control4 system is XN2 or R232 to RTS device to be able to control that making you control upto 16 different channels, whether you want individual window treatments or group of window treatments.

Kim Anthony Parker – iPort
Hi, my name is Kim Anthony Parker. I’m the Director of Product Development for iPort and today we’re showing integration of iPod to the Control4 system; and the thing that we love about Control4 is their ability to distribute this content that’s on your iPod throughout your entire house; and the thing about iPort is, we’ve allowed iPod to now make that information available to you over RS232. So, with that being said, now you can, with Control4, take your system remote control or your mini touch screen or your TV GUI or your 10-inch touch panel or all those products that Control4 offers now, and we go to music - we select music, we then select iPort as our source and we’ve set it up. So now you can see - you can browse the music just like you would on the iPod. So we want to go, select an Artist, we select Artist and then we select an artist and then we go and play the song or the album and hit select and now we’re playing the song that we’ve selected. So, now this would be something that would be distributed through the entire house or played just in a local room. The nice thing about it is it also plays your Apple protected iTunes downloaded songs so that you are not having to worry about if a customer says, “Ay, how come my iTune songs aren’t playing?” This does all that because it actually doesn’t analogue audio output. So, simplicity, easy to program, it’s a module that’s already built with your composer software. You just drag that module over into the home - your project file and then make your connections; your RS-232 connection and your audio connection and you’re off and rolling.

Key Digital Systems - Speaker
Brad, thank you for the opportunity to present my product line to you. A brief history of the company before we talk about the line and how it works with Control4. Our company is founded by Mike Tsinberg, with 39 HDTV patents. He is the number one patent holder in the industry and he is the founder of HDTV broadcast technology and DVD encoding technology. Our product line is composed of switchers, distribution amps, Matrix Switchers, video processors as well as video transcoders. One of our most exciting products is the HDMI2×4 Distribution Amp and Switcher, which basically gives you the flexibility of having both audio and video control - meaning, in the marketplace today, a lot of custom installers have problems with video resolutions not sinking up in HDMI as well as audio not sinking up because of the nature of the HDMI handshake. If there is ever a miscommunication that takes place, or the video resolutions aren’t set up properly or the audio resolutions aren’t set up properly, what you have is a miscommunication and an improper HDMI system; Key Digital addresses that - as well as Control4 being a tremendous partner to us, we have all the drivers available and we work with Control4 to have seamless integration with our products in their control system, and we thank them for the opportunity for being at the show with them.

Thomas Pickral - Home Automation Incorporated
We are HAI - Home Automation Incorporated, my name is Thomas Pickral, I am Manager of Business Development and what we’re showing here today is integration between HAI’s family of whole house automation systems and Control4’s Home Theatre Controller. What HAI specializes in is Lighting Control, Temperature Control, security in whole house audio, and what we are doing is, integrating that into control4’s Home Theater Control so you’ve got the ability to manipulate these things through your television or through a Control4 touch screen. So, HAI products like ‘security systems’ or ‘thermostats’ can be controlled through the interface on your television using the Control4 remote. So if you wanted to — while you’re watching TV, control the temperature on the thermostat, would have the ability to come in here for instance, you can down the temperature down to 72 degrees and it will update our current thermostat. You can do the same with ‘Security’ for instance. So if we wanted to go head and arm our security systems, we’d have the ability to do that - again, just right through the television. Now in addition to the interface provided by the Home Theatre Controller from Control4, HAI is also providing the ability to access these things through the telephone or through the web. So you’ve got the ability to log on and control all these devices - the telephone, by simply picking up the phone inside the house or from outside of the house by calling in or through the internet. So, we’ve got a product called Snap-Link which is this whole USB key and what Snap-Link does is, stores all the information for your house and you could plug it into any PC in the world and log on and control all these different devices. We’re also showing it here on this Samsung Ultra Mobile PC just as a demonstration, this is an off-the-shelf item we bought from BestBuy and it’ll allow you to again, come in here and control different devices like thermostats, adjust settings in here if we want to, or lighting control, and it will even let you view IP cameras.

David Richard – Eaton Home Heartbeat
Dave Richards, with Eaton Home Heartbeat Products and we are here in the Control4 booth, showing off our brand new product called Home Heartbeat. The product is very unique in that it is a home awareness type product using this ZigBee technology. We use a simple base station like what you see here, the base station reports to a home key, and then we have any number of various sensors like a water shut off sensor, a front door back door open and close sensor. We have range extenders, power sensors, all types of sensors that can be placed throughout the home and it is truly wireless. So there’s no new wires, and the great thing about the product is that all of these sensors report back to this base station and will give the home owner an alert of the status of that device. So, if a front door is open and it’s not supposed to be, an alarm goes back to this base station, reports to the key fob, where that alarm shows up on the key fob - and not only on the key fob but it also calls your cell phone or gives you an email report of the alarm. What’s also great about this is that — I’m kind of getting lost, but anyway let’s keep going. What’s nice about this is that because we do use the Zigbee technology, we’re allowed to communicate to the Control4 products like what we’re showing here. A simple open and close of a front door can now be reported back through the Control4 system where you can have a light turn on, you can also control ramp rate of how that light comes on based upon the open and close. The same thing can be utilized with a water sensor, if the water sensor detects water, it also can report back to the Control4 system, where then we can choose to turn the water actually off by utilizing our Home Heartbeat automatic shut-off valve or we can choose to do other types of functions through the Control4 system such as bring lights on or give you a blink because there is an alert going on. So the system reports utilizing alerts; you can receive an alert both through the home key while you are at home; it will vibrate or light up and give you an alert through the home key. You can also get alerts through your cell phone, and you can also get an alert through email, and we also introduced a brand new product here at CES, which is our Web portal. So, now you gain full control over the system, so I can see what’s happened in the past week, what’s happened in the past day, and also the alerts report back to the Web portal.

Wade Smith – WellSpring Wireless
I’m Wade Smith, I’m the CEO of WellSpring Wireless, and we make a broad line of sub-metering products that use ZigBee radios, and Control4 is kind enough to bring us in to talk about how we interoperate with their system, and we have here two example products, one is the utility meter - water meter in this case that’s tied to an automatic meter reading system with a two-way radio - ZigBee radio, and shut-off valve that’s battery operated so that the valve can change position in order to sense leaks and to curtail water use if the water bill isn’t paid or if there’s water found down the floor that prevent a catastrophic flood, also to sense small leaks that might lead to mould growth. So, we have another product here which is used in sub-metering of apartments and multi-family condominiums, co-ops, that sort of thing; simply - functionally the same as the utility product but with a smaller meter - 8 gallons per minute, same 2-way radio, in this case a (Inaudible) separate battery; and both of these products essentially function identically, but work at different ends of the marketplace. You can get more information on our Website which is wellspringwireless.com. So, I want to add my special thanks to the folks at Control4 who were kind enough to invite us into their booth to have us be one of the many companies that demonstrates how ZigBee makes our systems able to communicate with each other and operate together.

Abbas - DSC
Hi, my name is Abbas (ph) and here I am representing DSC. DSC is a leading Intrusion security provider that actually designs, manufactures and provides and sells Intrusion security control panels; and what we’re doing here, we are demonstrating the integration between a Control4 system and a DSC power series platform. DSC realizes — recognizes that this is where the market is going to go; it’s going to go into the point where everything is integrated. We are going to have a single point of control, where you control all the different components in the house from your — from the comfort of the home owner’s sofa. So what you see here, you have the DSC system with the new product that we’ve introduced, which is called IT-100. The IT-100, it’s a bridging module between the DSC control panel and the Control4; it’s a serial interface that enables Control4 to basically perform and control the DSC control panels. And some other functionalities — this is a demo screen of what the interface GUI looks like, and basically all you have you to do is, by moving your bunch - you’re armed with code — and by pressing on the remote control itself, you can enter the code, and that code will basically arm the system; and you could do it — just as easily, you can disarm the system by going to “Disarm with Code”, and you can enter the code in here. By entering there okay, you basically disarm the system. So, this system — this demonstration demonstrates the easy integration between the Control4 and the DSC Intrusion Security System via the IT-100.

Terry Hoffmann – Johnson Controls
Hi, I’m Terry Hoffmann and I’m Director of Building Automation Systems, Marketing for Johnson Controls. We are very glad to be here at the Control4 partner pavilion today, and we are demonstrating to people how Johnson Controls takes the Control4 technology and expands it to be used by people in the light commercial marketplace. The Control4 system, as we deliver it, is called Touch4 and it has some attributes that are slightly different than the residential systems that we all know. This slide summarizes those; it gives us low cost automation for residential and commercial systems, but focused eyes (ph) on the commercial; control and scheduling of lighting, audio, comfort, access, shades and blinds, monitoring, alarming of temperature, humidity, occupancy, and interface with the security system - all of those things that you might find in a normal Control4 system. We have added a BACnet interface through this system, so that we can do commercial temperature control, and in general some of the features like password, and scheduling and especially the alarming have significantly been enhanced for that real commercial building network that people are looking to expand the control system into. So, thanks a lot for stopping by.

Nick Finamore – Ember Corporation
Hi, my name is Nick Finamore, I’m with Ember Corporation. We are a proud member of the partner pavilion today here at Contol4’s booth at CES. Quite excited to be here; we’re the only chip vendor, we provide chips and software that actually to Control4’s devices as well as the many of the other members of the partner pavilion that you see here today. We provide chip and software technology that allow these devices to talk to one another, and for Control4’s system to be able to control and use, sense and monitoring information from those devices. What’s really exciting about what Control4 is doing is, they’re integrating multiple systems; people are providing lighting systems, providing security systems, media control and other devices and our chips can go into all of those devices, so that they can be managed and controlled with Control4’s system. What you’ll be seeing in the future is more devices, more manufacturers, who’re going be building devices with our chips and software in them that will allow them to be integrated with Control4’s system. So we are quite excited to be here with Control4, who have got many other customers that are building devices that will be integrated with Control4’s systems in the future. So, you can count a long list of manufacturers down the road that will be on our technology and using Control4’s systems.

Brad Baldwin – Rocky Mountain Voices
This has been a Rocky Mountain Voices Podcast. Visit is on the Internet at www.rockymountainvoices.com

Copyright ©2006 PodTech.net. All rights reserved. Privacy policy

Tags: Control4, CES, Rocky Mountain Voices

This podcast is brought to you by Rocky Mountain Voices.

Transcript:
Host: Eric Smith - Control4
Guest: Bob Metcalfe - 3Com

Eric Smith - Control4
I’m Eric Smith, CTO and Founder of Control4 and I am here today at the CES show with Bob Metcalfe, doesn’t need that much introduction, inventor of Ethernet, Founder of 3Com and many other things.

Bob Metcalfe - 3Com
…and Chairman of Ember.

Eric Smith - Control4
And chairman of Ember?

Bob Metcalfe - 3Com
A ZigBee supplier.

Eric Smith - Control4
Who is one of our best providers and we’re here just kind of talking about technologies and kind of the future of automation and what’s happening and it’s exciting for us to be involved in this kind of a business.

Bob Metcalfe - 3Com
People talk about the future of Home Automation, you have to be careful, it’s here already that what we’re really talking about, it has to do with very large numbers, but as you — we were talking earlier, Home Automation has been around for 20 years and it’s beginning to develop some scale now.

Eric Smith - Control4
We founded Control4 on two fundamental technologies, which are Ethernet and Zigbee and really we wouldn’t be the company we were without those things. We need those connectivity standards and honestly for a startup company, like us that’s focus on this kind of product to develop our own networking standards, just wasn’t feasible. And the main reason we needed too, is we needed some things for high throughput, higher bit rate, user interface and things like that and so certain things I mean that kind of thing did, but we also needed kind of a low bit rate, but high reliability, very inexpensive control network. Spent a lot of time looking for a solution, we even looked at putting Wi-Fi in light switches at one point, but it was then that we discovered ZigBee and got pretty excited about it.

Bob Metcalfe - 3Com
Well, there’re different kinds of networks for different purposes and there’s large numbers of them in the notion that they’ll be in one emerging standard just doesn’t fly because of what you just said, there’s just such a diversity of the requirement.

Eric Smith - Control4
I think this is why people ask me sometimes when Home Automation standardize, will Windows PC just talk to it all, would it just — how’s it all going to work together and there has been this kind of dream of a plug-and-play home, you put in a light switch, put in a thermostat and it just works. And I often tell people, “Well, look at your PC today. How many different ports are on the sides of that PC?” So, why is there an Edge Modem in it and a Wi-Fi modem underneath in that port and a traditional 56K modem and a USB and a FireWire and a parallel port and a serial port and a mouse connector and a cable connector, or a keyboard connector and a video connector, why so many ports? And that’s a pretty standardized area, it’s we’ve been working on it for a long time and that to think there one standards is going to do, everything seems pretty strange.

Bob Metcalfe - 3Com
Well the problem with that suggestion that the Windows PC would be the center of everything is just how what a bad starting point Windows is for something that supposed to be easy to use and transparent and user friendly. I mean we live in fear at our house that something will break with the computer and then we’re going to have to call somebody to come in because we can’t fix it ourselves.

Eric Smith - Control4
I’ve been seeing especially with the advent of the Media Center PC, which is a pretty fun technology, I really enjoy the Media Center PC, but just like any other experience I’ve had at the PC, it’s a PC and occasionally it falls down and people, I don’t know the last time I’ve had to reboot my Sony receiver, it’s been a long time.

Bob Metcalfe - 3Com
You have this, as you just said this Ethernet ZigBee combo in your products, so what do you use each of them for? I guess you would use the Ethernet for going up stream into the Internet and you would use ZigBee for going down stream into the control points?

Bob Metcalfe - 3Com
Yeah, generally, we just occasionally use the Ethernet to get between devices when it’s possible to, but what we really needed and Home Automation has been around for a long time. I think most consumers are becoming aware of it recently, but it’s been around for 16-17 years at least. I mean that’s how long I’ve been involved in it, but it’s always been kind of this metaphor you’ve either had these kind of, like your XTen stuffing by RadioShack that works most of the time, but was very inexpensive, or you had these very nice wired systems. The problem is what’s the odds that as you have a piece of 5-wire in a light switch box, it’s pretty low for most consumers.

ZigBee is just amazing and because it gives us a very robust, very inexpensive control network that makes all the devices talk and they talk reliably and I think most of it has to do with the mesh networking capabilities there where every device doesn’t have to see, it’s way all the way back to the controller, just as we’ll see the next device.

Bob Metcalfe - 3Com
I think you underestimated how old XTen is. I mean I think XTen was around in early 80s, so that be 20 some years ago. It’s amazing how that has persisted.

Eric Smith - Control4
It’s still around and it’s — but it has been mostly a obvious thing because it doesn’t always work. And so, it’s really hard for someone who makes a business of selling Home Automation to put in XTen, because if a certain light in the basement won’t turn off because there’s a compressor on it deep freeze down there next to it, there is nothing that do, or can do about it. And the consumer is going to say, “Why is that? You’ve said it would turn off the lights, it doesn’t turn off that light; I want my money back.” ZigBee allows us to provide the kind of reliability of the wire systems, but very close to the price points of the old XTen systems.

Bob Metcalfe - 3Com
Have you thought ahead to when every home has every device on a Control4 network whether there’ll be any interference or overlaps or security breaches are in?

Eric Smith - Control4
It’s definitely something that’s concerning that’s one of my favorite things about ZigBee, is the fact that it has encryption built into it, so that your neighbor can’t just hack your lighting system, or even worse, your security system. I love that and I love the fact that there’re different frequencies. So that there’re 16 different channels, so we can move things around and have a house next door to another house. We’re doing quite a few apartment buildings at this point and we’re finding it works quite well, even when you’ve one apartment right on top of another, there’s full security between them and they all tend to work quite well.

Bob Metcalfe - 3Com
How does ZigBee do in a Wi-Fi environment?

Eric Smith - Control4
That’s always a good interesting question too.

Bob Metcalfe - 3Com
I guess you could ask it the other way around, how does Wi-Fi do in the ZigBee environment?

Eric Smith - Control4
My best example of all of that is this trade show actually — the Consumer Electronic Show is the worst Wi-Fi nightmare on the planet, mean if you walk over the Convention Center across the street and you set an access point in a Laptop, next to each other, they will not connect. There’s so much noise in that 2.4 Giga Hertz Wi-Fi spectrum. What’s interesting is, ZigBee is in the same spectrum, but because it uses different techniques of sending data, it works better in it. We’ve got a booth right over there in the mid of that where Wi-Fi does not work in that building and the ZigBee works great and it’s a kind of an amazing thing.

Bob Metcalfe - 3Com
So, all that prior planning and engineering is paying off now.

Eric Smith - Control4
It is and it’s — companies like Ember that have made it happen for us, we’ve been very excited about that.

Bob Metcalfe - 3Com
So, introduce a long term standard like Ethernet was, like ZigBee will be, you do a lot of engineering, thinking of scalability in the long turn and then when you first come out with products, they’re too expensive because they’ve all that functionality, multi channel, encryption, frequency this, frequency that, speed and the initial instantiation of the product that you compare that to the junky proprietary things and they look better.

Eric Smith - Control4
Absolutely.

Eric Smith - Control4
So, if there was Ethernet in the early 80s at 10 mega bits per second and put up a little ARCNET look better because it was much, much cheaper, it didn’t have all that rigmarole in it. Of course then it’s the networks scaled up and as the Ethernet got cheaper then the frailty of the proprietary things faded.

Eric Smith - Control4
I remember when the concept of an Ethernet card built into a computer was just absurd. I mean no one would think about building that in because how many people really need that with network anyway and so you buy a NIC card and put it in the PC and make it work together. And it was a pretty neat thing and I think it was like about 95 or 96, when I first started seeing Ethernet card standard in the PCs. And I think the problem was, as I said earlier we looked into it for control systems, but it was in the neighborhood of $80 to $90 back in 1995 to put Ethernet on a device, now it’s $5 or $6.

Bob Metcalfe - 3Com
Well, the first Ethernet card I sold cost 5000.

Eric Smith - Control4
I can imagine?

Bob Metcalfe - 3Com
But ZigBee has a similar problem in that. It is — because now we’re down to some $5, way below $5 single chip solutions and that’s continuing to go down. So, as the network scale up and as the Control4 networks get bigger so that the features of ZigBee are more appreciated and then as we manage at Ember to get ZigBee to be cheaper and cheaper, a little take off.

Eric Smith - Control4
Volume plays the game almost everywhere in the — we’re seeing it happened already and I think when you get to. If you go right now — Control4 sells dimmers their $99 and that honestly shocks regular people, $99 for light switch? Because they’re used to that $2 home depot that a rocker and that seems expensive, but if you look that as compared to the other technologies, they’ve historically have been the lighting systems, they were $350 - $400 and so people in this industry tend to go, “Wow, $99 dimmer? That’s just as affordable as anything I’ve ever seen.” But I do believe, we’ll get down to where they were at the $25 to $29 dimmer, which is about the price of a decent dimmer, home depot right now. If you want to go buy nice dimmer that you can put on your wall, that’s would it cost and I think that’s when it becomes ubiquitous. I think we’re on the right curve to get there.

Bob Metcalfe - 3Com
It’s all inevitable really just at the moment — it sort of feels like it’s coming, but it’s inevitable, it’s going to happen. Those curves always happen.

Eric Smith - Control4
The one I’d like to look at is similar I talk about is, one of our evidences that Home Automation will hit the broad market, is that rich people and regular people are the same, they want the same things, just rich people can afford them. And high-end homes tend to have these systems. They’ve been for at least for last five years most high-end homes that are being built, have a Multi-room Audio System, have a dedicated media room, have lighting control, have an integration system.

If you look back 30 years ago, how many cars had power locks and power windows? It was only the very high-end cars because it’s quite of an expensive feature. Well I just read something a couple of months ago and one the papers saying that, Apple-Ford and Chrysler aren’t going to offer crank Windows anymore because that mechanical crank is more expensive than the power window motors,” because they’ve gone into a volume now that that’s less expensive and I think we’ll get there.

Bob Metcalfe - 3Com
Well, look at the GPS I am never going to buy a car without a GPS.

Eric Smith - Control4
Absolutely.

Bob Metcalfe - 3Com
How long will it be before all cars have GPS in them, five years, two years, eight years?

Eric Smith - Control4
I don’t think it’s very long.

Bob Metcalfe - 3Com
Not very long.

Eric Smith - Control4
It’s the best thing for men because we don’t have to ask for directions ever again.

Bob Metcalfe - 3Com
So, Eric, I have been — as to ensure the expert in Home Automation and I’m just the expert on networking. How do you see things rolling out over the next 10 years, so you can use our networks in your Home Automation systems?

Eric Smith - Control4
I believe the prices will go to the point in the next 10 years that most consumers, almost all consumers will have, like the same kinds of consumers that have TVs, will have Automation. I think we’re going to get there because the price points are going to get there and…

Bob Metcalfe - 3Com
Yeah, but there’s another point, there’s price points and I take your — I’m not just agreeing, but then there’s usability points, that’s right now a lot of our systems they’re as like my Honeywell Thermostats that I have on that, which are very old. I still can’t program those things. I go through the manual pressing all those silly buttons, so when you’re going to reach a — when do you think, or have you already reached the usability price point where things take off?

Eric Smith - Control4
Well, fundamentally when you look at Home Automation, it’s about two issues. It’s about networking all devices so they talk to each other and then building up a common user interface to all those devices. And the thermostats is a very good question because programming a setback thermostat with a little cryptic buttons and keys, trying to figure out what you’re doing is almost impossible, it’s a real pain. And one of the things we do because we talk to the thermostat whether it be one that we build or someone else does, we can present that UI on your home PC, which is a much better user interface, you have a much better ability to do things on that.

Can you imagine trying to do — like buy a new computer on your thermostat, but buying it on a Web page isn’t that hard. If you can program your thermostats through a Web interface, you can give them a better user experience. If you can do it through your TV and things like that. The other things that happens, if we have a setback thermostat, I know you live somewhere it’s kind of cold, in most of the year. Most people have their thermostats setbacks so that in the evening, it turns out that sets back to heat a little bit, then brings a backup in the morning at 6:30, say, but have you ever had to catch a flight earlier than that? Did you actually reprogram your thermostat to bring out the heat? No, it’s too difficult.

But if you have an automation system, your alarm clock could be integrated to your thermostat. So, now when you set your alarm clock to wake you up an hour earlier, because you’re going to go catch a flight, they track automatically adapts to turn on 20 minutes before that wake up and that really makes a great experience for the consumer.

Bob Metcalfe - 3Com
I need that, absolutely. Because my situation is so bad that when Daylight Savings Times comes, we just let the heat come on an hour earlier or later depending on (voice overlap) we can figure it out.

Eric Smith - Control4
It is too difficult to program this stupid thing. It is very difficult and that’s one of the benefits of automation. And another one I’d like talk about a lot, is people say why automate things? I mean I’ve got all these separate systems, but there’re real synergies to come when you integrate the systems. The best example I can think of is, if you have a smoke detection system, that’s integrated with your heating and air conditioning system and that’s integrated with your lighting system and that’s integrated to your motorization, like motorized blinds, or garage door and that’s also integrated with your audio system, there’re some really interesting synergies that can come.

Let’s say the smoke detectors go off, when people are in a fire what kills them? It’s usually not the fire, it’s the smoke. Well, a heating air conditioning system is a perfect mover of smoke in your house, so I call it the equal opportunity killer. Doesn’t matter where the fire is in the house? The HVAC will make sure that the smoke gets to every room; it also provides fresh Oxygen. So, if the smoke detectors could immediately turn off the heating systems, the fan doesn’t blow. That has some real tangible benefit for a consumer. Usually when fires kill people tonight…

Bob Metcalfe - 3Com
Turning the lights on.

Eric Smith - Control4
…dark, turn the lights on. Maybe not full blast — though because it might do the fog light a whole, but bring up 20% so you don’t blind yourself in the middle of night. How about making the motorized blinds in the garage door, automatically pop open so you get quicker escapes, so you don’t have to wait for door to go. How about having the audio system announce over the house, system where the fire is? By law, all smoke detectors have to go off, even if one senses the fire, but if the audio system could say, “You know the fire downstairs in the office, or the storage room,” that would be very helpful to people getting out of the house.

Another the problem is, fire trucks come at down the street at night. It’s a little bit hard to see address numbers on a house and truthfully if the flames are coming out the roof, it’s too late. The fires usually are hidden if you could have your front porch lights and yard lights are flashing that has some real tangible benefit, that kind of shows how you feel — integrate all those systems. That really has benefit because there’s so much…

Bob Metcalfe - 3Com
So, there’s three sort of triggers, there’s price point, there’s usability point and then there’s systemic value point to connecting everything together. Those three things are driving adoption I’m guessing.

Eric Smith - Control4
People have been looking. I’ve spoken at probably 15 conferences, where the topic was, “What’s killer app of Home Automation,” and they’re looking for the killer app, kind of like the Spreadsheet was for the PC, what’s the killer app for Automation? The challenge I think is that the killer app is the integration itself. It’s the making the things work together that is the killer app, I don’t think there’s anyone item of a Home Automation that’s going to be the reason why people buy it all by itself.

Bob Metcalfe - 3Com
So, that’s another benefit of standardized networking. When you have a standardized network, not only does it get cheaper more quickly because there’re a lot of people using it driving volume, but then there’s also the value of being able to connect products from many different companies together, so that you can — “Oh, there’s a light I will use ZigBee that talk to it.”

Eric Smith - Control4
Absolutely. Well, thank you Bob it’s been great talking to you and it’s been good to spend some time with you.

Bob Metcalfe - 3Com
It’s exciting being here at CES with you.

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Tags: automated home, networking, Eric Smith, Control4, 3Com, Bob Metcalfe, venture capitalist, ZigBee, Smart Home, Rocky Mountain Voices

Transcript:
Guest: Jonathan Schwartz - Sun
Guest: Paul Otellini - Intel

Jonathan Schwartz - Sun
Well, good morning everybody. I think we’ve got a pretty interesting day ahead of us. What I’d like to do is, first of all, welcome Paul and the Intel team. As somebody earlier remarked, it was interesting to see those two logos side by side up there, with no spontaneous creation of energy around them. We think today really changes the marketplace for Sun, it certainly opens up a new era in our future. We are really looking forward to talking through what it is that we’re all about.

So, what I’d like to do, and maybe give Paul an opportunity to take a little rest here, is actually talk back to a meeting, and I don’t know if you remember this Paul, but when I was announced as the CEO of Sun, that was back in April of last year, I made a series of phone calls, and probably first on the list was a call to Paul to say, surely, there’s more that we could do together. I mean we are really fundamentally engineering companies, we’re both really focused on innovation and opportunity. We then had dinner in a San Francisco restaurant, which Paul enjoyed a great deal, he came to my neighborhood, which I was happy about. We really got to talking about the marketplace, and it really struck me at that point, the more we talked, the more similarly we viewed the market, the more similarly we viewed the market opportunity.

A slide that can give you a little picture of that is really quite simple. The more folks come online, the more services they want to get access to. You want to get access to your Gmail account, you want to get access to your work, you want to get access to the new entertainment services. The more folks we could bring online, the more opportunity on the network, the more opportunity that would drive in the world’s data centers and network operation centers to fuel that demand. This is a very simple idea, but really the volume on the front end of this is what defines our markets. The accessibility, the affordability, and the innovation that really captivates consumers brings people online and creates economic opportunity, and certainly for Sun and Intel back in the world’s data centers.

So, what I thought I could do is just give you a little bit of a perspective on, not only our business model and the way we see the marketplace, but put our relationship today in the context of the business that we’re ultimately building, and then I will turn it over to Paul to talk about some of the things that we’re going to be doing together.

So, if you spend anytime around Sun, you’ll hear us talk about the four S’s. We’re basically in four businesses, and those businesses are Software, Server, Services and Storage. Now, for us those businesses are a Venn diagram, because there is a considerable amount of overlap between them. Customers really don’t want to have to make four entirely distinct and separate and disparate decisions, and similarly as an R&D company, we don’t want to have to do completely independent R&D to go pursue these marketplaces.

So, we want to leverage to the extent that we can the core innovations we have at Sun, the core systems engineering expertise, software expertise, and market expertise. To the extent that we can, that creates a very efficient model for R&D as well as a very efficient mechanism to go pursue the marketplace, but importantly for Sun, we cannot be just about our own intellectual property. We cannot simply attempt to lock piece A to piece B and piece C, that’s not how customers buy as we see in the marketplace, that’s not what ultimately we believe the market actually wants.

So, if you look at how we go pursue the marketplace, we tend to meet customers where they are today. Our servers at this point run both the SPARC as well as AMD, and going forward, the Intel servers we build are not just about running Solaris, they’re about running Windows, they’re about running Linux, they’re about running Red Hat.

The software we ship, and I’ll give you a graphic to really make this point in a moment, dominantly runs off of Sun hardware. The majority of the software that Sun builds is running on Nokia hardware or on Intel hardware or on — certainly non-Sun hardware, HP, Dell laptops and notebooks along with those systems and servers up in the network.

Our storage business tends to be very, very cross platform. A very significant portion of the storage we build in the marketplace, whether it’s archive systems or enterprise storage, attaches to an IBM mainframe or to an HP server, or to a Windows server.

Then finally our services business, customers don’t want to just go to a company they can support only its own products, they need those products in deployment attached to a world of other innovations and opportunities. So, really this is our view of the marketplace. We meet customers at the edges of this Venn diagram and then we do our best to bring them toward the centre, knowing full well, there’s only one customer in the world who only buys from Sun and that’s our Chief Information Officer and we don’t expect to clone him anytime soon.

So, fundamentally behind this is a very simple concept that I know — also, Paul and I spoke about, which is a belief that volume drives value. So, what you see up in front of you here is a chart showing since we announced the open sourcing of Solaris, announcing that Solaris would be cross platform, would run on anybody’s hardware, what happened when we left those downloads free onto the networks? So, you’ll see back in March of 2005, when we began this program, we have come close to, if not, I don’t have the exact numbers in front of me right now, around 7 million licenses total distributed out into the marketplaces, 7 million licenses. What’s truly interesting about those download figures is how significant a proportion of those downloads are actually running on Intel and x86 hardware out in the marketplace, nearly 70%.

So, 7/10 downloads, 7/10 of those licenses of Solaris into the marketplace were not running on Sun hardware, they were running on Intel innovation. They were running on systems built by HP and DELL and IBM, and clearly if there is going to be an indication of opportunity for us to work together, it looked an awful lot like, here is a great motivation. It’s evident that customers wanted us to work together, and so clearly we wanted to do exactly that.

So, I think you’ve seen some of the news come out this morning, but as we were discussing with the media this morning, you’ve seen one out of three elements of this relationship. To just walk you through what in fact is going on. We are announcing today a relationship in which Intel will endorse Solaris, will support it across a broad range of Xeon platforms, will agree to OEM Solaris out into the marketplace, and to ensure that the market gets the support it needs in running and optimizing Solaris on Xeon platforms. This is a market changing event. This totally changes the perspective that a customer has on how they can do business with Sun, and similarly how they can do business with Intel.

So, Intel has agreed to really promote Solaris, to help us collectively go off and build the marketplace and the ecosystem around that, and reciprocally Sun is announcing today that we are going to be building a complete line of Xeon servers as well as workstations, complementing and augmenting a very rapidly growing server business that we have at Sun. You’ve probably seen the double digit growth we’ve posted now for consecutive quarters. This just opens yet more opportunity creates more choice for consumers, and again, not just running Solaris, but running Windows as well as Linux that’s out there.

Lastly, and I think what’s most interesting to me is — in fact our teams had a dinner back in December to help prep them for working together on getting this agreement struck, and it was evident, we had all of the heads of our product businesses there, and similarly Paul had some of his leading products folks there as well. We’re both engineering companies, we’re both companies focused on technology, focused on the advancement of our own technologies, using process, using wisdom about the marketplace to create new innovations that really capture and captivate consumers.

So, we’re also announcing today that we’re going to be collaborating on the next generation of our software leveraging Intel software expertise, the next generation of systems leveraging Intel microprocessors as well as Sun Systems engineering capabilities. What does that hold for the future? Time will tell, we’re pretty certain you all will be paying attention to that, and certainly we think there is just a world of opportunity out in front of us. So, this is really a comprehensive relationship. This is not simply a buy-sell arrangement. This is a mechanism that brings the two of us together and creates new market opportunities and new options as well as new value for both of us.

So, the substance of our collaboration, why don’t I just quickly walk you through this, I think you can read this on your own. Again, from the Intel side, Solaris will now be a Tier 1 operating system in the Intel definition, which again confers upon Sun and the ecosystem built up around Solaris in the OpenSolaris Community, a great opportunity to go drive after the volume leading microprocessors in the marketplace. This really brings Intel’s involvement in not just the product evolution, but also the community evolution around the Open Source Java platform, NetBeans, as well as Solaris. Then importantly, Intel is going to help make sure that we know how to optimize Solaris well for Intel microprocessors, so we end up with a better total solution for customers.

On the Sun side, we’re certainly looking forward to building out uniprocessor Dual and Quad Core processor systems. I think we’ve also suggested that we’re not just going to end there, this is — again, we see the marketplace is growing, both in requirements as well as the need for scale. We’re going to be building out things that are greater than four way, and I don’t think it takes a lot of creativity to figure out what’s greater than four way, but it sounds an awful lot like an eight way. As we go — yeah, six way, probably not. Again, this is a mechanism for both of us to get together to do the engineering, to do the hard work, to invent things that really capture and captivate consumers.

So, with that I’d like to pass the pickle to — actually you have your own pickle. Paul Otellini, Chief Executive Officer in Intel. Thank you very much.

Paul Otellini - Intel
Thank you, gentleman. As Jonathan said at one level the very highest level, this is about Intel endorsing and embracing Solaris and this about Sun endorsing and embracing Xeon, but I think there is a lot more behind that story and to give you some of our perspective on that. I thought it has been just a couple of seconds talking about how we at Intel view the enterprise environment today. At the highest level, the biggest single thing that’s happening is it all data centers regardless of their size are now focusing on evolving to a service oriented architecture and what that means we’ve think about the data center providing the critical services for a company, large or small. It means you start worrying about the cost of that echoes of that environment. They overall ecosystem built out in a particular how you use your equipment.

Thinks like utilization rights of servers are becoming very, very critical particularly in the era of rising energy cause. So, you want to able to use them more, but also have them costless in terms of the overall construct at the data center. As this happens, we look at things that are important to CIO’s and data center managers today. One of the things that’s popped up to us is that Solaris is evolving as a mainstream operating system, as you saw some other rate on the downloads, but it also it’s mainstream and enough itself and just to the equipment the Sun ships.

Now we’ve the opportunity to have Intel Inside many of those boxes, but it is becoming as the slide as the Mission-critical UNIX for Xeon. What is that mean? It means that we can collaborate together to make sure that the feature sets that people are — who buyers are focused on that is availability, reliability, Demand Base Switching, virtualization those kinds of features can be unleashed from the microprocessor through the operating system into the hardware the people buy, this lowers are in customers cost and increases the utilization rights. It’s all very, very good.

All the customers are demanding more, more flexibility, interoperability that also a strong argument for us to work together Sun is in a unique position, rather unique position or being the operating system vendor and the supplier of the hardware. That means, we can collaborate to be able to take advantage of a lot of these deep features been in a microprocessors and surrounding architectures. Then the third point is the Intel architecture is expanding.

It’s expanding upwards into the high end of the data centers and downwards into mobile devices, but if you’re independent software developer, thinking about Solaris now, being able to think about Solaris and conjunction with Xeon, which is the volume leader in the marketplace. It’s really important to you as a software developer. You can now take advance of the install base of the Intel hardware that’s out there from Sun and other vendors, but also focus your efforts on Solaris. In terms on Solaris on Xeon in terms of being able to find new markets for your software. In terms of Intel in the enterprise, the driving feature in the enterprise is Moore’s law. It’s been sold for almost 13 years now and Moore’s law gives us more, more transistors.

Up until very recently, the more transistors met simply higher clock speeds. That’s changed it changed in the last year and it’s going to change. I think systemically going forward to where we’ll deliver more performance, but we do it through delivering multiple cores more and more cores of microprocessors on a single chip. That leads to overall lower power requirements, lower cost but gives people more performance. That transistor budget though the Moore’s law gives us, also gives us the ability think but it is the template to put new features on to the chips. You’re seeing Intel developed things like I/O virtualization.

Virtualization of the kernel capabilities to build or run multiple operating system environments on a single microprocessor, which is been true in mainframes for long time and now is coming down to volume-based servers. Intel — from our perspective has done a good job in the last year, meeting all of our commitments in terms of new products coming into the marketplace. We’ve been at or ahead of schedule on every new server chip we’ve developed and we now have industry leading performance on 28th of the top 29 industry benchmarks for servers in terms of performance or energy efficiency of those kinds of metrics. We were the first to market with quad Core. We started shipping quad Core in the third quarter and ramp that volume up in the fourth quarter.

Now you see our quad Core products setting performance metric records out in the industry. We’re stopping Jonathan talked about a deep collaboration. That collaboration goes beyond today’s products and we’re excited about working with Sun or what we can do tomorrow, not just 2007 but beyond. We have a lot of new and exciting products coming out on the next generation Silicon Technology, which is 45 nanometers. This technology is extremely healthy at our conference call last week. We talked about Intel now, microprocessors built on this technology, booting four operating systems and for those members of the press that are interested we’re going to have a deep breathing on 45 nanometers up in Oregon next Monday.

You can talk to our PR people. If you’re interested in attending that that would be one we can actually see what a construct of this technology is like, look the fab look at the products that have been built on it. I think it will be very exciting for you. We have three fabs coming up on this technology in 2008, but I think I talked enough about the technology maybe I think it would be best now to turn a back over to Jonathan and he can tell you about why he was interested in Intel.

Jonathan Schwartz - Sun
I offered earlier in the day to allow Paul to walk you through this slide. I am, so, thinking about this. This is actually as a very natural collaboration and I want to try to convey to you how we think about our business and how you should look about the some of the strategic moves you’re going to continue to see from Sun as we go drive forward. Every business we built at Sun is independent of the others. They are related to one another, but they cannot be exclusively dependent upon one another. If all we do is built software for our own microprocessors or our own systems. We’ll by definition not be able to go after – majority of the marketplace. The same applies for our storage business.

We cannot simply attach to Sun servers or to the Sun software that obviously misses the majority of the marketplace. By definition, we’re a minority of the marketplace and we’re looking forward to go participate in as broad a market as possible. So, you can dismiss the fact that one looking at our software business, there is a very natural relationship with the volume microprocessor leader in the marketplace. Again if you look at the numbers that are out there, if you look at where people built applications. They’re building them on Intel microprocessors they’re building them on laptops and notebooks, PCs as well as servers.

So, for us, this is an enormous expansion of the market potential, because we can leverage Intel’s brand, Intel’s reach, Intel’s momentum in the marketplace that gives to our consumers to developers as well as the enterprises, more choice and more options that creates more value for Sun. In the fact that we can reach a much, much broader marketplace.

So, frankly along with the technical expertise the fact that when we hurdle together, we end up having engineering interchanges, which create value for both companies. One of the most exciting things here and I think one of the things that is, is really the story underlying all of this. Is the fact that Intel and Sun getting together around the promotion and the endorsement of Solaris changes the game in the marketplace; what was, potentially in question two or three years ago, which is what happens to Solaris. Does it suffer the same fate as some of the other UNIX is in the marketplace that issue is now off the table.

We clearly have volume, we clearly can work together with Intel to amplify that volume and not just – go look at the market as it currently is and sharing a vision of where the market is headed next to what Paul just said? The fact that we can excitedly sit down with Intel and say tell us the features you’d like us to expose through the operating system. We’re already talking about I/O virtualization as well as the next generation of network optimization of application performance. These are the kinds of things we can do working together and again that creates market opportunity for Sun, creates adoption, and momentum behind Solaris, and if there is a better leading indicator for the future of Sun’s fortune, I can’t think of it than the adoption and the proliferation of Solaris.

So, tell us this is a very natural relationship, we’re very appreciative of the work that the Sun and Intel teams have been doing over the past 6 months as we tried to figure out or how is it we worked together. I think we have had a bit of an ebb and flow in our relationship and I think we’ve only been detecting flow in the past 6 months and I think we want to continue seeing that go forwards, so again this is to us, this is a historic moment. This definitively changes the game in the operating system landscape, changes the market opportunity for Sun gives developers that want to use technologies from Sun as well as from Intel new choices, new opportunities, new performance, new economics. The fact that we can give more choice to customers that ISV’s have a higher volume platform now to plan. There is just a tremendous opportunity both for the Intel side as well as for the Sun side.

So, we can do what we do best and in concert with Intel’s obvious strength and volume, and brand out in the marketplace. We can combine forces to really go after a next ways of opportunity. So, again, I don’t think we could be happy with the relationship, more expectant of the benefits. This is going to bring to us and to bring to customers ultimately at the end of the day. It’s all about them any ways. So, with that why not I turn it over to Russ and maybe we’ll field some questions.

Russ
So, we’ve got some folks moving around the room here with some microphones. So, in just a moment, we’ll start, but I’ll do have to ask you or we’re going to be online on the web, so I need to identify yourself and the company you’re with, so that people listening in and can also get that information and with that it also if you like to direct your questions to either of these two, just let us — let me know. So, with that I think we’ll start.

Tom
Hi, Tom Sanders (Inaudible) where will the Intel processor sit next to the AMD line?

Jonathan Schwartz - Sun
Right next to it; different boards.

Paul Otellini - Intel
Yeah, probably different boards; haven’t got on that level of collaboration yet.

Tom
I mean is it going to be — can I choose between a Intel skew and an AMD skew for the identical system or what is it going to look like?

Jonathan Schwartz - Sun
So, I guess two things, one, I’d refer you to John Fallow (ph) and he can talk about specifics of the segments we’re going after. The end of the day, customer will define that. The customer will determine what they want to buy from Sun and what the underlying infrastructure needs to look like? That applies by the way to software as well as hardware because we do an awful lot of business out in the marketplace now, satisfying Window’s demand as much as Linux’s demand.

So, that’s not so much a grand strategic plan about how we carve up the market that’s really a – let’s look at the marketplace let’s go figure out where Intel innovation really creates new opportunity, let’s go after that.

Ian Kinfer - Bloomberg News
Ian Kinfer; Bloomberg News. Jonathan. you mentioned number of facts is one into your decision, but all other the things you said about Intel is pretty much always been true of the Intel in terms of scale, size, power in the marketplace, so why now would be the question place.

Jonathan Schwartz - Sun
Well I think a few things, number one the fact that Solaris was growing as rapidly as that has not always been true. I mean go look at the chart is just been a rocket ride up into the right that changes again. Secondly our server business has been growing double digits and that’s over the past four consecutive quarters on the spot side, triple digits on the x64 side. Frankly I think we’re different company in were obviously coming at this relationship in a very different way.

Thirdly, I think there has been a change in our view of the marketplace and how we want to go after it, maybe leaving some of the rhetoric of the past behind us. Again, one of the first calls I made having gotten my shiny new job was to call Paul and say, “what can we do together?” because clear — of course, we’re going to compete we’re both very large companies. We compete with almost everybody in the marketplace, but where can we go collaborate to create value for both companies, so again this is an either/or relationship for Sun. This is very much in an relationship. I think it is also a reflection on time and place, but maybe I’d also ask Paul to respond to that.

Paul Otellini - Intel
Sure. From our perspective, this is not just a chip deal, that’s certainly is what we’re all about and is important to us from both the credibility standpoint and the commercial aspects of the relationship, but it is not insignificant for us to commit to endorsing Solaris. This means we’ll put deep engineering on it, we’ll put field resources on it and that is from our perspective not just because I like Jonathan, but I think it’s a really good commercial opportunity for us. The install basis Solaris in a lot of places where Intel is not in some cases. Financial services and telecommunication are two markets where Solaris is very strong there being able to offer an optimize environment on Solaris, on Xeon into those marketplaces, make sense for us and it goes beyond the traditional chip sales aspect of the collaboration.

Speaker
The questions (ph) seem to be very quick.

Merv Adrian - Forrester Research
Merv Adrian from Forrester. Can you give us a little color as to when you think you’ll start to ship systems. You said this year, but can you be anymore specific; you think it’s year end, you think it is going to come any quicker on that?

Paul Otellini – Sun
We’re shipping right now; Solaris running on Xeon - go to Sun.com/solaris, get it downloaded, run it. It runs well; it will only run better. And for the specifics of when we start shipping Intel systems, I guess I’d defer to John, late in the first half of 07. Can’t you do better than that John?

Stephen Shankland – CNetNews.com
Stephen Shankland from CNetNews.com. In the past, you guys have been concerned about keeping a cap on your R&D budget; clearly this increases the amount of R&D. You’ll have to do engineering; you’ll to do hardware and software qualifications and certification. I wonder if you can comment on how much of a difference this is going to mean to Sun’s business also in terms of – would just take some supply chain — are you - presumably you think it is going to be justified, but how important is that factor and are you going to be getting any help in those activities from Intel?

Jonathan Schwartz – Sun
Yeah and in fact just to the beginning part; this, is in our view, actually lowers the expense because now we’ve a collaborator who is willing to work with us to court and cultivate and invest in the success of the ecosystem. So, this is a way of making R&D much, much more efficient. We can do what we do best and really now work with Intel to make sure that they can bring all that Intel has to bear against ensuring the success of Solaris. I think the way we look at R&D, we’re not interested in – nor is Paul for that matter in capping R&D. We are interested in the return on R&D.

And so long as we can get a return, we are interested in amplifying that to the extent certainly possible. And I think this is a way of ensuring, we get a better return for the R&D we are doing. Again, Solaris just running on Sun — on SPARC Systems or just running on AMD systems misses the majority of the marketplace. We want to go after the majority of the marketplace. Sun simply delivering SPARC Systems or simply shipping AMD systems misses the Intel opportunity. We want to make sure we can participate in both equally. I think one of the unspoken assets that Intel has is, they got a big software team.

They know an awful lot about software; and the fact that we can get together to optimize Java, we can optimize Net means that we can optimize Solaris; makes their systems look better, makes our operating system look better, makes the overall customer set happier — that’s all goodness as far as I am concerned. And again, I don’t know if you want to add to that.

Michael Singer – InformationWeek
Michael Singer with InformationWeek. Talk about your — you might have alluded to it before, but what were the previous barriers, because both of you had guiders before you took your posts that had a different relationship than you two have today. What was it that broke down those barriers and for you Jonathan and then for Paul? Was it just that you had a new opportunity with Sun that allowed you to take that choice to make this decision today or can you kind of, give us some call on that?

Paul Otellini - Intel
I think it was a bottle of Barolo at Delfina; I think that really - really good bottle.

Jonathan Schwartz – Sun
You know leave history aside, we think — and I think what motivates both of us is, we think there is opportunity – let’s get busy - let’s get after the opportunity. And what do you got, what have we got, how do we put it together in ways that goes off and creates value. So I think, we’re both looking forward and looking at customers — and by the way, just talk to any customer out there; no one could possibly think that this is anything other than a brilliant partnership; all these does is create options and choice for them.

Paul Otellini - Intel
One of the things I think is interesting to observe is that we are coming together at a time when both companies had very positive momentum both in the market and in our products; a momentum behind Solaris, we had a momentum behind the double-digit growth in servers, momentum behind Intel’s new product lines and so forth. And I have always thought that momentum breeds momentum; and the idea that we could get — the two of us working together, could only multiply as what we could have done independently and that was the principal reason for me to really want to do this.

Audience Member
So Jonathan, you’re going to start releasing Dual Processors, Xeon Systems in the first half, which is pretty soon. How long have you actually been developing these systems and also can you comment on when you expect the 4P and uniprocessor systems to come; but basically when did you start working it? How long has this been under cover?

Jonathan Schwartz – Sun
We – and again just so you think about — we don’t take the team that’s working on these systems and have them completely segregated and isolated from every other team at Sun. We have really deep systems engineering expertise; and frankly, the fact that they were only working on SPARC - you know, microprocessors, under-leveraged the talent they had that could enable us to get into new markets. So we have a unified systems team at Sun that builds all the systems we build.

So, in that regard, along with Solaris, which is obviously more than two decades in evolution, we’ve been working an awfully long time in the same space. The question was, when were we really going to commit to build common products. And I think that relationship has been going on for a while, because we’ve seen one another in the marketplace so often.

So I don’t know if I could put a specific date on when did we actually sit down and say okay, what are the aspects and performance and in-outs and how do we go make this — just didn’t work that way. And in terms of the specific ship dates, I am not going to give that to you. You’d give it to the other guy. Yeah, it was a good try still. But again, I’d like to remind you, Solaris runs beautifully on Xeon, is available at Sun.com/Solaris.

Rush
I guess Michael.

Michael Singer - InformationWeek
On the software side, obviously Intel is adopting more the Solaris, but Jonathan talk about Intel software business, and what are the sort of gold nuggets within say TBB or BePro (ph) or what are the things that you’re looking forward to sort of enhancing that you may not already have in Solaris or NetBeans or Java for that matter?

Jonathan Schwartz - Sun
Are you asking him or me?

Michael Singer - InformationWeek
You.

Jonathan Schwartz - Sun
Let me give you a very simple example. Virtualization in a chip is less interesting if it’s not exposed by the operating system. If the operating system doesn’t know how to deal with it or leverage it or take advantage of it that makes the overall systems package less interesting. If we can synchronize and coordinate our releases around virtualization, whether it’s application virtualization, OS virtualization, or network virtualization, that’s only upside. I was with a customer just last week, who is in a very, very high scale and very high value environment, and one of the points they made, which was I think similar to the point that Paul made, is we’re the only company in the marketplace today that delivers both the operating systems and the underlying system infrastructure, the only one.

Now, a few years ago that was viewed as a deficit that was a bad thing, because that wasn’t the future. Well, now the fact that we can coordinate our releases and work with partners to make sure that we sit down with Paul’s team and say, what’s coming up and how can we help you amplify it in the marketplace, that adds value to them and also adds value to us. That applies across Solaris as well as Java. I mean again, to really understand the Sun model, we want Solaris to absolutely scream on Xeon, to blow everyone else in the marketplace away.

Paul Otellini - Intel
If I could just jump in there. The two other areas I think would be interesting, at least from our perspective. Solaris being able to take advantage of Intel’s I/O acceleration technology for the whole I/O part of the system to run faster. Demand based switching, so we can move task back and forth very quickly, exposing that from the hardware to the operating system would be very interesting to us.

Jonathan Schwartz - Sun
Ultimately, if we do a better job of optimizing Solaris on Xeon, because we can, then that means it’s going to win in the marketplace, but we want to present customer with choice, we want to do what we can to amplify the best of everything we build.

Rush
Steven.

Jonathan Schwartz - Sun
Don, you’re silent back there, what’s going on?

Don
Happy to yield the mike down.

Jonathan Schwartz - Sun
I read your blog, I can start asking you questions now. So Don, what do you think of the deal?

Don
So, where do you see now SPARC and Itanium competing in the future, how do you divide the x86 line from the SPARC line, and in your case, Paul, the Itanium line?

Jonathan Schwartz - Sun
We don’t divide it, we try to go after as much market as we can, but these are loosely coupled than highly aligned business, and so we want to see Solaris succeed on all platforms on which it ships. The fact that we’ve got four consecutive quarters of growth behind us suggests there is more than enough opportunity across all the disparate product lines. We want to go after all the opportunity and not just isolate ourselves to one.

Paul Otellini - Intel
I guess for my perspective, the very positive part of this relationship is the ability to work together to get the Xeon based systems greater than four, up and running, and delivering really good results into the marketplace. Sun is a good company to collaborate with from that perspective. I think it will be the wrong thing to do to reopen the religious war or Itanium. Itanium is a separate product line right now, Solaris does not support Itanium. If they decide to support it, we’d love it, if they don’t, that’s just business decision on their side.

Russ
Steven.

Steven
So, related question, which is big-iron on x86, it’s something a lot of people have tried for a very long time, Sequent, all these companies that have vanished into the midst, and it’s something I guess really, IBM is the only enthusiast for, do you think that Sun is going to be the company that finally gets big-iron x86 to break out, Paul?

Paul Otellini - Intel
Gosh, I hope so, but…

Jonathan Schwartz - Sun
He meant to say yes.

Paul Otellini - Intel
The reason I said that is, is that there are other customers working on 8 and above Xeon as well, not necessarily in this country, so you probably don’t have as much visibility to them, but we see that happening elsewhere. I think that in — if you look at, from our perspective, a snapshot or a side view of the Solaris marketplace in terms of some of those very critical mission, mission critical markets and data intensive markets like financial service or Telco, well, the thing is it has to be reliable has heck, that allows us to get Xeon into the space where it isn’t really today.

Jonathan Schwartz - Sun
Maybe then to give you more confidence in that, the single biggest determinant of the success of a high scale x86 system will be the popularity of the operating system that runs on a single socket x86 system. You cannot start by saying I’d like to build a 16 way x86 system, and oh, I would probably need an operating system. No one starts their business on a 16 way system, they all start their businesses and they all start their projects on one way.

So, the fact that we can show up in the marketplace with a one socket system that — I mean again, this is the recipe we know well. What’s led to the success of Sun Systems business is the fact that we’ve had complete binary compatibility up and down the product set. So, the fact that we’re going to be in this space with our own systems, and by the way with an operating system that eats threads for lunch and scales beautifully, should give us a little bit of a boost that maybe some of the other players haven’t had.

Russ
So, I think I’m going to have one more question here. So, if anybody would like to be the last questionnaire, that would be great, if not, we will end early. Michael, give it another go?

Speaker
No question Duncan.

Audience Member
So, the last question is on Service Oriented Architecture, SOA. We’ve heard about writing to the chip, writing to the OS, we write to the SOA stack, so what is it that you now bring to the table, Paul, that wasn’t previously already there with the current processor systems that you have in place Jonathan?

Paul Otellini - Intel
I’m sorry, what is it, that we bring to the…

Audience Member
Yeah, what is that you’re now bringing to SOA that Jonathan couldn’t do already?

Paul Otellini - Intel
Well, on his SPARC side, he’s been doing it for sometime. On the x86 side, I think we’re very comfortable with our first implementation, a visualization. We’ve a second instantiation of that coming down the pipeline that I think is substantially better than the competition. We have other things I talked about earlier in terms of I/O Acceleration, demand-based switching. The terms of the ability for us to use the advance silicon technology we’re about to deploy, to deliver not just performers, but energy efficient performers, leadership, makes the end systems better. SOA isn’t just what it does, its how it does it and how much does it cost, and we think that we help that whole equation in terms of power performance.

Jonathan Schwartz - Sun
Just to amplify what Paul said that, the single biggest issue with SOA in the marketplace — and look SOA is a horrible buzzword, and we can all agree that it represents something, but no can quite identify what it is. The single biggest issue in the data center, just economics, brutal efficiency, environmental capacity, that I think is — that’s become the dominant issue in large scale enterprises, that’s very different than developer productivity, where obviously we’ve been making a lot of progress with NetBeans and the Java platform.

So, I think just ending here, I want to thank Paul specifically and also especially the Intel team. This has been a long time coming and I know there’s been a lot of hard work that’s been put into it. We are thrilled to death with the market opportunities. We’re both going to go evolve and couldn’t be happier with the progress we’ve made to date, and couldn’t be more excited about the progress we’re going to make in the marketplace. So, thank you all very much.

Paul Otellini - Intel
Thank you.

Jonathan Schwartz - Sun
It is much appreciated.

Paul Otellini - Intel
We iterate that from our side, thank you.

Jonathan Schwartz - Sun
Good.

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Tags: Sun, Jonathan Schwartz, Intel, Paul Otellini

Reporter’s Notes: This is such a big issue the FCC is getting involved. Rich Tehrani’s VOIP blog covers the specifics. Vonage users in San Francisco now have E911 service, the importance of which was underlined by a recent case of a Bay Area man who died after calling 911 from a VOIP phone and was unable to be located in time for the crucial medical attention he needed.

- Michael Johnson

Click here for transcript.

Tags: VoIP, Scott Navratil, Dash911, E911, ISPCON 2006

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A related DNS story on CNET writes that “DNS could slow broadband service.” Certainly the impact it has could be high — especially with corporate enterprises and medium sized businesses.

Tags: Robert Thomas, Infoblox, DNS, DHCP

Click here to listen to part 1 of 2

Tags: Mike Boich, Bud Colligan, Shelby Bonnie, CNET