McNealy: Aussies need a niche
BY SIMON VANDORE

Summary Description The Sun boss said Australia should specialise in one area of the new economy, and announced plans for $50 million in local investment.

Introduction
Sun CEO Scott McNealy believes Australia lacks a clear identity in the high-tech world.

Body
"Australia needs a digital tagline," the billionaire said while delivering yesterday's National Press Club Telstra Address in Canberra.
Just as the US has Silicon Valley and Scandinavia is a centre for wireless technology, Australia could improve its standing in the new economy by becoming known for something, McNealy said. Money market commentators have pointed to Australia's image as a primary producer with a lack of new industry as one reason for our flagging dollar, a point highlighted by a critical International Monetary Fund report last week.
McNealy suggested Australia could try to become the digital media capital of the world, as it is already home to huge media empires like News Ltd and PBL. Initiatives such as an annual conference on digital media and enticements for digital media companies to invest locally would be a good start.
The post-Olympics image of Sydney would help, McNealy said, describing the city as "a warmer San Francisco" which would be very attractive to Americans.
"You should all be doing a brain drain on the rest of us," he said.
However, capital gains tax is still a disincentive and the total cost of capital in Australia needs to come down, he said. He compared Australia to Ireland, where tax breaks for investors have led to a technology boom with very low unemployment. Both countries had the advantage of English as a first language and an attractive lifestyle.
Balance required
On the other hand, McNealy warned that it would be a mistake to go too far in one direction.
"You can't be all clicks and you can't be all bricks," he said. "Can you get the Australian industry to go clickster too? Not to drop the bricks."
McNealy announced that Sun will be investing $US50 million in venture capital divided between Australia, Japan, New Zealand, Korea and Taiwan, through its new Asia Pacific Venture Investment Program which will ultimately invest about $US250 million thanks to additional funds from partner companies.
He also announced that Sun would be selecting three Australian schools to receive $400,000 of equipment each, including a Sun Ultrasparc server and 100 SunRay (thin client) devices.
Humorous criticisms of Microsoft were a feature of McNealy's speech. He cited examples of Windows program bloat and claimed that if an army were to receive attack orders electronically, the word 'attack' would fill 48 bits in email, 256 bits in HTML, 90,112 bits in Microsoft Word and 268,045 bits in PowerPoint. Use of the latter program has been banned within Sun.
McNealy described Microsoft's .Net strategy as "an all-encompassing hairball" that nobody understands, claiming that Intel's recent earnings warning and Microsoft's antitrust problems are signs of a change in the market.
"What you're seeing here is that the Wintel thing has stalled," he said, describing Microsoft as 'convicts'.
McNealy said the real solutions lie in ASCII, HTML, XML and Java. He approves of the growth in Linux, though he insisted it was just Unix. Sun, he said, is actually the number one Linux company in the world due to its Solaris expertise.
Broadband woes
However, McNealy agreed with Bill Gates' comments that Australia needs cheaper and more widely available broadband access, because the return on investment is significant.
"It's much easier to do telemedicine than to build a hospital in the bush," he said.
"The Internet is totally underhyped," McNealy said, claiming that everyone in the world, including Sun, is hopelessly behind in exploiting the benefits of 'internetworking'. He advocates closing down postal services in favour of email and retraining postal workers in new economy roles, though he said this would never happen due to unionised labour.
Spot markets such as eBay are more efficient means of ecommerce than pricelists, he said, and he encourages the adoption of this model for other trade. A car should be able to broadcast "tank is empty" to nearby petrol stations and direct the driver to the cheapest offer, he said.
McNealy also continued a long-standing attack on concerns over online privacy, repeating his claim that consumers are already without it.
"Privacy has never been absolute," he said. "People get out of control, hysterical in their attitude to privacy."
"You want an ambulance driver to tap into your medical records," McNealy said. "I think information is good. As long as you have a population in a democracy that's paying attention."
Finally, McNealy expressed concern over rising oil prices and interest rates, which he said currently present big risks to the health of the world economy. However, he is satisfied in his own career.
"I'm not going to do another startup," he said. "I'm not going to make the senior [PGA golf] tour either."