For years, the prospect of an IBM-Microsoft plot to dominate the industry has kept executives at Sun -- the third member of this high-tech "Bermuda Triangle" -- awake at night--until now.

During the April 2 press conference with Sun CEO Scott McNealy and Microsoft CEO Steve Ballmer, McNealy said, "Make no mistake about it. There's nothing about this agreement that would upset us if it resulted in people buying more Microsoft and more Sun equipment than they normally would have. The rest of the world has to deal with that."

If other Java licensees wouldn't help IBM, perhaps a bigger enemy of Sun would. While continuing to license Java, IBM has worked closely with Microsoft to push every one of Sun's buttons in hopes that it could eventually assert the same arms-length control over Java that it now does over both Linux and the open source community. Most of those buttons have been technical collaborations resulting in what Sun feared and resisted more than anything else: interoperability between Java and Windows. But whereas third party-developed interoperation between the two technologies (within the confines of the same computer) served as the basis of a Sun-initiated lawsuit (Sun v. Microsoft), the IBM/Microsoft-developed interoperation between the two was based on a lawsuit-resistant layer of abstraction that involved a network. Not only was IBM having its way with Java, but, with the help of the company whose customers it wanted (Microsoft), it built the highway of interoperation necessary to more easily substitute IBM's software infrastructure for Microsoft's.

Linux was coming on strong in the enterprise. Java, as a runtime environment, was dominating .Net in the application server market as well as having a near-lock in the mobile space. And IBM, through its Web services collaborations with Microsoft (and now BEA), was weakening Sun's control over Java. Microsoft and Sun found themselves in a mutually shared predicament. With no formal relationship between Sun and Microsoft, IBM's relationship with each of them was working to IBM's advantage against both of them.

To restore balance, there was only one option. On April 2, 2004, Microsoft and Sun exercised it. Although their deal may target IBM, I believe it's also as good for customers as McNealy and Ballmer say it is. Sun will continue to extol the virtues of standards, while Microsoft will continue to demonstrate that useful things sometimes get done faster (and better) when the steps to standardize are skipped. Although execution will count for everything, Sun turned an important corner when McNealy promised to end the rhetoric and dispense with the litigation against Microsoft. Likewise, Ballmer and Microsoft now come across as less domineering and more accepting of the fact that there's plenty to go around. Their mutual respect for intellectual property sets a welcome tone for the new dynamic between the two companies. Both men came across as being sincere, and I expect that they will follow through to the benefit of the IT community as a whole.

What exactly will Microsoft, Sun, and their customers (which collectively must represent 99.99 percent of all enterprises) get from this deal? Let's read between the lines from the April 2 press conference.

Ballmer: "I do think that in an environment that gets litigious, it's harder to have an open discussion. I saw Scott a couple of years ago at a golf tournament and it was hard to have an open discussion. Neither of us knew exactly what to say or what to do."

Between the lines: This agreement will establish communication channels at all levels of the two organizations: from the top, where Sun CTO Greg Papadopoulos and Microsoft chief software architect Bill Gates won't need to be as secretive about their regular discussions, to the bottom, where the hardcore technical collaboration takes place. In a post-announcement interview, Sun software CTO John Fowler told me, "With litigation going on, [those were not] even phone calls we could make, and now we can. This is a landmark change. Now, there's a whole bunch of things we can go explore."

What sort of things will they be exploring?

McNealy: "[We're going to make our technologies] interoperable in a unique and exceptional way." Going forward, this provides an opportunity to deliver a higher level of interoperability and compatibility from each other's servers to each other's clients and from server to server, while respecting each other's IP.

Between the lines: The agreement paves the way for interoperation at multiple layers of the software stack. This includes direct communication between the Solaris and Windows operating systems, from Solaris and Java (and probably Linux) clients to .Net application servers, from Windows clients to Java-based application servers, and from Java-based application servers to .Net-based application servers. In more general terms, the agreement should diffuse a lot of that "either-or" pressure that's been fomented by the competing interests of the Java and .Net ecosystems. For example, enterprises can breathe easier knowing that Sun and Microsoft will work together to ensure that Java-based handsets will work seamlessly with Windows-based servers.

Additionally, McNealy's use of the word "unique" hints at forms of interoperability that don't yet exist. Whereas other Java licensees will likely inherit some of that interoperability for their wares, subsequent comments by Fowler suggest that some of the material borne out this relationship, especially at higher layers of the software stack, will exist outside the standard Java specifications produced by the Java Community Process. These extra-JCP technologies will no doubt serve the desires of both Sun and Microsoft to curb IBM's intrusions on their customer bases.

Said Fowler: "This was done without the consultation of IBM. Our products [Microsoft's and Sun's] will interoperate better [with each other] than with IBM's products. I would assume that IBM is not going to view it as a positive turn of events for them."

So, what will be the context of all this interoperation?

Ballmer: "We agreed on specific technical collaboration as it relates to how you make servers and clients talk to one another across the network. Greg [Papadopoulos] and Bill [Gates] have been meeting on a regular basis for many months now to go drive the appropriate interoperability and compatibility frameworks that allow the two architectures to work in a much more seamless way than they normally would have, had our technical teams not been allowed to collaborate."

Between the lines: While Ballmer specifically mentioned network-bound interoperability, Sun's Fowler warned me not to read too much into those words. For example, fully sanctioned, intra-machine interoperability between Java and Windows (of the sort that Sun once sued Microsoft over) is now back on the table--should customers demand it. After all, since that same intra-machine interoperability could have been achieved by going out onto the network and back with Web services protocols, it makes more sense in the name of performance to sanction a more direct path.

The importance of this to the development community is not to be underestimated. For the most part, third-party and enterprise developers, both of which are critical to the Java and .Net ecosystems, had to choose development languages and frameworks on the basis of which ecosystem offered the sort of heavy lifting best suited to the task at hand. For example, to the extent that Microsoft Office provides developers with useful APIs for working with Office-based documents and an Exchange-based e-mail infrastructure, enterprise developers with a preference for Sun's Java had to introduce another language and integrated development environment (IDE) to their toolboxes, thus increasing both complexity and cost during a time where most organizations were looking to simplify their approaches to IT. Direct access to Microsoft's .Net classes from the Java Virtual Machine and vice versa could ease the pain of many developers.

Additionally, Microsoft and Sun's support of this sort of virtual machine connectivity could give birth to a new cottage industry of AppForge-like middleware companies. AppForge provides a write-once run anywhere development environment that spans the PalmOS and PocketPC operating systems. The sorts of AppForge-like middleware that could be created to commoditize functionality across Java and .Net are limited only by creativity.

For Microsoft developers accustomed to working with Visual Studio, it would be beholden upon Microsoft to incorporate the necessary technology, which it will be licensing from Sun, into its development tool (Visual Studio .Net). For Java developers, we'll have wait to see just how Sun, which will be licensing technology from Microsoft, intends to make such functionality available to Java programmers. To the extent that Sun has a competitive agenda with IBM, we may see it look for a way to expose this functionality to the Sun-backed NetBeans integrated development environment, but in a non-open-source way that prevents the technology from finding its way into the IBM-backed Eclipse development environment.

What is unlikely, however, is the merger of Microsoft's C# programming language and the Java programming language.

McNealy: There are no plans to merge C# with the Java language or .Net with the Java Web services architecture.

Between the lines: McNealy was responding to a reporter who asked whether C# and Java might merge. There are enough differences between the two, and Sun and Microsoft have every intention of competing with each other, that merging C# and Java is off the table. Had the two men been asked whether Microsoft's Visual J# and Java might eventually have more in common, the answer most likely would have been yes. Both companies understand that the more "standard" the Java language is, the better it will be for developers. In true standards fashion, such a development would allow Sun's NetBeans-based development tools and Microsoft's Visual Studio to go head to head on a "comply with standards, compete on implementation" basis. How--and if--Sun and Microsoft intend to keep IBM off that development dance card remains to be seen.

Although he wasn't asked, McNealy stated the obvious when he said that there were no plans to merge the .Net and Java runtimes into a single entity. What he didn't address, however, is whether the licensing deals paved the way for Sun and Microsoft to develop implementations of the each other's runtimes. For example, as the operating system layer becomes more commoditized, and most of the value-added functionality shows up at the middleware layers where .Net and the Java runtime environments play, Sun may develop an interest in being the official provider of .Net on Solaris and Linux. Why would Microsoft consider this? Although the availability of Unix- and Linux-based versions of .Net might carve a notch out of Microsoft's profits from Windows, those profits could easily be offset by .Net licensing fees.

When asked about the possibility of this, Sun's Fowler said, "I have no idea [whether we'll do that or not]." Leaving the possibility open, however, Fowler added that "this agreement paves the way for having a discussion about almost anything." Should Microsoft suddenly become interested in developing its own Java runtimes again (it tried this once already, but its implementation landed it in court), the next question is whether we might see Microsoft join the Java Community Process. "That's up to Microsoft," said Fowler. " If Microsoft wants to join the JCP, we'd be happy to talk."

JCP or not, for Microsoft and Sun to become 10-year bedfellows, there could be no mistake about intellectual property issues.

Ballmer: It's an agreement that comes from two companies that believe in intellectual property, that develop intellectual property, and that are respecting intellectual property ,and we needed a framework for our collaboration that honored our mutual interest in intellectual property and as part of doing all of this collaboration.

McNealy: [We'll be] respecting each other's intellectual property in a very solid way.

Between the lines: There's more to the "respect each other's IP" phrase (which each CEO used repeatedly throughout the press conference) than meets the eye. The agreement sends an important signal to the marketplace regarding the fair value of both Microsoft and Sun's IP on an ongoing basis.

To the extent that Microsoft, by virtue of its settlement with the U.S. Department of Justice, is under orders to make its intellectual property available to others on a reasonable and non-discriminatory basis, there is perhaps no other licensee in the industry that can better serve as the litmus test for what's considered reasonable and non-discriminatory than Sun. While Sun was directly engaged with Microsoft on several legal fronts over the last decade, it was also an indirect player, lobbying hard behind the scenes to make sure Microsoft didn't end up with the keys to the high-tech kingdom.

By wiping out its outstanding lawsuits against Microsoft and agreeing to license Microsoft's technology on an ongoing basis, Sun has cast a new light upon Microsoft as a company willing to play by the rules and atone for its sins. In addition, as an industry bellwether that's licensing technologies from Microsoft, Sun's agreement ushers in a new chapter in Microsoft's history, as the company's growing portfolio of intellectual property becomes a stand-alone revenue center.

Likewise, Microsoft $1.95 billion payment to Sun, which includes $350 million worth of technology licensing fees, sends a clear message to the rest of the technology community, and particularly IBM: Sun's IP is not to be disrespected. Sun is entitled not simply to charge royalties for its inventions, but also to have its rights as the inventor of Java preserved. Had Java been a true standard, I would be singing a different tune. But it is not. It always has been Sun's intellectual property.

And what of the disrespectful rhetoric that has existed between the companies?

McNealy: "At the prodding of just about every customer I met, [I was told] 'Cut the rhetoric, Scott. Go get interoperable. Stop the noise and begin the collaboration.' Maybe we've grown up. Maybe they [Microsoft] have grown up. Who knows? Maybe the customers are getting more in charge these days. I'm going to do my best to be good. I will be good. There's been an equal amount of rhetoric coming the other way. Mine was just more clever. There will continue to be the rhetoric around whose products are better. I feel comfortable knowing that the tone is the kind that customers want.

Ballmer: We're going to continue to compete. You're going to continue to hear from me and our guys about why Windows servers are the best and you're going to continue to hear from Scott and his guys about why Solaris, why Java. That's good, healthy stuff. The thing I don't think you'll hear out of either one of us is that we're "welded shut" (a reference to one of McNealy's favorite terms to describe the Windows software stack).

Between the lines: What do you think? Write to me at david.berlind@cnet.com.

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