Sun Microsystems has been having a tough time lately with a record loss of more than $2bn and unrelenting criticism from many analysts and customers alike.

While the other systems giants have been reining in product portfolios that are too diverse, Sun remains wedded to markets as diverse as supercomputing and desktop applications, operating systems and grid computing.

Wall Street may want to see more fiscal prudence from company chairman, president and chief executive, Scott McNealy, but he shows no signs of changing his stripes anytime soon, as he told Computing in an exclusive interview last week.

Sun grew spectacularly in the dot com period and now you are retrenching, how do you feel about that?

It's way more comfortable. It's way more rational. It's way more manageable. We were growing the company at 40 to 60 per cent per year. We were hiring three to four thousand people a quarter. It was kind of like: 'Here's a mirror. If you can fog it, you're hired.'

Now I think we are managing the company much more responsibly. The product quality is way better. The service and support is way better. The product strategies are much more rational.

What do you hope that rationalisation will achieve?

I don't do predictions. Clearly as a company we are driving productivity gains very aggressively and driving through cost reductions. We went three or four years without thinking a bit about cost reduction.

So we got behind a lot of the old economy companies in terms of cost and productivity improvements and so we are now harvesting those very aggressively.

You are strongly behind Linux now. How do you see that sitting alongside the Solaris operating system?

This is more than just Linux - it's open source. We're leveraging mankind's R&D around the user interface, around the browser with Mozilla, around Star Office, around Solaris with the Linux kernel. Every step along the way we are leveraging open source and the Java community development. This is something which so many people don't understand.

How many other companies are helping us make Java better? We've got hundreds of Java Specification Requests and hundreds of Java Community Processses where we have had competitors and partners and customers alike. That's an immense amount of team R&D around something that isn't exactly open source but it's better than open source, because you have the compatibility tests. Both approaches have their advantages, but we are leveraging both.

You took many people by surprise with the decision to offer the Java enterprise products for an all-in price of $100 a month. Is that working out for you?

It was shock. It was unbelievable. And do you know what was really interesting -IBM and Microsoft have not responded. They don't know how to respond.

I've said: 'Check'. I don't know if it's checkmate, but we've said: 'Check, move your king' and they don't know what to do and they are at their drawing boards right now, trying to work out what to do. I only say it's check because with $60bn in cash Microsoft can probably buy its way out, but it's going to be expensive. IBM is probably big enough that they can buy their way out of check, but it's going to awfully expensive for them too.

By the way, I used a pawn for the check. I used our software.

You have made a deal with chip maker AMD - where do you see 64-bit processing going on the AMD platform?

We see three silicon investments: 32-bit Intel Xeon - two-way and four-way; two to eight way 64-bit x86 with AMD Opteron; and one to 100 way-plus with UltraSparc. And then a fourth chip major investment is going to be chip multi-threading and that one you will see start next quarter.

Each one has a different design centre and a different set of characteristics. UltraSparc is more reliable, has more features. Opteron is 64-bit, Xeon is 32-bit. We can go to 100-way scalability, they can't. But they are lower cost and higher megahertz. They have all these different characteristics, but it depends on what you are trying to do inside the datacentre - which architecture you choose. But they all run trusted Solaris and the Java Enterprise system.

What made you choose AMD Opteron over Intel Itanium?

It was a slam-dunk reason. We maintained binary compatibility with the entire x86 software base with Opteron. We took the Xeon Solaris binary and it immediately ran on Opteron.

Itanium would require an entire re-write and recompile and re-certification our operating system and then of every application that ran on top of it.

Is that is why it is taking time for Itanium to catch on?

Itanium is last millennium architecture - it's too late. Sparc and IBM's Power have already taken the space in the 64-bit, vertical scaling, enterprise compute space. Itanium would need to be three or four times faster than Power and/or Sparc to establish a position, coming in eight years, nine years or you could say 10 years, late.

We got everybody to recompile for Sparc 64-bit way back in 1994 because we were the first. They're last, nobody's going to recompile for that environment. So AMD was just great. AMD is an Itanium killer.