Sun reckons its Java bundles can replace Microsoft desktops - and IBM and HP data centres - for the price of a cup of Starbucks-style Java a day.

Amid a bundle of announcements, Sun Microsystems has presented a new software licensing model which is intended to attack the positions of Microsoft on the desktop, and IBM and HP in the data centre.

In two software stacks previously known as ‘Mad Hatter’ and ‘Orion’, the company is bundling software with support services and integration, for a fixed fee per user per year.

The Java Enterprise System includes ten Java-based server software products for $100 per user per year, and the Java Desktop System, intended to replace a whole Windows desktop, also costs $100 per user per year, or $50 if bought together with the server stack.

Both are still in tests, but should ship by the end of the year.

“A company with 60,000 employees would pay £80 million to licence the ten products [included in the Java enterprise server stack], plus an integration fee of around £24 million,” said Arlene Adams, Sun’s UK director of software.

“The new deal would cost them £5 million per year.” This works out at roughly the cost of a less functional kind of Java rollout, she said, comparing it to the cost of a Starbucks coffee per employee, per day.

The server bundle, previously known as ‘Project Orion’, is intended to replace standard IT functions such as Exchange servers as well as corporate middleware, and is aimed at companies with 100 or more users. It includes a directory server, messaging server, calendar identity server, instant messaging, clustering, a proxy server, application server, web server message queue and remote access.

The Java Desktop System, previously known as Mad Hatter, includes Linux, the Gnome GUI, the Star Office application suite, the Mozilla browser, and Ximian personal information manager (an Outlook-like program, now owned by Novell).

“The current industry business model is not healthy and sustainable,” said Adams, alleging that Sun’s major rivals are all hog-tied by their vested interests. “A software company [such as Microsoft] cannot change the business model, because it must think of revenue streams from licence sales. Meanwhile, Hewlett-Packard and IBM have dependencies in the services business.”

Services-led companies will always angle for contracts that take a lot of man-hours, so to adopt this model would cut off needed revenue streams, she said.

Interesting as that argument is, are we supposed to believe that Sun has no vested interest? And if it is not a software company, like Microsoft or a services-led company like it says IBM and HP, what does that leave? Sun people bristle at the suggestion that they work for a hardware company.

The new deal is actually a services offering, but one that is designed to be cheaper, simpler and more deterministic than those offered by HP and IBM. “Despite its “we are not a services-led company” Sun does a lot of services – roughly 30 percent of its revenue, according to analyst James Governor of RedMonk.

The offerings are expected to go through the Sun’s partners, such as EDS. Despite the low costs, partners can still make a margin, said Adams, but would not discuss how big that margin would be, or how it is that services-led companies such as EDS can make this work where IBM and HP could not.

Meanwhile, despite the apparent completeness of the Java Desktop, not everyone is convinced. “I think Sun should give up Mad Hatter and do something more interesting instead,” said commentator William Fellowes of the451.com