After taking in requests, Sun and Microsoft each will prioritize, see what intellectual property (IP) needs to be cross-licensed and make interoperability happen, McNealy said.
Friday's agreement is not about joint development, it is about a licensing framework that facilitates licensing of intellectual property between Sun and Microsoft so the companies can make their products interoperable, Ballmer stressed.
"It is not joint development ... it is technical collaboration where (Sun) will pursue their independent vision and innovation as we will," he said. "But ... if customers want something to work together or we want something to work together for our own competitive interest we have a licensing framework that lets us go do that. "
Sun will receive Windows Certification for its server products. The companies announced Windows certification for Sun's Xeon servers, effective immediately. Certification for Sun's Opteron-based servers is "moving forward," the companies said.
Ballmer and McNealy also stressed that their settlement is not about money, but about business opportunity. Both Sun and Microsoft expect significant revenue to result from their collaboration.
The bitter legal dispute between Sun and Microsoft started when Sun filed suit against Microsoft in October of 1997, alleging that Microsoft failed to stick to the Java licensing agreement between the two companies. That breach-of-contract lawsuit was settled in January 2001. when Microsoft agreed to pay Sun $20 million. That deal also ended a countersuit Microsoft had filed against Sun.
But 14 months later the legal battle was renewed when Sun filed a private federal antitrust lawsuit against Microsoft, accusing the company of using its PC operating systems monopoly to undermine Java's success, thereby harming competition.
The ruling in the U.S. government's federal antitrust lawsuit had determined Microsoft is a monopolist and found the company guilty of abusing that power, partly based on Microsoft's dealing Sun over Java. Sun reiterated that point in the March 2001 lawsuit and asked for a permanent injunction requiring Microsoft to license proprietary software interfaces to other companies and to "unbundle" Internet Explorer, the IIS (Internet Information Server) Web server and the .Net framework from its operating systems.
Sun contended in the lawsuit that Microsoft's "ultimate goal" was Internet access domination so that users would have to use a Microsoft product everytime they connected to the Web. At the time, published reports said that Sun sought damages of more than $1 billion. Sun officials refused then to give an exact figure.
Sun on Friday also said that it has promoted its software head Jonathan Schwartz as the company's new president and chief operating officer.
Sun on Friday also announced that based on preliminary financial results, it expects revenue for its financial third quarter, which ended March 28, to be about $2.65 billion. Net loss, excluding one-time items, is expected to be in the range of $750 million and $810 million, or $0.23 to $0.25 per share. Excluding one-time items, which take into account cost of layoffs, net loss for the quarter would range between $200 million and $260 million, or a net loss per share range of $0.06 to $0.08.
Sun officials said the company would lay off about 3,300 people worldwide.
(Nancy Weil in Boston contributed to this report.)