Although Sun discontinued sales several months ago of its customized Linux distribution, the company hasn't entirely abandoned its do-it-yourself Linux strategy: In its forthcoming bundle of desktop software, code-named Mad Hatter, the included Linux operating system will be Sun's own.Sun decided in April to\u00a0stop marketing\u00a0its Sun Linux 5.0, saying customers hadn't shown interest in having another version of Linux available. Several weeks later, Sun partnered with leading Linux distributor Red Hat, whose operating system software it now sells on its x86 server hardware.Partnering with Linux vendors will remain Sun's server-side strategy, but on the desktop side, it will rely on its own distribution, Sun's Software Group Executive vice president Jonathan Schwartz said Monday during a meeting with press in New York.Sun's forthcoming Mad Hatter software bundle, now in beta testing, is a package of basic desktop applications comprised mainly of open-source components. It includes Sun's StarOffice productivity suite, the Mozilla Web browser, the Gnome (GNU Object Model Environment) desktop interface, and Ximian's Evolution information management software.Sun's planned split Linux strategy makes sense, since in many ways Linux on the server and Linux on the desktop are very different technologies, said Illuminata\u00a0senior analyst Gordon Haff. In a software bundle such as Mad Hatter, the integration between applications is critical, and by controlling the operating system, Sun can better manage Mad Hatter's overall technical architecture, he said.Originally slated for an August release, Mad Hatter is running slightly behind schedule and is now likely to debut in September or October, Schwartz said. Sun's target buyers for the bundle are cost-conscious businesses with large workforces that don't need high-end application functionality, such as call centers, retail outlets and bank branches. Sun's largest beta tester is supporting 4,000 workers on Mad Hatter, he said.Mad Hatter will include all the basic functionality needed to equip a PC at a fraction of the cost businesses would otherwise spend licensing operating system and productivity software from Microsoft, Schwartz said. Within three years, Sun hopes to sell 50 million Mad Hatter bundles, he said.Sun anticipates pricing Mad Hatter at $50-$100 per worker, per year, according to Schwartz. The final pricing will be announced at the company's mid-September SunNetwork conference, in San Francisco.Also slated for announcement at SunNetwork is the pricing of Sun's Orion server software package.Sun is transitioning its software strategy, and will soon offer just core five products, Schwartz said: the Orion server software bundle, the Mad Hatter desktop bundle, the J2ME (Java 2 Mobile Edition) mobile device software, the Orion Developer and Java tools for programmers, and the N1 data center technology.Orion will include all of Sun's server software, such as its Sun ONE\u00a0Application, Instant Messaging, Calendar, Web and Portal servers. Included components will be updated quarterly, and the bundle's pricing will be a flat, per-employee fee likely to be $100 to $200 per year, Schwartz said.At that price point, Sun is confident it can undercut all its rivals -- but only customers deploying Orion on Sun hardware will be eligible for the per-employee licensing. Schwartz declined to say whether Orion is intended as a loss leader to boost Sun's hardware sales. The company considers itself a systems vendor, and doesn't differentiate between hardware and software, he said."We will do more systems business because of Orion," he said. "We're using all of the competitive weapons in our arsenal."Customers not buying Sun's hardware will still be able to purchase Orion, but under more expensive, piecemeal licensing terms, Schwartz said. Sun will also offer traditional and metered licensing terms to customers that prefer to purchase that way, but it will encourage buyers to take advantage of its predictable, per-employee billing, he said.That per-employee billing will eliminate the need for software audits. Sun intends to bill customers based on the number of employees listed in their U.S. Securities and Exchange commission filings; private companies will self-report to Sun their headcounts, he said. Sun's flat Orion licensing will cover both internal and external deployments of its software. For a customer like search engine developer Google, that will mean paying for licenses for its 1,000 employees while being able to use Sun's software to support its 100 million -plus users, Schwartz said.