Here’s our recap of what happened during the first week, and highlights of the second week follow below:

Stick and move: Early in the week, Android chief Andy Rubin and Google Executive Chairman Eric Schmidt borrowed the same strategies used by their colleagues during the first week of trial, uttering things like “I do not recall” fairly often. But they both agreed that Google believed its arrangement with Sun was legal, an opinion that would be bolstered later in the week. (Wired)

Patent denied: Oracle wrapped up its presentation of the copyright phase of the trial on Tuesday, but was dealt a blow on Wednesday regarding the upcoming patent phase of the trial. Judge William Alsup denied an Oracle petition to reinstate one of the five patents that were barred from the trial after they were deemed invalid upon re-examination by the U.S. Patent and Trademark Office. After the PTO changed its mind on one key patent, Oracle hoped to get it back into play, but the judge ruled it was too late. (Groklaw PDF)

Show us the money: Google was forced to release as evidence a 2010 presentation on the financial picture for Android, including projections through 2013 for revenue and profit. The documents showed that Google was overly ambitious with its expectations for its Nexus direct-to-consumer plans, revenue from Google Music, and revenue from Android app sales. However, the documents also revealed that Android earns Google quite a bit of ad revenue, and that the company’s future projections for ad revenue were based on a much more conservative expansion of Android and smartphones in general than what has actually come to pass. (The Verge)

Sun rises and sets: Two former Sun executives presented very different impressions of how Sun viewed the APIs (application programming interfaces) at the heart of this trial. Jonathan Schwartz, CEO at the time Sun was purchased by Oracle, was called to the stand by Google and testified that Sun thought the Java APIs should be open and available to anyone. However, Scott McNealy, who co-founded Sun and served as CEO for decades, was called to the stand by Oracle and said Java contained “lots of intellectual property.” (CNET and ZDNet)

What’s next: Closing arguments in the copyright phase are expected to be delivered on Monday, after which the jury will deliberate on the central question of whether Google should have obtained a license from Sun in order to use the Java APIs included with the original version of Android. Should they find in favor of Oracle, damages will be decided after the patent portion of the trial kicks off.

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In his memo, Schwartz, a very highly regarded person in the open source community, who once had a widely followed blog that he eventually posted to less and less, noted the fact that Europe’s approval of the Oracle acquisition took nine months — a long time. Schwartz has, partly because of the rules surrounding proposed acquisitions, been very silent during that time. In today’s internal memo, he refers to the impact that “change in control” has upon any acquisition and describes how broadly it will affect all Sun employees:

“I’ve also led, and been a part of many, many acquisitions at Sun, both large and small. From those experiences, I’ve learned one very clear lesson–the single most important driver of a successful acquisition are the people involved–and how committed they are to the new owner’s mission. And the most effective mechanism I’ve seen for driving that commitment begins with a simple, but emotionally difficult step. Upon change in control, every employee needs to emotionally resign from Sun.”

Schwartz goes on to acknowledge that “some” employees will have places at Oracle, but clearly he doesn’t see himself as having one. what about his own future there? While Schwartz goes to lengths in the memo to express support for Larry Ellison, the fact is that Ellison is well-known as a difficult person to work with. Most of all, though, the quoted text above points to a disheartened person — a person whose heart is not in what he might be asked to do under Oracle.

During his tenure as CEO of Sun, Schwartz was best known as the pony-tailed lover of all things open source, quixotically dressed on stage in pinstripe suits. I’m betting he has serious doubts about Oracle’s intent to advance Sun’s open source efforts.

For example, why should Oracle drive the MySQL database division forward — after it had grown nicely — when it’s competition for Oracle’s own expensive, proprietary databases? Even Monty Widenius, co-founder of MySQL, has been asking that question. Many people in the open source community see Oracle’s acquisition of MySQL, and the long waiting period that Europe required to approve the deal (while many MySQL customers bailed) as sealing MySQL’s doom.

For that matter, why should Oracle care about overseeing the OpenOffice suite of open-source productivity applications? That’s just competing with Microsoft in a game that doesn’t go far. And we don’t even have to get into GlassFish and the countless other open-source software efforts at Sun that Oracle has little financial interest in supporting.

Schwartz’s decision to leave probably has a lot do with open source efforts that he cares about that are unlikely to flourish, and a lot do with money. admonition to employees to “emotionally resign from Sun” is a signal that the upcoming change in control at the company will run deep, and probably affect the company’s many open source efforts. That includes There is money that Oracle can save by extinguishing projects such as MySQL, or letting them languish. It may include There may be money that Oracle can reap through staff cuts and possibly cutting Sun’s hardware business. Schwartz’s decision Any future decision Schwartz makes regarding staying may also have to do with substantial money he’ll get as a result of his equity in Sun in any exit.

Sun’s positioning as an open source leader started to become sketchier last April when Oracle proposed the company’s acquisition. Today, we’re seeing the endgame of that pursuit from a huge player in proprietary software, and the beginning of the financial fallout to come. Money changes everything.

Image courtesy of TechShowNetworks on Flickr.

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A faction led by CEO Jonathan Schwartz wants to sell the company, while a rival band led by former CEO and Co-founder Scott McNealy doesn’t want to sell. IBM is offering between $9.10 and $9.40 a share, according to the WSJ report. The Times report said that IBM had initially offered $9.55 a share, but later shaved off the offer. Why?

I.B.M. scrutinized the “change of control” contracts with Sun executives, senior engineers and managers. I.B.M. felt that the payments to senior employees were higher and extended more broadly across the company than it had anticipated. I.B.M. pointed to the change of control contracts as one reason it was reducing its offer price.

For some Sun board members, a sticking point was that IBM could totally walk away from the deal because it has too much optionality, the Journal said.

Regardless, this is yet another sad wrinkle on the face of what was once Silicon Valley’s brightest innovator. As expected, naysayers and Wall Street analysts are out in full force saying this is the worst kind of news for Sun.

Having covered Sun for a long time as a reporter, I agree that Sun has its problems. But are the problems so deep that it should just be handed over to a rival? I don’t think so. And while Sun has fallen on tough times, it continues to be a bastion of engineering excellence.

Stacey believes that the two companies, if combined, could have become serious players in cloud computing. In March this year, Sun announced plans to offer its own cloud services, and that is a good place for Sun to start. In my view, IBM was getting quite a bargain with Sun, though I think a company like Cisco Systems would be a better buyer for Sun, because it can shake up Sun’s academic culture.

Another idea came to me after reading Software AG Deputy CTO Mike Miko Matsumara’s blog, who thinks that with this deal collapsing, we might see the return of Sun  Co-founder, Scott McNealy. Whether that happens or not, the company should also pursue an option of going private.

The four Sun co-founders — Scott McNealy, Bill Joy, Vinod Khosla and Andy Bechtolsheim — swing enough clout in the Valley to help put together a rescue package. Given how easily Palm has been able to raise additional funding, I don’t think Sun will have trouble raising the capital. Bad as it is — down 10.7 percent from fiscal 2008 — Sun will post revenues of just over $12 billion. And it still has a few billion dollars in cash.

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Here are some of the changes:

* Anil Gadre, currently Chief Marketing Officer, will now head up the Application Platform Software business, which would include Java, MySQL and other such stuff.
* John Fowler will now lead Systems Platforms, which includes some of its new storage and analytics products.
* Dave Douglas will head up company’s Cloud Computing & Developer Platforms units, including the Network.com efforts.

Will these help? I am sure they can’t hurt. Or as someone recently said — leaky oil tankers take a long time to sink, so there is enough time to patch stuff up.

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• Sun’s OpenSolaris OS will be available on the Amazon Elastic Compute Cloud (Amazon EC2) customers for free. It is in beta for now.
• Sun will provide premium technical support for MySQL database running on Linux and Amazon EC2.

These developments are meant to address the needs and complaints of the developer community. OpenSolaris, which comes with tools such as ZFS and Dynamic Tracing (D-Trace), will be offered for free, in contrast to some Linux offerings that cost money. For instance, if you sign up for EC2 and pick RedHat, it costs $19. ZFS allows instant rollback and continual check-summing capabilities, something developers have found lacking in the EC2 platform. This OpenSolaris on Amazon EC2 beta is currently available by invitation only. Some software vendors, including GigaSpaces, Rightscale, Thoughtworks and Zmanda, are already offering their solutions via Amazon Machine.

From OStatic: As Sun Microsystems’ JavaOne conference kicks off this week, the company has announced its free new OpenSolaris open source operating system. It’s available for download . The big question with OpenSolaris is how it may compete against Linux rivals, especially since it is a fully supported operating system. OStatic, our open source blog, has the details.

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For me, the most relevant article focused on constant connectivity and how that affects people’s personal and work life balance. The general consensus was that different people handle it different ways (although I like that Jonathan Schwartz, the CEO of Sun, insists on two hours of “rolling around time” with his sons in the evening before getting back to work.)

My worry is that with constant communication and a social norm tending toward multitasking with work, play and our family lives, that a whole chunk of the population gets discounted or disenfranchised.

People like me, who leave at a certain time on most days and who don’t check their email/blogs/Facebook accounts except for once or twice on the weekends seem to be in short supply. And while people often talk the talk about family time being important, I’m amazed at the pitches I get for breaking news sent to me at 9 or 10 at night for news that will go out in a few hours or early the next morning.

I question why they would think I’m working and what they are doing working at that time. If it weren’t time sensitive news, I would consider it a function of their lives and schedules, but somehow thinking I might respond anywhere near that time is crazy. So this “all-work-anytime” culture is a problem in my opinion, because it expects a rapid response at any time of the day or night, and also breaks down an accepted time and place when business can be conducted. I doubt that is sustainable, and already is driving a lot of stress.

The moral? Turn off your CrackBerry, step away from the computer and take some time to read the articles, and think about what an always-on nomadic culture will mean for you. Then decide how you choose to participate in it. I’m choosing to turn off my computer now.

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For other technology firms planning IPOs, the deal may be as welcome as a kick in the head. While 58 technology firms went public in the last 12 months, the market began to soften in the final quarter, with companies such as Classmates.com and Applied Precision pulling their plans for public offerings and only strong contenders, such as NetSuite, managing to make it out the door. Indeed, Peter Falvey, a managing director with tech investment bank Revolution Partners, says 2008 isn’t looking good for the tech IPO market.

“Volatile markets are lousy for high-growth tech IPOs, and I think the markets are going to be choppy for some time,” Falvey told me this morning. “The tech stocks have gotten hammered, and I think public company investors will be looking to be more conservative in 2008. Companies will continue to file and be ready in case the window opens, but I think [the] first half of 2008 is going to be soft.”

Sun (JAVA) has agreed to pay $800 million in cash and assume $200 million in options for MySQL, which had raised $38.5 million from venture and strategic investors including Benchmark Capital, Index Ventures, SAP, Intel Capital and Red Hat. Sun CEO Jonathan Schwartz explains in his blog that the deal gives Sun a product in the $15 billion-a-year database market; it’s also the final piece needed for Sun’s open-source operating system for the Internet.

So why is this important for the internet? Until now, no platform vendor has assembled all the core elements of a completely open source operating system for the internet. No company has been able to deliver a comprehensive alternative to the leading proprietary OS. With this acquisition, we will have done just that – positioned Sun at the center of the web, as the definitive provider of high performance platforms for the web economy. For startups and web 2.0 companies, to government agencies and traditional enterprises. This creates enormous potential for Sun, for the global free software community, and for our partners and customers across the globe. There’s opportunity everywhere.

MySQL and its development community are behind the deal. MySQL Chairman (and venture backer) Kevin Harvey said it gives MySQL customers “one-stop shopping for all of their Web 2.0 infrastructure.”

MySQL is the database for many of the new economy’s hottest companies, including Google and Facebook. For Sun, it not only closes a gap in the company’s open-source software plans, but offers a way to sell Sun hardware to the current generation of startups.

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