Sun Microsystems CEO Scott McNealy (pictured left) recently told the San Francisco Chronicle about his burgeoning relationship with Microsoft's Bill Gates and Steve Ballmer, as well as other big things going on in his company's life. Here are excerpts from the interview.

Golf, Microsoft, and the Men's Room
After noting that he invited Steve Ballmer (pictured right) to play golf in the spring of 2003, an invitation the Microsoft CEO accepted, McNealy noted that "there was a lot of dancing for a full year. We met in the spring (of 2003). It was the beginning of April (2004), a year later, when we finally got it together."

"The funniest story came when Bill walked out to go to the restroom. We sent him down unescorted. And some poor Sun employee is walking his dog around the building and kind of had to do a triple take. 'Nah, that couldn't have been Bill Gates walking around here...(but) there was never a leak. It was quite a big surprise to everybody. Everybody just wanted to make sure we got it right before we went out and went public with it. But it did take us a while to hammer through all of it."

On the Follow-Through from Golf
"The first conversation wasn't with Bill. It was me and Steve, and then we basically handed it off to Bill Gates and (Sun Chief Technology Officer) Greg Papadopoulos to work through the technical frameworks.

"Actually, the harder part was after we got the deal done, and then we had to actually sit down and start developing interoperability and what would be the framework and how would we protect our ability to share and their ability to protect. We both have very different strategies. Theirs is more successful, apparently. (Laughs.) At least for their shareholders.

"It actually took about six months of just kind of getting to know, getting to trust. I remember Bill and Greg had just met, and Greg comes back and reports, 'You know, both sides decided there are some pretty smart folks on the other side of the table here.' Which was a huge kind of breakthrough.

Once the technologists have respect for the other side, then things tend to move forward a lot more aggressively. They wouldn't put ridiculous ideas on the table, knowing the other side would figure it out."

On Drinking Beer with Ballmer
"Ballmer and I go way back. We went to high school as crosstown rivals in the Detroit area. He actually stayed in my room when he came out to visit Harvard to see if he wanted to go there.

"We used to get together and drink Stroh's beer that was smuggled in from Detroit. When anybody came back from Detroit, they always brought a couple of cases of Stroh's beer to Boston because they just didn't have real beer out there. He and I went to business school together and we actually kind of just tabled our friendship when things got supercompetitive.

"So I've known Ballmer forever. We have lots of mutual friends. It wasn't like he was an unknown quantity to me at all."

On the StorageTek Acquisition
"By buying StorageTek, we get access to about a thousand sales reps, which grows by an order of magnitude our number of data asset experts, plus a couple of thousand of sales reps. Let's look at the assets we get. We get a company that has a huge amount of revenue in a market that everybody says has been going away for 20 years, yet it hasn't.

"Also, it's first-year accretive in a non-GAAP (generally accepted accounting principles) basis, which is pretty obvious. If they're making several hundred million dollars pretax and we only make a hundred million on the $3 billion net cash we have to put out, that's immediately accretive. There's probably some cost synergies we can take advantage of. We think the revenue synergies are actually quite significant, even though we don't need any to justify the deal. Both companies, Sun and StorageTek, are generating cash.

"We still have $4.5 billion left over after the acquisition. So, a $4.5 billion company with both sides of the acquisition generating cash before cost synergies or revenue synergies."

On Having a High-Profile Number Two
"Every one of my folks has been high profile. That's not new. Carol Bartz was hardly a shrinking violet working for me. Eric Schmidt was one of the most respected and well-known folks in the industry. So there's nothing new about that. (Schwartz) has found a good and effective way to save on airplane flights to go speak at Comdex. He just sits at his wireless laptop and creates a blog. It's great. It makes him more effective. I think that's fantastic."

On Sun and Linux
"We believe in community development. I'm going to sound a little Al Gore-ish here. But we invented community development at Sun.

"Let me justify that because I don't think (Gore) justified his (comments about inventing the Internet). I think I can justify ours. (Former Sun Chief Technologist) Bill Joy, as far as I can tell, kind of pioneered the whole concept of open-source kernels at (Berkeley Software Distribution) and created the licensing mechanism. We brought him into Sun, and we were kind of the Red Hat of Berkeley software before (Linux kernel inventor) Linus (Torvalds) was out of diapers. So we've been doing this forever.

"We've been driving the Unix community forever. The Java community process, over 900 folks, 2.5 billion devices, 700 million cell phones, 700 million PCs, a billion Java cards, 4.5 million developers.

"We love community development. We'll leverage it. We think we can compete quite nicely -- and we have for 24 years in the open-source, open-interface community development world. I don't know anybody else who's done better, created a bigger cash pile.

"We're 16 straight years cash-flow positive from operations by being a community developer. Now, we don't have the Microsoft cash pile, but we've got an interesting one. I'm certainly not ashamed of what we've done over the last 24 years.

On his Tradition of Microsoft Bashing
"It's all theater, and I've been saying that for years. But you guys never report that part. You just report the quips. But that's good. All press is good press, right?"