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McNealy will continue in his role of chairman of the systems giant, which he co-founded in 1982, while Schwartz is elevated from COO to CEO and retains his title of president.

McNealy is now tasked with pushing market expansion and Sun's government and academic relations, heading up Sun Federal Inc., which focuses exclusively on US government business.

'Sun has been a labor of love for me for since 1982 and it has been an honor and privilege to serve as its CEO for the past 22 years. We've helped shape the industry as it is today and the opportunities before us are immense. I look forward to a smooth transition and to working with Jonathan on company strategy in my continued role as chairman,' said Scott McNealy.

Schwartz, 40, joined Sun in 1996 when it acquired Lighthouse Design at which he was CEO. Prior to that he was a consultant to financial services companies. He was named COO and president in 2004.

In a conference

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call Schwartz claimed Sun had revived product quality and would now focus on growth and financial performance, although he denied rumours of job cuts. He added that the role of COO would now be obsolete.

Blue-jeaned McNealy, 51, has CEO-ed Sun Microsystems since 1984, and his outspoken viewpoints on the computing industry have rarely been without an audience. However, Sun, which was once considered the Rolls Royce of servers, struggled in the dot com bust and the rise of cheap x86 servers. Often in hard-pitched battles with IBM and HP, its Q4 2004 financials saw its first revenue increases after years of decline.

Since then it has cut deals with AMD and the Linux distros and carved out its own share of the x86 server market.

It has also pushed its own characteristically idiosyncratic take on the open-source movement, delivering its Solaris platform under a licence of its own making - yet approved by the Open Source Institute - and pushing the boundaries of open-source further by open-sourcing its chip hardware designs.

It was also instrumental in the EU's antitrust case against Microsoft, but was subsequently placated by a $2bn handshake from Redmond.

Most recently it has launched the first real-world iteration of its famous slogan, 'The Network is the Computer', with its Sun Grid Compute Utility, designed to make computing power as ubiquitous, affordable and reliable as water, electricity and gas.