Will 2004 be the decisive year for Sun? We look at what the vendor's been up to since we last profiled it to determine whether the future merits sun screen or a slicker.
The first half of 2004 has been busy for Sun Microsystems. The last time our Server Snapshot captured the vendor, we predicted 2004 would be a turning point: Sun's attempts to regroup from tough Unix battlefield losses would either be successful enough to stave off disaster and it would arise from the ashes to profitability, or it would crash and burn. More than seven months later, the regrouping continues and the future remains unclear.
This much is for certain, however: The battle remains a steeply uphill one. First-quarter 2004 statistics from IDC show Sun's revenue 12.5 percent lower than it was in the first quarter of 2003. At the same time, Dell, Fujitsu, HP, and IBM gained firmer footholds, and the overall server market grew 7.3 percent. Sun's current share of 10.2 percent brings it neck and neck with Dell, whose sweet spot holds a very different customer. For fiscal third quarter 2004, Sun posted a $760 million loss. A of press time, Sun's fourth financial quarter earnings are awaiting release.
As Sun regroups, belts have been tightened and favors called in. In June, Sun closed its Newark, Calif. manufacturing plant. Two plants remain, one in Hillsboro, Ore., another in Linlithgow, Scotland. In April, Sun quietly laid off thousands of employees in what has become an annual norm since 2001. It also put a fire under its management, appointing Jonathan Schwartz the new chief operating officer and reorganizing its hardware groups into two divisions, Throughput Systems (SPARC) and Network Systems (x86). In April, Sun reached a settlement with Microsoft from which it will receive more than $1.95 billion. The vendors also agreed to collaborate on technology.
But surreal wheeling and dealings aside, Sun has been burning rubber on the hardware development front. In February, the vendor more firmly redirected its approach to x86, adding the dual-Opteron Fire V20z rack server and dual Low Voltage Xeon B200x blades to the family.
At the same time, Sun fueled its Sun Fire servers with the explosive Chip Multithreading (CMT) capable Solaris 10-ready UltraSPARC IV, adding the E2900, E4900, and E6900 in the midrange, and the E20K and E25K to the high end. Sun also stoked its NEBS-Certified offerings, replacing the Netra t1400/1405 with the UltraSPARC IIIi-based Netra 440.
The following chart is an overview of Sun's server offerings. New additions are noted in bold; newly retired servers are italicized.
Sun Microsystems' Server Lines at Glance
||Midframe and Midrange
||NEBS-Certified Servers |
||Web, file, print, ERP, database, and Security/VPN
||Server consolidation, data warehousing, data mining, OLTP, large DBs, and ERP
||Server consolidation, mainframe rehosting, high performance computing, decision support, and data warehousing
||Web services, data analysis, and straight-through processing
||UltraSPARC IIi, III
& IIIi, Opteron, Xeon
||UltraSPARC III, IV
|UltraSPARC III, IV
|UltraSPARC IIi (B100s), Mobile Athlon (100x), Low Voltage Xeon
|UltraSPARC IIi, III, IIIi |
|1 to 8 (SPARC),
1 to 2 (Xeon)
|1 to 24
||Up to 106 (III),
Up to 72 (IV)
|1 (SPARC, Athlon),
2 (L.V. Xeon)
|1 to 12 |
|SPARC: Solaris 8/9
(Red Hat/SUSE Enterprise)
|SPARC: Solaris 8/9
x86: Linux, Solaris 9
|Solaris 8/9 |
||Sun Fire (SPARC):
Sun Fire (x86):
Compute Grid Rack System
Compute Grid Rack System
Grid Rack System
|$995 (V100) to $124,995 (V880z)
|$59,995 (V1280) to $1,121,295 (E6900)
||$354,530 (12K) to $3,196,985 (25K)
||B1600 Chassis: $4,795
Eight B100 blades with a B1600 Chassis: $23,399
|$3,395 (120) |
to $32,995 (CT820)
From Sun's now otherwise defunct line of server appliances.
>> Looking Ahead
Forging Ahead on x86 With Solaris
After some waffling, Sun has made x86 amends with appropriate gusto and has placed high hopes on its V20z Opteron-based rack servers. Sun believes the coupling of V20z and Solaris x86 revision 6 will be tempting for enterprises that have less than stellar Linux marriages. "Customers are saying, 'I don't see the robustness, I don't see the feature sets, I don't see the support I was expecting for my applications from the Linux environment,'" Sun Senior Technical Marketing Manager Bob Waumbaugh said.
Whether a kitchen-sink Solaris approach will win over x86 admins remains to be seen. Sun clearly hopes to make inroads against Linux with its vague promise to open source Solaris in the future.
Yet, it seems unlikely Sun will win purely on price. "I don't think they have their strategy for the SMB [market] put together like HP and IBM do," Gartner Vice President of Strategic Marketing Laura McLellan said.
Thus, Sun's hopes for x86 seem paradoxically pinned on a Solaris built for the Unix market transcending its roots and assuaging administrator unfriendliness for software viewed as rooted in SPARC philosophy.
SPARC IV Sparkles ... With Solaris
Sun's reliance on Solaris makes considerably more sense for its new UltraSPARC IV servers than its x86 line. UltraSPARC IV's CMT capabilities bring it head to head with IBM's POWER chip, though they don't differentiate it outright. "I would never take AIX over Solaris," Andy Ingram, vice president of marketing for Sun's Scalable Systems Group told ServerWatch, "Solaris 10 is the culmination of years of effort, and in terms of capabilities, performance, and ISV support, Solaris is stronger than AIX."
Small SPARC hardware perks aside (like what Ingram sees as IBM's downplaying of POWER's NUMA-esque qualities), the soon-to-be released Solaris 10, scheduled for September, will be Sun's chief differentiator for the platform.
Bright Future with Fujitsu and Solaris
On June 1, Sun cemented a 20-year partnership with Fujitsu. It announced the Advanced Product Line (APL), which will merge Sun's SPARC servers with Fujitsu's by 2006. APL will spotlight Fujitsu's Primepower on the high end (code-named Olympus) and Sun Fire on the low end (code-named Niagara).
"Both sides are doing the development, and in the end we get one product line to be shared between them," Ingram said, "We pick different colors for the cabinets, and different logos, but otherwise they are essentially the same."
The alliance should lend Sun and Fujitsu wider Asian and North American exposure, respectively. "The manufacturing is setup so all products can be manufactured in one of three sites," Ingram said.
Servers will be manufactured in Sun's Oregon and Scotland facilities, and Fujitsu's plant near Tokyo. "The goal is to build a product as close to the customer as possible," Ingram added, "so we ship the components and do final integration at one of those three sites."
At that time Sun also announced the cancellation of its Gemini (UltraSPARC V) and Millenium (dual UltraSPARC II) projects along with a gradual phasing out of its SPARC manufacturing relationship with Texas Instruments. Future upgrades to SPARC will be determined jointly with Fujitsu, Ingram said. We wonder whether this future-minded move is meant on some level to downplay the current bad news.
Those fearing Sun will be offloading its SPARC production entirely on Fujitsu down the road may take heart in the fact that Sun is running two of the joint venture's manufacturing plants. (Others may rightly say Sun should offload SPARC.) Another advantage of the Fujitsu partnership, Ingram noted, is that it further frees Sun to develop its advanced, super-CMT capable processors.
The Long-Term Forecast
Gartner's McLellan sees recent Sun subscription model pilots, where developers are offered systems in exchange for software subscriptions, as a sign of profitability to come a profitability she believes will arrive for the fiscal year beginning this month. "How does HP sell against free?" she asks. A good question, but creating competing subscription models is one potential HP response."
As to the long-term future, McLellan sees Sun finding success selling computing power wholesale, through private labels. She predicts 50 percent of enterprises in the United States will have "shifted over from an asset to an access model by 2010," and Sun's billions of dollars in savings it will see it through and give it a jump start in this field.
Despite Sun and Sun friendly analysts forecasting a sunny long-term future, the present and near term remain cloudy. We recommend packing an umbrella and sunglasses in your briefcase.