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When Jonathan Schwartz took the helm of Sun Microsystems in April,
it wasn't clear what kind of company he inherited--an old-school vendor
of expensive, proprietary systems, or an industry stalwart revitalized
around open source software and standards-based hardware.
After two quarters of solid sales growth, fueled by x86 and
Sparc servers and an open source version of its Solaris operating
system, Schwartz thinks the answer is now clear. "The proprietary and
expensive moniker is now dead," Schwartz wrote on his blog last month.
"Dead dead dead." And there's this significant factoid to back him up:
Sun recently bumped Dell out of the No. 3 spot in server sales, behind
IBM and Hewlett-Packard.
Proprietary and expensive? CEO Jonathan
Schwartz insists that label is "dead dead dead," and some new product
and market share developments back him up.
When Jonathan Schwartz took the helm of Sun Microsystems in April,
it wasn't clear what kind of company he inherited--an old-school vendor
of expensive, proprietary systems, or an industry stalwart revitalized
around open source software and standards-based hardware.
After two quarters of solid sales growth, fueled by x86 and
Sparc servers and an open source version of its Solaris operating
system, Schwartz thinks the answer is now clear. "The proprietary and
expensive moniker is now dead," Schwartz wrote on his blog last month.
"Dead dead dead." And there's this significant factoid to back him up:
Sun recently bumped Dell out of the No. 3 spot in server sales, behind
IBM and Hewlett-Packard.
Schwartz this week will unveil a number of products on the turf of its
most important customer base: Wall Street, whose big, demanding tech
organizations will determine how long Sun's rebound lasts. Among the
advances Sun will tout: faster processors and increased memory in its
midrange UltraSparc IIIi server line; servers equipped with Advanced
Micro Devices' most recent Opteron processors; and encrypted tape
storage on the acquired StorageTek platform. Sun also is incorporating
the multicore UltraSparc T1-based processor platform into its Netra
systems for telecom carriers.
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Sun Microsystems CEO Jonathan Schwartz
Photo by Justin Sullivan/Getty Images | |
The
offerings demonstrate the growing breadth of Sun's product line, which
once showed gaps despite the company's big R&D investments and
touted innovations. "We went through a period when we didn't have a new
product portfolio," acknowledges John Fowler, executive VP of Sun's
systems group. "There was a lot of skepticism."
Still High on High End
Sun is on pace to sell $500
million in AMD-based servers this year, though customers are still
buying lots of UltraSparc servers for top performance. The new products
and the pilgrimage to Wall Street show that while Schwartz fights the
"expensive" label, Sun isn't retreating from the computing high end.
At the High Performance Computing Virtual Laboratory, a
computing grid used by a consortium of Canadian universities, Sun
systems have helped boost performance by 500%. The lab chose six Sun
servers with the latest UltraSparc IV+ processors, three with new
UltraSparc IIIi processors, and one with a multicore UltraSparc T1 for
a new data center. Sun beat out IBM and Silicon Graphics because it
provided the lowest cost for performance once power and maintenance
were factored in, lab executive director Ken Edgecombe says.
Sun also is building on last year's $4.1 billion acquisition of
StorageTek. By adding data encryption to the StorageTek T10000 tape
drive system, Sun keeps pace with IBM, which last week said it will add
encryption to its enterprise-class storage drives. Sun plans to add
encryption to its T9840 tape-drive system by the middle of next year.
Sun pulled off a surprise last month when it passed Dell--a
company built around selling inexpensive, industry-standard
computers--to become the third-largest server provider in the world,
according to IDC. Sun's server revenue grew 15% in the second quarter
compared with the year-earlier period. Nathan Brookwood, an analyst
with Insight 64, attributes Sun's success to a broader, more-open
product line that appeals to more buyers. "People used to ask why Sun
spent so much money on R&D and why didn't they become more like
Dell," Brookwood says. "Now people are asking why Dell doesn't do more
innovative things."
Sun's gains are partly the result of strategies initiated more than
four years ago, when the company began developing the UltraSparc T1.
Sun's ability to deliver high performance while reducing power
consumption is what appealed to David Schairer, CTO of Concentric, a
hosted application service provider that recently moved to the
UltraSparc T1-based T2000 servers. The UltraSparc T1 comes with up to
eight processor cores, each with four independent threads, providing a
total of 32 processing elements per processor. Sun plans a
second-generation UltraSparc T1 that will have eight cores with eight
threads each.
The telecom industry is another key proving ground for Sun. The
Netra T2000 is based on Sun's UltraSparc T1 servers, which have
generated more than $100 million in revenue since they were introduced
a year ago. The Netra T2000 is a "mirror image" of the standard T2000,
with certifications to meet telecom requirements.
Shortly after Sun began developing UltraSparc T1, it launched a broad
line of x86 servers using AMD chips. Sun's future may hinge more on
AMD's processor technology than its own, though Sparc systems continue
to account for about 90% of the company's server sales. Some customers
still view UltraSparc as too pricey. In the past few years, Sun has
seen some of its Wall Street customers migrate to commodity Linux
servers from other vendors. Sun has been fighting back with its Opteron
line.
Intel's introduction of the Woodcrest platform for one- and
two-processor servers pushed Intel back into x86 performance
leadership, according to some benchmarks. AMD answered recently with
Rev F versions of its Opteron processors that increase performance
using so-called Double Data Rate 2 memory and built-in virtualization.
Graham Lovell, senior director of Sun x64 systems, says the company
just began shipping one- and two-processor servers using the Rev F and
will extend its use to all its x86-based servers through the remainder
of the year.
Oh, Those Financials
While business is looking up
for Sun, its financials are still lackluster. The company reported 18%
higher revenue for the fiscal year ended June 30, but it posted a net
loss of $864 million for the year and $301 million for the fourth
quarter. Restructuring and acquisition costs were partly to blame.
The balancing act of reducing costs versus funding innovation goes on.
Sun expects to cut up to 5,000 jobs in fiscal 2007, which began in
July. Schwartz, in his blog, writes that cutting corners on components
and selling lower-priced products don't "matter as much as delivering
value and innovation."
Too many IT buyers still think of Sun as the high-priced
alternative--even as it sheds the proprietary label. Perceptions die
hard.
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