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Sun Microsystems plans to tell Wall Street clients today that its
turnaround strategy will pay off as the company continues to bet big on
the experimental chips in its newest computers.
A new line of computer servers for the telecommunications market
will exploit CoolThreads, a key chip that represents Sun's biggest
effort to set its computers apart from competitors.
COOLTHREADS MARKET LARGER THAN EXPECTED
Sun Microsystems plans to tell Wall Street clients today that its
turnaround strategy will pay off as the company continues to bet big on
the experimental chips in its newest computers.
A new line of computer servers for the telecommunications market
will exploit CoolThreads, a key chip that represents Sun's biggest
effort to set its computers apart from competitors.
Sun has been struggling to adapt to a shift in customer tastes
toward low-cost corporate computers known as servers since the dot-com
bust, but in the past quarter the company has been regaining some
market share in servers.
Critics say it's too early for the Santa Clara computer maker to
declare victory with its chip strategy, particularly when it's still
losing money and laying off employees. Sun lost $301 million in its
most recent quarter and is cutting 5,000 jobs.
``Sun is at the point where they've made a lot of changes at the
company, gotten rid of their old strategy, and now they have to buckle
down and sell stuff,'' said Gordon Haff, an analyst at market analyst
firm the Illuminata.
John Fowler, executive vice president of Sun's systems group, said
the CoolThreads chip family, launched in December, is doing so well
that the company has expanded beyond its initial market. During the
previous quarter, he noted, more than $100 million worth of computers
with CoolThreads chips, which can perform 32 processing tasks
simultaneously, were sold.
``We are going back to Wall Street this time, and we can show them positive momentum,'' he said.
Sun's chip strategy has three thrusts: It is joining its rivals in
the low-end server fray by adopting Opteron chips from Advanced Micro
Devices, a move that has given it an edge on rivals, such as Dell, that
have relied on Intel chips. Sun is also relying on Fujitsu for a line
of highly reliable Sparc chips for high-end servers. And it is using
CoolThreads and its successors to pave a new market for computers that
can do a lot of tasks simultaneously such as displaying Web pages for
consumers.
But Ravi Arimilli, an IBM fellow, says Sun's direction with
CoolThreads doesn't make sense. He says Sun is pouring most of its
limited engineering sources into a narrow market, and that it will
confuse customers with several different chip alternatives.
But Marc Tremblay, chief architect of systems at Sun, says the
market for CoolThreads is turning out to be larger than originally
expected. He points to Intel's shift toward designing chips that bear a
resemblance to CoolThreads as validation that Sun is headed in the
right direction.
``We laugh when we hear it is a niche market,'' Tremblay said. ``The
Internet is a nice niche. Most of our customers are doing this kind of
processing.''
Sun traces its latest chip bets to 2002, when it bought a small
company called Afara Websystems. Afara's chip focused on
power-efficient computing that used a lot of processors, or cores, on a
single chip. In 2004, Sun canceled its mainstay chip, UltraSparc V, in
part to throw more resources at the Afara chip, later named CoolThreads.
CoolThreads has eight cores, or processing brains, on a single chip.
And each core can handle four programs, or threads, at once. Sun plans
to double the number of cores and threads with a new chip, code-named
Niagara 2, which will debut next year. In 2008, Sun plans to launch
Rock, which combines the features of CoolThreads with faster
performance per core.
``Sun seems to be gaining traction,'' said Nathan Brookwood, an
analyst at Insight 64. ``Now I'm waiting to see if it results in more
customers and server sales.''
Read the original article: http://www.mercurynews.com/mld/mercurynews/business/15506739.htm
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