Sun rises with new generation of servers

Meta Group says Sun must start playing nice with Microsoft and IBM, or Hewlett-Packard will reestablish itself as IBM's clearest alternative by the end of next year, and Sun will face an increasingly uncertain future. see commentary

During an event in New York, Sun chief operating officer Ed Zander plans to showcase lower-end servers and workstations using the months-late UltraSparc III "Cheetah" chip, the basis of the new "Serengeti" server family. Built atop the new hardware will be Sun's "Net Effect" plan, which adds software bundles selected for specific jobs and promises to keep computers up and running.

With the new generation of products comes a Sun that can be seen as older, and perhaps wiser. The company is in the middle of a cultural transformation, a change that some analysts believe may prove more difficult than mere product launches.

Once a Silicon Valley rebel whose Unix products and UltraSparc chips bucked the Intel-Microsoft trend, Sun is trying to tone down its rhetoric and assume an attitude more befitting a member of the hardware establishment. In short, Sun is acquiring some of the personality of that stodgiest of computing corporations--IBM.

"Two years ago, Sun's biggest target was Microsoft. Today, its biggest target is executives at Fortune 150 enterprises," said Robert Francis Group analyst Michael Dortch. "I think they've figured out it's in their interest to stop fighting technical fights with the Microsofts of the world and to focus on business problems with customers."

The reason for the change: Sun has largely succeeded in its evangelism to convince the world that big servers are the best place to put important corporate computing jobs. Even Microsoft, long Sun's archrival, has acquiesced to Sun's server-centric worldview in its .Net initiative.

The new line also is coming out at a crucial time, as HP, IBM and Compaq are revving sales efforts on competing products. Microsoft also this week will release a version of Windows 2000 for the server market.

Yet so far, Sun appears to be the best at preaching the server sermon. Although other companies can brag about chips running at higher speeds, or servers than can churn out more operations per second, Sun's ability to smoothly integrate hardware and software on its servers has struck a chord with corporate buyers.

The company has knocked aside IBM and Hewlett-Packard to become the top seller of Unix servers. Like its rivals, Sun is also building up its consulting division.

But with success comes middle-aged anxiety. Zander, chief executive Scott McNealy and other Sun executives have been wrestling with how to coax the company out of its upstart culture, spokesman Doug van Aman said. "Sun was a quote machine," a company that "took every opportunity to quip," he said.

"Now, it's becoming more statesmanlike," van Aman said, backing off from baiting others or rising to others' bait. "Humility is a part of leadership."

Some analysts have speculated that Sun could start to see some market share erosion during the next year, and Intel's Itanium push will begin to gain steam as time goes on.

Sun must also come to grips with partnering with consulting firms and other, potentially rival, computer firms. Corporate customers, whose computer networks are populated with mainframes, PCs, servers and software from a variety of different vendors, might not be receptive to the company?s push for a Sun-centric package; for example, a network made of computers running only UltraSparc chips, including the Solaris operating system, storage by Sun, thin clients and other Java and iPlanet software.

"What concerns me more is, can Sun deliver the combination of its own products integrated with other companies' products and the services customers need to get all this stuff running?" Dortch said.

For example, take data storage. Sun hasn?t been able to dislodge competitors EMC and Network Appliance, whose products attach to any sort of computer system.

"Sun sees storage as a burger-and-fries sale," where Sun's storage systems accompany Sun's servers, said Yankee Group analyst William Hurley. But in today's world, with numerous manufacturers' servers all swapping data on the same network, "the burger-and-fries approach does not necessarily work. Sun needs to address that to remain successful."

Server stats
Sun's new systems will use the UltraSparc 3 chip, originally expected at the end of last year. Designed by Sun, but manufactured by Texas Instruments, the system will debut at 750-MHz speeds. Texas Instruments chief financial officer Bill Aylesworth has said that chip speeds will be increasing soon.

"We've got product in the 750- to 800-MHz range and a roadmap to get up to a gigahertz and beyond," Aylesworth said in an interview. "That should be very competitive for Sun."

UltraSparc 3 chips are manufactured with TI's newest technology, a 0.18-micron process and copper interconnects. By mid-2001, TI will start making 0.15-micron chips on larger 300-milllimeter wafers, Aylesworth said. Using a smaller process size shrinks the size of chip circuitry, cutting chip costs and increasing chip performance.

Also at the launch, Sun will unveil its "Net Effect" initiative. This strategy is likely to tie together Sun's traditional server pitch combined with the "SunUp" program to keep computers up and running, in addition to a collection of hardware and software assembled for specific tasks.

Initial systems likely will begin shipping in coming months, but the top-end system, code-named StarCat, isn't expected until April, Salomon Smith Barney analyst John Jones said.

The upcoming low-end UltraSparc 3 machines likely will be priced low enough to take on Intel, said Giga Information Group analyst Brad Day. "They'll be much more aggressive in their price-performance positioning than we've seen before."

One way Sun will achieve this goal is by using the same components across the entire product line, easing manufacturing and inventory planning, Day said.

Competition concerns
Sun is launching its UltraSparc line amid heavy competition in the Unix server market, which International Data Corp. says is growing well beyond its 1999 sales of $25.6 billion.

HP is flush with the launch less than two weeks ago of its high-end Superdome server, which catches up to Sun's 64-CPU size and ability to divide a system into multiple partitions. HP says its PA-RISC 8600 CPU is as powerful as the UltraSparc 3 and that the successor 8700 due next year will surpass it.

IBM, meanwhile, is by all accounts resurgent. Big Blue has wrenched away part of Sun's market with its high-end S80, which sells for less than Sun's current top-end E10000 server but offers better performance.

In October, IBM will introduce the S80 successor, called S80Turbo, a similar design boosted by faster chips incorporating IBM's silicon-on-insulator (SOI) manufacturing technology. In 2001, IBM will introduce "Regatta," a 32-processor server with the upcoming Power4 chip.

Weathering delays
Sun may not have a technological lead, but it has won culturally, stealing the attention of software companies and computer buyers, said Illuminata analyst Jonathan Eunice. "If Sun didn't have the cultural tie-in, I don't think they would have had time" to weather the delays launching the new UltraSparc 3 systems, he said.

Sun itself has said delays are par for the course. "Clearly, no technology company is immune from the trials and tribulations of bringing product to market," said Chris Kruell, systems product group manager.

And don't count Intel and Microsoft out. Tomorrow, Microsoft will formally launch its own delayed product, the top-end Data Center version of Windows 2000, which runs only on a tightly controlled collection of hardware and can use 32-CPU systems--even though little Windows software can run on such powerful computers.

HP's Superdome eventually will accommodate Intel's 64-bit chips and Windows 2000, but that change won't happen until the second half of 2002, HP said.

The result of competition: "I think they may lose some market share to HP and IBM, particularly in the mid-range and high end, but I think they'll still maintain a significant lead in terms of first-place leadership," Day said. "I think HP and IBM are hungrier than they've ever been before. Sun will have to defend their installed base against that kind of incursion."

One likely avenue for growth for a more buttoned-down and businesslike Sun is hiring presales technicians who can work closely with potential customers to help Sun win bids, Day said. "As they continue to move their large systems into a mainframe-alternative space, I think you'll see much more of those kinds of presales technical specialists being hired," Day said.

Sun can't just become conservative though, in its attempt to court big-business customers. "In a world changing with the speed and unpredictability of today's business, you need some amount of risk-taking in your system to succeed," Dortch said. Indeed, IBM and HP have been adopting Sun's methods, he said.

But Sun has a longer way to go, as exhibited by the invariant McNealy keynote address antics and top-ten lists. Indeed, the IBM-ization of Sun might bring some curious role reversals as Sun tries court the suits and ties of the world.

"Ed Zander is stuck with being perceived as more conservative on a corporate level than Scott McNealy," Dortch said. "It'll be interesting to see if Zander becomes more footloose and fancy free and McNealy becomes more conservative in this high-end market."

News.com's Ian Fried contributed to this report