The two companies' respective Sun Fire and Primepower products will be replaced with a single line of servers based on Sparc processors by the middle of 2006.
"We're going to be bringing a series of low-range, midrange and high-end products to market," Sun Chief Executive Scott McNealy said at a news conference here. The new products, under the code name Advanced Product Line (APL), will replace Sun's Sun Fire line and Fujitsu's Primepower products, the companies said.
Sun and Fujitsu currently sell servers that use two different chip families, Sun's UltraSparc and Fujitsu's Sparc64. The chips can run the same software, including Sun's Solaris operating system, but require different hardware designs.
Fujitsu already sells Sun's UltraSparc designs, but as part of the new agreement, Sun will also sell Fujitsu's Primepower systems during the transition period to the joint product line, McNealy said.
Sun and Fujitsu began eyeing expanded alliance options in 2003, when McNealy met with Fujitsu's chairman and former CEO Naoyuki Akikusa.
The move comes as Sun struggles with its third major round of layoffs in three years and declining revenue, despite a growing server market. Sun's UltraSparc chips, one of several RISC (reduced instruction set computing) models on the market, have seen major competition from more mainstream Intel processors, such as Xeon.
The deal involves several chips and systems. Both companies will sell APL systems, which are based on Fujitsu's coming Sparc64 VI processors. And both companies will sell systems based on Sun's "Niagara" and "Rock" chips, models with a "throughput computing" design for running several processing tasks simultaneously.
Sun will design the low-end APL servers, and the companies will jointly design the high-end systems, said Brian Sutphin, Sun's vice president of business development, who hammered out the deal over the last year. Sun will design and build the Niagara- and Rock-based products.
When either company sells an APL system, both will get some fraction of the revenue, McNealy said in an interview.
The partnership could help Sun's current financial woes. In October, Toni Sacconaghi, an analyst at Bernstein Investment Research and Management, estimated that joint development of the Sparc processor could save Sun $200 million per year, and joint development of Sparc and servers could save $300 million to $400 million.
The joint work should increase server revenue in Sun's fiscal 2005, which begins July 1, McNealy said. The companies expect the Sparc market to grow because of joint work in research, marketing and software partnerships, he said.
The partnership does increase the potential for Sparc, said IDC analyst Jean Bozman. "It does create a bigger total available market for the architecture," she said.
Fujitsu for years has produced its own Sparc chip family, Sparc64, whose different hardware interface can't fit into Sun's servers without significant engineering work.
Sun canceled development of its high-end UltraSparc V processor earlier this year, a move that wasn't related to the Fujitsu deal, said Marc Tremblay, Sun fellow and chief architect of the company's processors and network products. Instead, the problem with the UltraSparc V was simply that its design began too early and didn't represent what the market now needs, he said.
The APL processor will fill the UltraSparc V high-end niche, however. The "next-generation APL microprocessor...will bring new meaning to the term RISC mainframe," McNealy said.
Sun has been working for years to move high-end features found in IBM's expensive but powerful mainframe servers to its own Unix servers; IBM and Hewlett-Packard have a similar strategy. Fujitsu, which sold mainframes, has been building sophisticated features into its Sparc64 family, such as the ability to re-execute an instruction automatically if it fails.
Fujitsu will manufacture the APL chip, and Texas Instruments will manufacture the Rock and Niagara chips, said Andy Ingram, vice president of marketing for Sun's Network Storage Products Group.
The initial APL systems won't use Sun's proximity interconnect, technology under development that stacks chips on top of each other to permit direct communications that today are handled by slower wires on a circuit board. But that technology will be used, according to Tremblay. "I'm counting on it," he said.
The technology should arrive in 2007 or 2008, as long as Sun finds a way to make manufacturing affordable, Tremblay said. McNealy wouldn't share specific schedules for the Niagara- and Rock-based products, but Tremblay said the Rock models will arrive after the first APL systems.