Sun, IBM set sights on wireless market

The top seller of Unix servers is forming a new business unit and a $100 million venture fund for the wireless market, but Big Blue is matching Sun's plans almost step for step.

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Stephen Shankland
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SANTA CLARA, Calif.--Sun Microsystems has formed a new business unit and a $100 million venture fund for the wireless market, the company announced Monday, but IBM is matching Sun's plans almost step for step.

Meta Group says Sun and its competitors hope wireless will replace the Web as the main driver of growth in the server market, but these companies need to reexamine their business plans.

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In an event at it's Santa Clara, Calif., campus, Sun also announced a new server for telecommunications companies along with beefed-up software and services. In addition, Sun will invest $100 million in the next year in companies creating new wireless technologies, said Ann Wettersten, vice president of Sun's new wireless group.

With the move, Sun is trying to take advantage of its status as the top seller of Unix servers, a key product in enabling telecommunications companies to offer Internet services such as email or online shopping via their cell phones.

The wireless group, formed in July, includes its own engineers and marketing and business development personnel, and also will tap into employees in other Sun divisions, Wettersten said. She declined to say how big the effort is but said it involves "multimillion-dollar investments across the board at Sun."

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Sun's wireless future
Ed Zander, president/COO, Sun Microsystems

Sun vowed that its servers and its Java software will set the direction of the wirless revolution. "We have made it our mission to be the No. 1 thought leader and to provide products and services to enable the wireless Internet," said John MacFarlane, executive vice president of Sun's network service provider group. "Everything with a digital heartbeat will be connected to the Net, and Java will be an important part of its connection."

Motorola will have Java in all of its portable devices by 2002, said George Paolini, vice president of technology evangelism. But even in a world where it is common for gadgets to run java, it will take some time for actual use of the software technology to catch on, acknowledged Sun chief operating officer Ed Zander.

"It's like laying dark fiber," Zander said, referring to the unused fiber optic cables that telecommunications companies hope eventually to switch on. "You've got to put the infrastructure out first, than you light it."

But Sun isn't alone in trying to win a place in the computer centers of telecommunications companies, lucrative customers who buy servers by the hundreds and who are at the heart of the convergence of telephones and computers. IBM also unveiled a new server, software and services Monday and said it has signed BT Cellnet, Telecom Italia, Avenir, UniXS and others as customers.

But selling servers for wireless computing infrastructure may not be as profitable as IBM and Sun hope. For one thing, they face competition from Hewlett-Packard, which has offered its own wireless hardware, software and services for a year. And Compaq Computer, though trailing Sun, HP and IBM in Unix server sales, has long been a strong seller of telecommunications servers for handling ordinary voice telecommunications.

Another long-term problem is determining exactly how popular new Internet services will be. Many cell phone users aren't interested in fancy, new services, and several makers of mobile phones and the chips they use have been hurt by diminished forecasts.

Despite these challenges, few doubt wireless communications will be important, and the opportunity for Unix server sellers is tremendous. Most voice traffic is handled by special-purpose equipment that joins callers in the same circuit. But in the future, many expect the telephone network to become part of the Internet. That would mean major new business for companies such as Sun.

"There's a convergence in the Internet and the communications network," Wettersten said. "If you fast-forward, it's going to be a total Internet Protocol network."

Sun, IBM, HP and others are trying to be as well-positioned as possible before a major overhaul of today's mobile phone technology: the replacement of mobile phones with third-generation "3G" models. The higher data-transfer speeds of 3G systems, combined with the increasing computing horsepower of mobile phones, handheld computers and pagers, mean mobile phones will come closer to the capabilities of desktop computers.

For customers, 3G means new services. For telecommunications companies, it means new opportunities to charge customers and new ways to try to keep them from changing to other providers.

There is one big difference between the Sun and IBM plans for wireless: Where Sun offers hardware, software and help getting it all set up and running, IBM's global services division will actually run it for customers. "Hosting the application for somebody else is part of the offering," said Irving Wladawsky-Berger, vice president of technology and strategy at IBM. "The world that we're living in is more complicated than simply being a pure hardware vendor."

Sun disagrees with IBM's philosophy, however, fearing that providing such hosting services treads on the toes of companies that might buy products and services.

"I think it's important not to compete with your partners," Wettersten said.

Among the Sun and IBM announcements Monday:

 Sun showed, but won't start selling yet, a new server based on the Compact PCI design, a telecommunications-friendly architecture that packs lots of CPUs in a small area. The server, the first Compact PCI model from Sun, complies with the Network Equipment Building Systems (NEBS) standard.

NEBS-compliant servers can withstand earthquakes, high humidity, smoke and dust, and in the case of power outages can run on a direct current from giant battery systems instead of the usual alternating-current power supplies.

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IBM takes aim at wireless market
Dan Powers, director of early stage Internet technology, IBM

 IBM announced a new Unix server, its first NEBS-compliant model. The pSeries p640, 8.75 inches tall and rack mountable, holds as many as four Power3-II CPUs and has a price tag starting at $13,599, IBM said.

 Sun released a new version of its iPlanet calendar, message and directory software that improves support for wireless devices. The software enables services such as instant messaging through cell phones or calendar updates through pagers, Sun said.

 IBM announced WebSphere Everyplace, a version of its e-commerce server software that can join wireless gadgets to back-end servers. With the software, servers can handle encryption, translate Web pages for tiny screens or send messages. "WebSphere Anyplace is now a full product," Wladawsky-Berger said.

 Sun announced an expansion of its earlier Java phone partnerships. Those who plan to use Java for wireless devices include Sprint, Motorola, Nokia, NTT DoCoMo, Siemens, Research In Motion, Sony, LG Telecom, NEC, Matsushita-Panasonic, Mitsubishi, Fujitsu, Symbian, Nextel, One 2 One, SmarTone, Far EasTone and Telefonica.

 IBM said it is updating its data centers so it can host customers' wireless services later this year. IBM has 175 data centers and 15 e-business hosting centers and plans to add another 68 centers through arrangements with a variety of telecommunications and hosting companies such as AT&T, KPNQwest and Telecom Italia.

 Sun said it has 50 partners to supplement its own wireless offerings.

 IBM has its own wireless partners, including Palm, Symbian, Razorfish, River Run Software Group and Motorola.