Sun/IBM face-off may benefit users

The tussle for market share between IBM, which last week introduced new Unix servers, and Sun Microsystems could mean better deals for customers in the months ahead, analysts said.

But users shouldn't evaluate the two companies based only on the competing price and performance claims being bandied about by the vendors, analysts added.

IBM last week claimed that its two new midrange Unix servers - the p620 and the p660 - offer substantially greater performance at much lower prices than comparable systems from Sun.

The systems are the first midrange IBM servers to feature the company's silicon-on-insulator technology, as well as self-management and mainframe-class error-correction capabilities, which result in a 35 per cent performance boost without additional cost, said Michael Kerr, an IBM vice president.

Sun declined to comment on IBM's claims. But Jonathan Eunice, an analyst at Illuminata, said that while IBM's new boxes may have the same raw performance as comparable Sun servers, they don't have the same redundancy or built-in scalability.

Meanwhile, as previously planned, Sun last week cut prices on several of its server configurations to make way for its new UltraSPARC III-based systems, which are due to start shipping in volume later this year.

Prices for the Sun's UltraSPARC II-processor-based Sun Enterprise 3500 to 6500 servers were reduced by as much as 16 per cent. For example, the price of a Sun Enterprise 6500 system with 24 processors and 48GB of memory was cut from US$874,000 to $775,000, or by 11.3 per cent. Sun also dropped prices on its Enterprise 10000 server by as much as 16 per cent.

While Sun's price cuts are related to its UltraSPARC III systems, they're also part of the company's increasingly bitter turf war with IBM, according to Eunice.

Sun had a 45 per cent growth rate from 1999 to 2000 in worldwide server revenue. It also had a higher U.S. server revenue last year, with $4.78 billion in sales, compared with IBM's $4.69 billion, according to Stamford, Conn.-based Gartner Inc.'s Dataquest unit. But IBM shipped more units in the U.S. last year, selling 239,612 servers while Sun sold 139,243.

"IBM continues to be a tremendous thorn in Sun's side [because] their systems are strong and their pricing is aggressive," Eunice said.

As a result, "both the vendors are obviously very sensitive to what the other is doing," said Joyce Becknell, an analyst at Aberdeen Group.

The good news, from a user perspective, is better prices, more aggressive discounts and better services all around, Eunice said.

"I think they are going to go blow for blow," said Bob Plamondon, a senior director of global IT services delivery at Cable & Wireless PLC, a telecommunications services firm.

The company, which uses many Sun servers, last year purchased a high-end IBM Unix server to run a crucial data warehousing application.

As part of the deal, IBM trained four Sun Solaris administrators to work with IBM's AIX Unix, explained Plamondon. "It was a big help, because we had no AIX skills," he said.

So far, IBM claims to have trained 1,000 Solaris server administrators and taken more than $150 million in business away from Sun as a result of its AIX for Solaris Administrators project.

"They were extremely competitive with each other," noted Kevin Smith, CEO of New York-based start-up MDoffices, which recently purchased IBM's new servers to host an application that enables physicians to transmit prescriptions and other medical information via wireless devices.

MDoffices had planned to host its services on Sun equipment but opted for IBM because the company offered a better lease option, he said.

IBM "offered us an opportunity to get the kind of equipment we needed as a start-up, on a lease arrangement where we didn't have to pay anything for six months," Smith said.

The company is currently installing IBM's new servers but will continue to test its applications on Sun equipment as well, he added.

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