Sun inches toward low-cost computing

Sun Microsystems demonstrated Oracle's new database software running on a cluster of its Intel-based servers last week, its latest step toward offering customers a low-cost alternative to its proprietary Unix servers.

Sun showed Oracle's 10g database, unveiled at last week's OracleWorld show, running on a cluster of SunFire V65x servers and Red Hat's Linux operating system. The configuration also used new clustering capabilities in Oracle10g and high-speed Infiniband switches to boost throughput between the systems.

Sun makes the bulk of its money selling Unix servers based on its SPARC chips and Solaris operating system, and the Intel-Linux combination has been widely seen as a threat to its core business. Nevertheless, Sun recently launched two servers of its own based on Intel chips, which it offers with Linux or Solaris.

One analyst commended Sun for its apparent show of support for Intel and Linux at OracleWorld. Others saw a vendor responding reluctantly to pressure -- both from the market and from its long-time ally Oracle, which has become a big proponent of Intel servers -- and said Sun needs to articulate its low-end strategy more clearly before customers will buy into it.

Sun's Intel-based servers top out currently at one-processor and two-processor machines. It needs to spell out plans to offer four-way and eight-way systems in order to show customers that it will offer them a path for growing their businesses, said Bill Claybrook, a research director for Linux and grid computing at Aberdeen Group Inc.

But Sun has little financial incentive to promote Intel-based servers over its own Unix systems, which produce higher profit margins for the company, noted Gordon Haff, a senior analyst at Illuminata Inc., in Nashua, New Hampshire. Its strategy, therefore, has been to embrace the "Lintel" platform tentatively while promoting Solaris on SPARC as the best choice for its customers, analysts said.

"They are sort of a reluctant Linux company, meaning they don't hate it, but that most people in the company still see Solaris on SPARC as the wave of the future," Claybrook said.

Sun's tepid support for Intel-based platforms puts its goals out of alignment with those of Oracle. The vendors made hay during the dot-com boom selling Oracle's software on Sun's Unix servers, and even today Solaris remains the most popular platform for Oracle database clusters, officials at both companies said. But with spending on large IT projects in decline, Oracle increasingly is promoting Intel-type servers running Linux or Windows as a way to reduce the cost of deploying its software.

"The partnership (between Oracle and Sun) that was so successful during the dot-com bubble has lost a lot of its value, and the thing that has killed it is Intel," said Ted Schadler, a principal analyst at Forrester Research Inc., in Cambridge, Massachusetts.

And Oracle's low-cost message isn't letting up. If anything, the grid computing model -- in which businesses harness unused computing resources by tying together distributed systems -- is making Oracle more a fan of Intel and Linux.

"We expect some customers to set up grids based on Unix, but ... it doesn't make sense to use a big, expensive OS when you're trying to squeeze out cost, so Linux is a natural choice for the grid," Oracle vice president John Magee said in an interview last week.

The threat to Sun's Unix business is real, according to many analysts. While its low-end Unix servers are doing well, sales of its mid-range and high-end servers have stumbled as businesses in traditionally strong markets for Sun, such as financial services, have moved to embrace Intel and Linux, analysts said.

"They really have to do something, because pretty much in the last year it's become clear that IT managers are buying smaller boxes. Very few people are going out and buying those big (Sun Fire) 15K and 12K 64-bit SPARC machines that Sun sells," Claybrook said.

Ironically, Sun could offer some of the best Intel-based systems on the market if it chose to, Claybrook said. Solaris is "still by far a better operating system than Linux," he said, and if Sun were to promote its Solaris-Intel servers more enthusiastically it might find many customers willing to pay for them, he said.

Sun executives play down any suggestion of conflict between Sun and Oracle. McNealy's speech Tuesday kicked off with a video of himself on stage with Larry Ellison, Oracle's chairman and chief executive, pledging to tackle the low-cost computing market hand-in-hand. "We are absolutely aligned in our visions and our engineering efforts," McNealy said.

What's more, he argued, Sun is better positioned to sell low-cost systems to enterprises than is a company such as Dell Inc. Sun has the technical expertise and services to help customers assemble low-cost computers into larger systems, whereas Dell doesn't, according to McNealy. "It's not about getting a 1U box mail-ordered from a Web site to solve your problem. It takes a ton of R&D," McNealy said.

Alan DeClerck, senior director of Sun's Oracle business unit, acknowledged a "perception" that the companies' strategies are out of sync but argued it has more to do with how Oracle is marketing its products than "a reality of what's happening in the field."

He noted that the Sun-Oracle cluster being shown used not only Sun's Intel servers but also its Fibre Channel storage arrays and Control Station management software. Sun can garner additional revenue from such configurations by selling other software and services, including its N1 software for managing data centers, which he said will complement Oracle's grid software. "Sun is a complete solutions company," he said.

Illuminata's Haff commended Sun for reacting to changes in the market and demonstrating support for Linux and Intel. The company is doing its best to adapt to a new environment where Unix is no longer the obvious choice for enterprise computing, he said.

"In the past Sun's strategy was to stick its head in the sand and say, 'We make the most money off of our big systems and that's what we're going to sell.' It's to Sun's credit here that they're accepting that there are changes going on and adapting to them as best they can," Haff said.

"Historically they've shown a lot of adaptability and they're trying to adapt again," he continued. "They're doing a pretty good job of getting their supply chain and operations in place to sell low-cost systems, and they seem to be heading off in a reasonable direction. There's no guarantee they'll succeed, but the fact they're going off in a lot of sensible directions is a lot better than bumbling along with their heads in the sand."

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