Sun Users Advised to Seek Trade-in Options

FRAMINGHAM (04/18/2000) - Meta Group Inc. last week joined Gartner Group Inc. in advising users to insist on investment protection guarantees when buying Sun Microsystems Inc.'s high-end E10000 Unix server.

That's because each server - which can cost more than $1 million - won't be upgradeable to Sun's next-generation UltraSPARC III-based servers, which are supposed to ship next year. As a result, companies that buy new E10000s during the next few months will need to get some kind of a guaranteed trade-in option under which they will be able to swap out their existing systems for the new servers, said Brian Richardson, author of the advisory from Stamford, Connecticut-based Meta Group.

Protection Planned

Sun hasn't announced a formal upgrade policy, but a spokesman said the company plans to provide full investment protection for customers. "Just because we haven't announced a formal policy doesn't mean we don't know how to take care of our customers' investments," he said.

Richardson said trade-in options aren't unusual when it comes to very expensive hardware. For instance, when Hewlett-Packard Co. preannounced its V-Series of high-end servers a few years ago, the company offered 100% trade-in protection for customers that purchased its existing servers in the months before the new server shipped, Richardson said.

Stamford, Connecticut-based Gartner has been telling Sun users to be prepared since last fall.

"We are advising our clients not to sign any contracts" until they have a written trade-in offer from Sun, said Tom Henkel, a Gartner analyst.

The highly scalable UltraSPARC III servers, code-named Serengeti, promise a performance boost of 75% to 100% over existing systems, according to Gartner.

The systems, which were supposed to start shipping later this year, now won't ship until early next year, Gartner said.

The months leading to the release of the new UltraSPARC III boxes may also be a good time to negotiate steep discounts on the E10000, Henkel said. "If Sun offers you less than 30% off list price, you are paying too much," he added.

Last week, Sun declared profits of more than $436 million on revenue of just over $4 billion for the quarter ended March 26. During the same period last year, Sun earned profits of $292 million on revenue of $2.96 billion.

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