Sun remains confident of SPARC longevity

Intel seems to have reached a point where it no longer needs to preach to the converted as all the leading server vendors have announced plans to port to Itanium. All but one that is, Sun Microsystems is standing resolute in its refusal to adopt Itanium, and remains confident of its future in the high-end server space.

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By  Zoe Moleshead Published  September 26, 2001

Sun Vs Intel|~||~||~|Intel seems to have reached a point where it no longer needs to preach to the converted as all the leading server vendors have announced plans to port to Itanium. All but one that is, Sun Microsystems is standing resolute in its refusal to adopt Itanium, and remains confident of its future in the high-end server space.

Recent IDC figures confirm Sun’s continued leadership in the Unix market, and also its improved market share in terms of shipments, garnering 55% of the worldwide Unix market. The vendor attributes its reign at the top to its ability to determine market direction and develop its products accordingly.

“We put a lot of effort into trying to find out where the market is positioned, where the market is going, where the requirement is,” says Johann Muller, product sales & marketing manager, Sun Microsystems, Middle East & Africa.

Sun is also positive that it has the edge on Intel when it comes to experience in the 64-bit processor market. While developing its own UltraSPARC processors over five years ago, Sun encountered and overcame numerous problems in development — problems Intel still has to face.

“We’ve been in the market with 64-bit processing for nearly three years. We are now in our second or third generation 64-bit CPUs,” comments Muller. “[But] five years ago, Sun wasn’t that good, when we started working with it [64-bit processing] we had big problems. I can guarantee you that Intel are going to have the same big problems.”

Intel has a war chest packed with dollars to fund the development of it IA-64 architecture, and with money being ploughed into the fund by IT companies and end users, Intel sees this as an affirmation of its 64-bit architecture.

“Right now the fund is sitting at about a quarter of a billion dollars,” says Ferhad Patel, e-business manager, Intel, Middle East & North Africa. “So there is a lot of support for the fund itself and hence the ISVs.”

Sun believes that no matter how big Intel’s coffers may prove to be, money is no substitute for time, experience and research & development. Ensuring cohesion between the chip, the compilers and the applications is just one challenge Intel is facing.

“Intel will give you a blueprint or say this is what we’ve designed and it gets finalised and goes into production,” comments Muller.
“A year down the line they can’t get half of the stuff working, they’ve missed their second deadline, so they’ve got to start thinking how they can get the chip out quicker — so they remove some of the functionality,” he predicts.

||**||Sun's future|~||~||~|Despite Sun’s bravado analysts also remain unconvinced about Sun’s long term future, suggesting the vendor will be forced into adopting Itanium. “Sun has little choice but to attack the viability of Itanium,” says Andy Butler, vice president & research group director, Gartner Research.

“It will become difficult for Sun to keep Sun SPARC alive as an alternative to Itanium in ten years.”

Intel also believes time is on its side, and that Sun is fighting a losing battle long term. The chip vendor describes it as ‘short-sightedness’ if customers focus simply on current technology and architecture.

“If you look at the economy, most people are looking to 2002 and beyond, and that’s the time when the future Itanium-based platforms, McKinley, Madison and Deerfield, —that’s when they are really going to be strong,” predicts Patel.” I think by 2003 and 2004 there will be an upswing in the economy by then, and that we will be well positioned.”

Gartner analyst Butler, believes Sun is content to maintain its position in a niche market, “milking the SPARC/Solaris cow for as long as they can.”

Sun can continue to dominate the market for a few years to come, capitalising on the proposed HP/Compaq merger, and developing its strengths. “Sun know they are selling to a smaller portion of the IT infrastructure but they are determined to be [very] good at addressing that portion,” says Butler.

Though Sun seems to be fighting a lonely battle, the vendor claims a market dominated by Intel chips will prove negative to competition and development.

“If everybody is putting Intel chips in their systems, where does the whole concept of competitiveness go? A captive market typically results in a lack of development and a lack of drive, there’s always competition needed. Customers want an alternative,” explains Muller.

However, Sun is also struggling to overcome slumping profits. Its CFO, Mike Lehman announced in a recent conference call that the company was struggling to hit its break even target of $3.7 billion.

The Unix player is blaming the economic slowdown in the IT market, as well as a proliferation of second hand servers flooding the market. It is however, predicting a change in its fortunes by the start of next year.

“It’s a combination of things, if you look at the US market, during the Internet explosion lots of companies bought lots of equipment, and it is now in the market as refurbished or second hand equipment being auctioned off,” Muller says.

The Middle East is proving a bright spot for the company, with the region continuing to hit its targets as it registered 35% growth at the end of fiscal year in June, and looks set to hit its first quarter targets as well.

However, slowing revenues have forced Sun to take a more cautious approach in the region. “From a business point of view I think we can take more business, we just don’t have the headcount,” comments Muller. “With the slowdown we are not employing more people, we’re being a bit more conservative.”

With the release of the ‘flagship’ 72 CPU StarCat server and an 8 CPU system, Sun is looking to add the final pieces of its SunFire range by the year end, and boost its sales with many customers holding off on purchases until the servers were released. According to Sun, the systems are already generating interest in the region.

However, the StarCat server, which Muller describes as a “beast” is likely to guarantee only 10 or 15 customers among the high performance and mainframe companies in the Middle East.

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