Can Sun Turn Up The Heat On Linux?

Now a much humbler company, Sun Microsystems is out to show partners it's not going to become the next Digital Equipment Corp.—the once high-flying alternative to IBM that failed to change with the times and ultimately was swallowed up by Compaq Computer. Sun is about to launch a brand-new operating system, Solaris 10, that it believes will leave Linux and Windows in the dust from a performance perspective. Instead of trying to displace those two platforms, however, Sun's new Solaris will work with them. That's in addition to sporting a new platform and a revamped business model that should position partners to compete head-on against the providers of commodity hardware. All this and more is helping Sun get its house in order.

For example, Sun narrowed its losses for the quarter ended Sept. 30 and again showed positive revenue growth. The net loss for its first fiscal quarter was $174 million, down from $286 million for the same period last year. Meanwhile, Sun reported revenue of $2.6 billion, a quarter-over-quarter increase of 3.6 percent.

One reason for the turnaround? Humility. Just how humble is Sun? Consider its new president and COO, Jonathan Schwartz. In nothing short of a mea culpa, Schwartz has acknowledged some key missteps since the dot-com bust of 2000. "Our shelves, in all honesty, were empty," Schwartz said of the past three years at a launch event in New York. "We just didn't have much."The humility, its dtente with Microsoft and a promise of interoperability, coupled with new wares and Sun's mindset to beat rivals like Dell from a price-performance basis, has customers and partners tuning in again.

"We're seeing a big, big mindset change from the CTOs with the customers we deal with," says Tom Kuni, CEO of SSI Hub City, Metuchen N.J., and president of Sun's VAR council. "The customers I'm talking about are the Big Boys on Wall Street—the most cynical customers of all."

Kuni says Sun also has heeded the concerns of partners—helping address profitability by increasing margin opportunity, encouraging its sales personnel to push services business to partners and addressing concerns of the company's long-term viability, which was an issue in helping seal deals. "Sun unequivocally has the best channel program in the industry," he says.Much of the company's transformation revolves around its decision to sell Solaris on other platforms, a move that has brought a tectonic shift within Sun, particularly for those who were compensated for the sale of hardware. "This is a fundamental culture shift in Sun," Schwartz said. Key to Sun's long-term future is Solaris 10, which will ship this fall.

"It is without a doubt the most important product they've released in a decade," Schwartz said.

The new OS includes a completely rewritten TCP/IP stack, Linux interoperability, grid containers, improved security and self-healing capabilities. Sun also used the event to unveil its new pay-per-use computing grid, where customers can purchase grid cycles in hourly chunks at a rate starting at $1 per CPU per hour. And borrowing from the cellular industry, Schwartz is looking to take the emphasis off making big margins on hardware and instead pushing it to software and services.

Still, Sun's resurgence is far from guaranteed. While analysts say it has an impressive engineering road map and new business model, the proof will be in the implementation and its ability to convince customers to hear the company's story.

"They have their hands full," says Frank Gillette, an analyst at Forrester Research. Also key will be getting VARs educated and trained expeditiously, he says. "You have to think those Opteron servers look interesting to the VAR channel as a much better alternative than HP or IBM boxes, because those guys will compete with the VARs in ways that Sun won't."Sun also has taken the wraps off two new Solaris-based servers running the company's UltraSparc IV processor. The Sun Fire V490 and V890 are four-way and eight-way servers, respectively, using Sun's Chip Multithreading Technology. Sun also provided a preview of its new networking capability from its acquisition of Nauticus Networks, which will add virtualization and resource optimization to systems in the future.

On the storage front, Sun has unveiled several new wares, including the StorEdge 6920, a midrange storage system that supports up to 65 TB of storage, has 28 2-Gigabit Fibre Channel ports, 16 GB of cache, support for 448-GB drives and CPUs with functions such as storage pooling and snapshots. Based on Pyrus technology, the 6920 can take on the grid functionality that's embedded in Solaris 10, the N1 Grid Containers, which give applications their own dedicated resources, caching, I/O and memory in the server.

With the Pyrus software, "we take that capability and extend it all the way down to the storage device," says Adam Mendoza, director of strategic alliances in Sun's network storage business unit.

At the end of the day, Sun is aggressively looking to win back business lost by its miscues. For example, it's trying to win back financial-services firms by offering migration and promotional programs. Among them are a Xeon trade-in program that will give such firms credits for migrating Xeon servers to its Sun Fire Opteron-processor-based systems. Those credits will start at $560 for a low-end Sun Fire V20z server to up to $1,250 for a midrange V40z server. The company also is offering 50 percent discounts for customers that upgrade from Linux to Solaris. In addition, Sun is expanding its programs for financial-services developers, offering Wall Street-specific Sun Tech Days this fall, a developer council and several other promotions. No wonder things are brighter in Santa Clara, Calif., these days.