Sun Cuts Prices Of Galaxy Servers

Sun Microsystems slashed prices of its Galaxy line of x86-based servers by as much as 37 percent, hoping to stimulate sales of its bigger boxes.

Graham Lovell, Sun’s senior vice president of marketing for x64 servers, said prices were cut on the Sun Fire x2100, x4100, x4200 and V40z, models that use Advanced Micro Devices’ Opteron processor. Those models, first marketed under the Galaxy code name, were engineered as low-cost, high-performance systems for the data center that will run Solaris, Linux or Windows. When the systems started shipping in November, the lowest-end system was priced at less than $800.

One typical midtier 4200 model, loaded with two 2.8GHz CPUs, now carries a list price of $5,795, down from $9,235 at launch. Lovell said the cost of add-on components such as memory also has been reduced.

The sizable cuts came as a surprise to some in the industry because Galaxy servers had been thought to be selling well—so much so that some solution providers had trouble getting their hands on new models during the initial product launch.

Lovell said Santa Clara, Calif.-based Sun made the move to improve the cost-to-performance ratio and spur sales of the higher-end models.The servers continue to sell well and Sun increased its shipments of the Galaxy line by 87 percent in its second fiscal quarter, compared with the same quarter in 2005, according to Lovell.

“This isn’t an unusual strategy,” he said. “We usually cut prices from quarter to quarter, but we were a little more aggressive with the dual-core models to stimulate the higher end of our product line.”

The move definitely was unexpected by some partners. “It’s a cut they probably didn’t need to make,” said Rob Wolfe, president and CEO of AvcomEast, a Sun partner in Vienna, Va., who added that the Galaxy servers “have been flying off the shelf.”

But Wolfe noted that Sun must play by typical x86 pricing rules with the Galaxy line, a switch from its usual models, which use RISC processors manufactured in-house. “That is the nature of the beast in the PC world,” he said. “When in Rome... .”

Charles King, an analyst at Pund-IT, also was surprised by the changes. “It’s interesting to see that severe of a drop in price so close to the initial product release date,” he said.King speculated that Sun could have a large quantity of servers in the pipeline or could be clearing out models to prepare for product revisions.