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New Game Plans
Hewlett-Packard and Sun Microsystems have a lot to prove. The two struggling IT vendors this week will unveil a wave of products designed to patch weak spots in their product lineups and re-establish their former positions of strength. They're innovative additions, but the companies will have to do even more to keep up with Dell, which drives the market for high-volume, low-cost PCs and servers, and IBM, which dominates the high end with its mainframes, systems integration and outsourcing services, and army of consultants.
The stakes are highest for Sun, which many had written off in recent years as a provider of overpriced and underpowered proprietary systems. This week, it introduces the Galaxy server platform, an x86 line designed to help the company regain its position as a leading supplier of high-performance systems. Sun is billing the event as its "triumphant return to Wall Street." Hewlett-Packard, meanwhile, is adjusting to new CEO Mark Hurd and a 10% cut in its workforce imposed earlier this year. This week, HP is launching an initiative to foster virtualization across its product portfolio, making it easier for businesses to consolidate and shift workloads among fewer servers.
Chicago Mercantile is increasingly moving to blade servers. "There's no one platform that does it all," CTO Troxel says.
The financial-services market is the current battleground. Sun says 40 brokerages, exchanges, and financial-services companies are testing its new Galaxy platform, which is designed to win back customers in an industry that had been its core strength. "Not too long ago, the word on Wall Street was, 'How do we port away from Sun?'" admits Larry Singer, VP and strategic insight officer for Sun. "But now, the buzz is back."
Prestigious Wall Street wins are crucial for Sun because financial-services companies buy the most-powerful computers available and can serve as a proving ground for new technology that can then be sold to other key markets such as education, government, and telecommunications. But HP won't give ground without a fight. In the past six months, HP says it has moved 150 Sun customers to HP systems, generating more than $200 million in revenue.
Among those HP has lured from Sun is financial-services provider Currenex Inc., a foreign-currency trader that averages about $20 billion a day in transactions. Currenex in January moved from Sun servers equipped with Sun's Sparc processors to HP systems that utilize x86 processors from Intel and Advanced Micro Devices Inc. Sun wasn't demonstrating enough dedication to creating systems that used the Linux open-source operating system, says chief technology officer Sean Gilman. In addition, the performance of Sun's Sparc systems had waned, and the company's x86 effort was just beginning, Gilman says.
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