Sun begins Sparc phase of server overhaul

By Stephen Shankland
Staff Writer, CNET News.com

Published: December 5, 2005, 9:00 PM PST

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Sun Microsystems took the "Niagara" plunge Tuesday in New York, launching its new UltraSparc T1-based servers, which are a key part of the company's effort to restore its ailing server fortunes by catering to its core customers.

The Sun Fire T2000 and T1000 use the UltraSparc T1 processor, code-named Niagara, a radical processor design that Sun hopes will turn around the Sparc family's market share losses. The Niagara systems are the second half of a server overhaul that began three months ago when Sun introduced its "Galaxy" line of x86 servers.

The 3.5-inch-thick T2000 is available now with a minimum price of $7,795 and a maximum of $25,995. The T1000, half as thick but lacking the T2000's redundant components, will arrive in the first quarter of 2006 with prices ranging from $2,995 to $10,995.

The Santa Clara, Calif.-based company initially expected the systems to be used for lower-end Web-oriented tasks such as delivering Web pages. But the company gradually grew more ambitious, concluding that the T1-based machines also are good for running Java server software, mid-range databases, e-mail server software such as IBM's Lotus Notes and SAP's accounting and inventory software.

"We believe this is the finishing up of the reinvention of the product line," said Chief Marketing Officer Anil Gadre. "I believe Niagara will instill vast amount of new confidence in the direction of Sparc long-term."

Sun needs that confidence. Tarnished by delays and lackluster performance at the same time the dot-com implosion wiped out Sun's cachet, the Sparc line suffered at the hands of Power processors from IBM and x86 processors from Intel and Advanced Micro Devices.

In the third quarter of 2005, Sun's server revenue slipped 7.6 percent to $1.05 billion, while IBM, Hewlett-Packard and Dell all saw gains that outpaced the overall market growth of 5.6 percent. And though Sun prefers to emphasize unit shipments--a number that corresponds more directly with another part of Sun's recovery play, potential software sales--there, too, it lagged its top three rivals and the overall market.

Sun talked long and hard about Niagara years before its introduction. In the words of Karl Freund, vice president marketing for IBM's successful pSeries Unix server line, "When don't have great product, you'd better sell futures."

But now Sun also is revealing some performance scores as well as grand plans. The results are creditable, said Gabriel Consulting analyst Dan Olds.

Video: Taking the 'Niagara' plunge
At a press event in New York, Sun Microsystems CEO Scott McNealy and Sun Executive Vice President David Yen unveil the Sun Fire T2000 and T1000 servers.

"These are pretty good benchmark numbers and certainly seem to put Sun back on the performance short list," Olds said.

And Sun has future Sparc plans. First will come Niagara blade servers, models that will share the same chassis as models using Advanced Micro Devices' Opteron x86 processor, said David Yen, executive vice president of the Sparc server group. The Niagara blade servers are due in the summer of 2006, he said.

Then, likely in 2007, will come Niagara II, built using a more advanced manufacturing process that permits smaller circuitry and therefore more features. One major feature will be multiprocessor support, so that unlike with the first generation more than one Niagara chip will fit into a server.

Then, in 2008, Sun expects to release servers with a chip code-named Rock, which is designed to have both the many cores and threads of Niagara but also fast single-thread performance.

With Niagara and Galaxy, Sun has bet that the high-volume, low-cost sales approach will pay off. "Obviously, they have to sell lots of systems of this size to pay back what has to be a considerably larger R&D investment than they have even with Galaxy," said Illuminata analyst Gordon Haff.

And selling low-cost products geared for high-volume markets can be hard on profit margins, said Merrill Lynch analyst Richard Farmer in a Monday report. "The continued trend towards the low end could pressure margins, though Sun has held or expanded margins during a similar mix shift in recent quarters," he said.

Now the race is on to see which of Sun's two new server lines fares better as Sun tries to regain its footing. "He (Yen) has got a new-age processor going into a hungry, installed base. I've got a great x86 system that can run any operating system," said John Fowler, head of Sun's x86 server group.

There's no competition between the two executives, though. "We don't have any friendly wagers," Fowler said, adding that it's "not a bad idea, though."

Three factors figure prominently in Sun's attempt to tout Niagara: relatively low power consumption, an ability to perform many tasks in parallel, and a price tag designed to compete with cheap x86 servers as well as lower-end Unix machines from IBM and HP.

"We are pricing our systems very, very competitively, even compared with the x86 standard," Yen said.

Each UltraSparc T1 has eight processing engines, called cores, and can run 32 simultaneous instruction sequences, called threads. The entire chip consumes a maximum of 72 watts, considerably less than rivals such as Intel's Xeon, which consumes 110 to 165 watts.

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