Sun's McNealy sings a low-cost tune

Scott McNealy, Sun's chairman and chief executive officer, promised to deliver low-cost computing to users when he launched a...

Scott McNealy, Sun's chairman and chief executive officer, promised to deliver low-cost computing to users when he launched a series of products yesterday.

He argued that Sun could offer better value low-cost hardware than its rivals, be it low-end Unix servers based on Sun's Sparc chips or Intel-based servers running Solaris or Linux.

In both cases, McNealy said, Sun offers a better deal because it throws in its operating system and middleware for free.

Other Sun executives plugged the latest offering for consolidating storage systems onto a single, large machine, while Mark Canepa, a Sun executive vice-president, said two low-end UltraSparc IIIi servers were "comparable to a PC kind of cost structure".

Sun's claim that it can save customers money by bundling software is only partly true, one analyst said. If customers want the whole stack of Sun software - including its operating system, middleware and management tools - then they may indeed save some money, said David Freund, an analyst with Illuminata.

"If you add all the numbers up, it looks really compelling. The trouble is, you never would add all the numbers up. You'd never buy a Dell server with all those components on it, so it's somewhat disingenuous when you look at the actual value of any one server at a time," he said.

Customers who buy numerous Sun servers may, in aggregate, save some money even if they want the whole Sun software package on only some of those servers, Freund added.

McNealy brushed off concerns that Intel and Linux are threats, pledging to expand Sun's line of servers running Intel-type processors and to support the popular Linux distributions for its customers. Sun originally planned to sell its own version of Linux but abandoned the idea last month.

Another analyst said Sun had no choice but to start selling Intel-based servers, since some of its customers had been looking in that direction.

"It was pragmatic," said Jean Bozman, an analyst at IDC. Sun would prefer to sell Sparc Solaris systems, from which it makes higher profits, she noted.

It remains to be seen whether Sun is committed to x86 and Linux or whether it will turn tail should its more profitable Unix business pick up steam again. "I think you have to look at the volumes" to see how serious Sun is, she said.

While its midrange Unix business has performed poorly recently, Sun's low-end Unix business has been doing well.

Although Sun is using Intel's 32-bit processors, McNealy was dismissive of Itanium, Intel's 64-bit chip that some analysts view as a big threat to his company. He argued that the architecture is clumsy and that there is little support for Itanium in the industry, and said Sun's market share is too strong for Intel to overcome.

"I wouldn't say we dominate, because that might be illegal, but we have 'interesting' market share in the 64-bit space," he said.

McNealy was promoting two low-end Unix servers, a midrange storage line and the N1 Data Platform, a product for managing groups of storage systems in a datacentre more efficiently.

Although Sun is offering professional services to help customers implement N1, it does not plan to beef up its services arm with an acquisition.

"We're not going to try to compete with EDS, we're going to go out there and partner," he said.

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