Sun Slices Galaxy Prices By Up To 37 Percent

Sun Microsystems has slashed prices of its Galaxy line of x86-based by as much as 37 percent, surprising some industry watchers.

Graham Lovell, senior vice president of marketing x64 servers, said prices were cut on Sun Fire x2100, x4100, x4200 and V40z, models that use the AMD 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 either Solaris, Linux or Windows. When the systems started shipping in November, the lowest-end system was priced at less than $800.

Though Sun did not offer specific pricing information, one source said a typical SunFire 4200 model, its beefiest offering loaded with two CPUs, now carries a list price of $6,295, down from $7,595 at launch.

The sizeable 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 Sun made the move to improve the cost to performance ratio and goose demand in the higher-end models.

The servers continue to sell well and Sun increased its shipments of the Galaxy line by 87 percent in Sun's second fiscal quarter, compared to 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 Vienna, Va., Sun partner who said 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 their 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 because he had heard the Galaxy servers were selling at a healthy clip.

"It's interesting to see that severe of a drop in price so close to the initial product release date," he said.

But King noted that Sun could have a large quantity of servers in the pipeline or could be clearing out models of in anticipation of product revisions.

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