Sun Touts Solaris For Low-End Servers, Targets Red Hat Linux
Sun executives planned to meet Tuesday with Wall Street customers to tout their aggressive move into an area dominated by vendors that sell systems running so-called commodity chips and low-cost Linux software.
The embattled server and software maker says tests show its Solaris operating system, running on a server with Advanced Micro Devices' Opteron microprocessors, is cheaper and performs better than a similarly configured system running Red Hat Linux.
"There is a large-volume party going on at the low end," said Anil Gadre, Sun's chief marketing officer. "To be candid, we have not been a participant in that party."
Sun, which made billions of dollars selling high-end systems with its own Sparc chips and Solaris software during the tech boom, lost business as customers realized cheap chips and low-cost software like Linux could serve their needs.
It's facing a tough battle on Wall Street, where its high-end and midrange systems are still in use though businesses have in recent years been moving toward low-end equipment that's becoming increasingly powerful.
But, analysts say, it's not clear whether Sun's latest drive into cheap servers will actually help its own financial situation.
In its last fiscal year, which ended June 30, Sun lost $388 million on sales of $11.19 billion, compared with a loss of $3.43 billion on sales of $11.43 billion in 2003. Its 2004 losses were buffered by Sun's $1.95 billion gain from a settlement with Microsoft.
"There are questions around how well Sun can do making money off of those low-priced products," said Gordon Haff, an analyst at the research firm Illuminata.
Sun also finds itself in the awkward position of both criticizing and embracing Linux, the operating system that it uses in some product lines but competes against in others. Linux is developed by a community of programmers, with no company owning the intellectual property.
Red Hat, like Sun, makes money by offering support and services to companies that choose to use Linux, which itself is freely available. Sun, however, also sells its proprietary Solaris operating system.
"We are very much a good citizen of the community and love the Linux community," Gadre said. "But we believe we have a superior product offering from a performance, stability, security and price advantage standpoint compared to the brand of Linux called Red Hat."
Red Hat, the leading Linux distributor, did not return a phone call seeking comment Monday.
The next version of Solaris, which is expected to be available later this year, will allow users to run all their Linux software without having to make changes to the underlying code.
Sun also plans to make Solaris open source, though it has not specified the terms of the license.
Shares of Sun closed unchanged at $3.94 Monday on the Nasdaq Stock Market. So far this year, they have lost more than 16 percent of their value.
Copyright © 2004 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.