Sun Plugs the Grid Some More, Adds Some Features

by Timothy Prickett Morgan

Sun Microsystems hosted its Network Computing 2005 Quarter 2 (NC0502) quarterly announcement blitz in Washington, D.C., this week, and while the company did not roll out any new hardware, its top execs did spend a great deal of time fleshing out their vision of utility/grid computing and having a bit of fun with the crowd, specifically when Scott McNealy, Sun's chairman and CEO, hit nerf baseballs into the crowd that were supposed to designate units of grid processing power.

Back in February, when Sun rolled out the Sun Grid, which is at this point as much a concept as it is an actual utility-style compute farm that Sun has assembled from machines that it is burning in before they ship to customers, the company talked about its vision of grid computing a lot, too, and basically said it wanted to be the provider of the hardware, software, and services that go into making the internal corporate grids and the shared public grids that Sun envisions as the next wave of its product development and which it expects to make money from in the next decade. If the NC05Q1 event in Santa Clara, California, was about turning the power on in the Sun Grid and getting the basic idea of Sun's implementation of utility computing and utility pricing out there, then the NC05Q2 event in Washington, D.C., was about further explaining the inevitability of this transformation in the way information technology is assembled and consumed. And, because Sun is on the middle of a lot of product transitions, the Washington, D.C., event was also yet another occasion when McNealy calmly and sarcastically reminded everyone that Sun has lots of money in the bank and it is planning for the long haul in this transition from do-it-yourself to utility computing.

Understandably, then, McNealy did not talk about the rumors that erupted last week that Sun was looking to take itself private. As we already pointed out in "Sun Steps on Leveraged Buyout Rumors," Sun is not interested in doing an LBO to take itself private, and nor is it interested in being acquired or likely to be acquired in a hostile manner given the transitions it is facing and the high cost of doing such an acquisition.

McNealy said that Sun had been through three jarring transitions before, and that he expected this one to be no different. It took the Stanford University Network Microsystems company that created the concept of the Unix workstation and open systems networking eight years to get to be a $1 billion company, and it wasn't really until the early 1990s that Sun started creating the special-purpose Unix servers that eventually became the preferred platform for telecommunications companies, and the academic institutions and the early service providers that became the backbone of the Internet. By the late 1990s, the Sun-Oracle platform had become the preferred platform for the dot-com boom (thanks in large part to the openness of the platform and the fact that Oracle and Sun are two of Silicon Valley's first dot-coms themselves), and then the boom went bust. McNealy, like Sun, has been humbled a bit by this experience, and simultaneously toughened up like an athlete or a soldier. "We used to be to the dot in dot com, and the we switched back to being the 'O' in Old Economy," quipped McNealy. "Be careful of your marketing messages. People have a habit of remembering them."

About $5 billion of that $7.5 billion cash hoard that Sun is sitting on comes from that dot-com boom, when perhaps Sun should have been working on multithreaded processors like "Niagara" and "Rock" and positioning itself in the X86 market with Opterons; perhaps a hundred other things. It doesn't matter now. What matters for Sun is the future, and getting there, and making some money there. "We think there will be a very nice decade of utility computing," explained McNealy, saying that if you study utilities, two things matter--scale and communities.

He brought up communities for two reasons. The first was to beat his chest about Sun and the University of California at Berkeley being the two largest contributors of to the open source movement for the past two decades (Sun may have been founded at Stanford University, but Bill Joy, one of the creators of the open source Berkeley Systems Design Unix and one of Sun's other founders, hailed from across the bay.) "It is only fitting that, being in Washington, that I get a little Al Gore-ish and say that we invented community development," he said wryly, adding that the many application development environments in the world had come down to two: Java and .NET. This was the second reason to bring up community--to take a swipe at a new buddy, still competitor Microsoft. "These communities matter, which is why there are only two software stacks left--it is really mankind versus .NET out there. And we will win. When it is mankind versus anybody, mankind still wins," he declared. If it were only that simple, the computer business would be a lot different, but McNealy is correct that in the new IT world of the 2000s, standards and community make the difference between a product living or dying stillborn.

As for scale, Sun has thousands of engineers and has bought and built the tools that will help it create and extend the Sun Grid compute and storage utilities, and has partnered with other firms to help it work on other more useful utilities, including the Holy Grail that Sun calls the Transactional Grid. That's the one that doesn't just do number-crunching jobs like Monte Carlo simulations and protein folding, but that can run an ERP suite in a secure, remote, cost-effective way that will prompt governments, corporations, and other organizations around the world to shut down all or most of their data centers.

We are a long way off from that moment, and McNealy is far too smart to get caught in the trap of predicting when this might happen. But he made an interesting case for Sun's position when it comes to utility computing. "If you are spending more than $2 billion a year on R&D, then it is probably a good idea for you to build your own grid," he snapped. "People often ask me, 'Who is your biggest competitor?' And I say it is often the CIO, who is trying to build his own stuff."

The most interesting thing that McNealy said in his remarks was that IT vendors have done a pretty good job in the past couple of decades of lowering the barriers of entry for technologies, but that they have done a terrible job in removing the barriers to exit. He asked the crowd to swap out the Windows on their PCs to another platform to illustrate the point. Or the customers in the audience to unplug their mainframes. This, as we all know, is not so easily done. But the picture that McNealy painted of the current Sun Grid compute farm and the future transactional grid that Sun wants to build is this: you don't have to sign a lease, you don't have to fire people or hire people, you don't have to write off capital equipment or spend a lot of capital up front to do computing. You just buy your capacity, you use it, and then you sign off. "The barrier to exit is like getting out of a cab," he explained.

McNealy also shed some light on what Sun believes companies are paying for their computing power in relation to the $1 per CPU per hour that Sun is charging for the Sun Grid. He said according to surveys of Sun's customers with mixed platforms, it costs about $8 to $10 per CPU per hour to run a Wintel or Lintel box that is running at about 15 percent CPU utilization. (Obviously, if you can get the utilization higher, it costs less, which is why virtualization software is becoming increasingly important.) For midrange Unix and OS/400 servers, Sun reckons that customers are paying about $100 per CPU per hour, and that on high-end mainframes, the price is on the order of about $1,000 per CPU per hour. McNealy also said that this analysis did not take into account the zero barrier to exit on the Sun Grid; there is definitely a cost to moving applications off any server. What McNealy did not say, however, is this: the comparison is not apples-to-apples, since the Sun Grid can only be used for number-crunching jobs, not transactional jobs. For all we know, it will cost $50 to $100 per CPU per hour to run midrange-class applications on that future transactional grid Sun is starting to talk about. The cost probably will not come close to what Sun reckons customers are paying on their mainframe applications, which is why I expect Sun to go after the front-end transactional monitors with the Sun Grid first. Sun already owns the Unix clone of the CICS mainframe transaction monitor and has a mainframe rehosting environment that it bought several years ago. Sun could save mainframe shops a lot of money by plunking baby Sun Grids on site running this software and plugging it into the existing mainframe applications. You start with the transaction monitor, and then you move to rehosting the applications and then the databases.

But, before we get to that future, Sun and other proponents of utility computing will have to build secure systems that people will trust as much as their own systems and spend a lot of time getting people used to the idea that they don't have to run a data center, that they should let professionals do it. The record to-date for the quality of outsourcing and systems integration in terms of saving money and improving the efficiency of IT has not been great, so this will be an uphill battle.

But McNealy is convinced that something that looks very much like a shared, public transactional grid is the way the industry will go, and he is being careful about not setting specific expectations. Because he was in Washington, D.C., McNealy used government customers as an example, saying they had no problem buying electricity and water from a utility, but "when it comes to computers, they all freak." He said making the transition to utility computing was going to require a psychological and an anthropological change. "How many different, unique SAP setups to we really need to make SAP wiggle? Every one of us has a unique email server--what is that? Why isn't my email scott.mcnealy@sun.yahoo.com? Remember when you wouldn't give up your voicemail? We will get over this. We will evolve. Predicting when is difficult."

Aside from all the vision, Sun did have some specific grid computing announcements. Sun has already rolled out the beta version Sun Grid Compute Utility (that's the $1 per CPU per hour service) and is now promising to deliver the Sun Grid Storage Utility (which costs $1 per GB per month) sometime this summer. This is also when the compute utility is expected to go live. Sun is working with Archipelago Holdings, the electronic brokerage house that was just acquired by the New York Stock Exchange, to create a CPU cycle exchange to allow companies to buy and sell their excess computing capacity and to purchase capacity on professional grids like the Sun Grid. Sun announced this week that it has regional Sun Grid centers operating in Virginia and New Jersey within the United States and in London in the United Kingdom, and that it will be opening other regional Sun Grid centers in the near future. These regional centers already have customers from the financial and education sectors. Sun also rolled out a variant of its pre-configured clusters called the Sun Grid Rack System, which is a chunk of the Sun Grid boxed up (this is called a "bright cluster" in the supercomputer industry, and Sun has sold such clusters for several years). What is new is that the Sun Grid Rack System comes in four configurations--with 8, 16, or 32 two-socket Sun Fire V20z compute nodes or 10 four-socket Sun Fire V40z compute nodes--including a management node, network switches, operating systems, and all the stuff to make it useful. The base configuration costs $77,000. These chips off the Sun Grid are created by Sun's Customer Ready System operation in its factories.

McNealy said Sun is working on a special grid aimed at developers, which will give them inexpensive access to the tools to create applications and compile them, as well as a display grid, which will sell customers Sun Ray thin clients for something like $1 per display per day and let them access office applications remotely, as Sun already does with its own employees.

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