Sun Goes on the Offensive with Server Deals

by Timothy Prickett Morgan

Having got its first "Galaxy" Opteron-based servers out the door a few weeks ago and then quickly following them up with the "Panther" UltraSparc-IV+ processors for its Sparc-based servers, Sun Microsystems has, for the first time in about five years, a compelling lineup of Unix servers that it can bring to market and compete aggressively against its rivals. But technology is not enough to peddle boxes because customers want deals as well as great gear.

While leaps in performance and great price/performance improvements are sufficient to make many customers stay within a server product line--Sun's or otherwise--Sun has been hammered on by its rivals as its Sparc-based servers have been perceived as being overpriced and underperforming since the "Cheetah" UltraSparc-III processors were delayed about two years, and finally came to market slowly in 2001 with considerably lower clock speeds and a lot less performance than Sun had been promising for four years. From that point forward, the server market crashed and Sun saw its 20 percent per year sales growth come to an abrupt halt. And in a reflexive action, rather than reading the writing on the wall and embracing X86 processors with Solaris 8, Sun started to pull back on the X86 platform and circled the wagons, getting whatever Sparc-Solaris sales it could as it awaited a resurgence in the server market and future UltraSparc-IV and UltraSparc-V processors that, Sun hoped, would allow it to catch up with IBM's Power4 and Power5 processors and the Itanium 2 processors from Intel that were being championed by Hewlett-Packard in its Unix server line.

IT historians will argue a few years from now about how much damage this reflex action caused, but eventually, as it became clear that Sun needed to change its ways as Linux-based and Windows-based X86 machines started to make huge headway at Sparc-Solaris shops that quite correctly saw Sun not delivering the value that these boxes did. As a consequence, Sun saw its server sales plummet, and after a changing of the guard at the company (excepting chairman and CEO Scott McNealy), Sun has set itself on a course to get its Sparc-based platforms on track--ramping up the UltraSparc-IV and UltraSparc-IV+ chips, getting its future multithreaded "Niagara" and "Rock" processors to market in 2006 and maybe 2008, respectively, and partnering with Fujitsu-Siemens for big monolithic Sparc boxes--and creating innovative X64 servers based on Opteron chips to fight back against Wintel and Lintel boxes. It might have been better for Sun and its shareholders that the company realized what it needed to do in late 2001, but to its credit, Sun has worked very hard in the past three years to get its Sparc and Opteron server houses in order.

To summarize, Sun actually has Sparc and Opteron boxes that are truly competitive, which means it has products that will appeal to customers who love Sparc and want to stay as well as those who don't and want to leave for X64 iron even if they do want to stay with the Solaris platform. And as the UltraSparc-IV+ processors are rolled up into the Sun Fire 20000 and 25000 servers later this year and Sun delivers more powerful Galaxy machines with up to 16 Opteron cores in a single system image, Sun will finally have a complete product line that is absolutely and irrefutably competitive. Of course, for that statement to be true, Sun has to do in the high-end Sparc line what it did in the midrange line, which is deliver the dual-core Panther chips with no increase in price over Sun Fire boxes using the prior "Jaguar" dual-core chips. (The Panthers offer about twice the performance of the Jaguars because they have tweaks in the chip pipelines as well as an on-chip L2 cache memory; all prior high-end UltraSparc processors had external L2 caches, which crimped their performance.)

If Sun wants to grow again, it has to fight back against the onslaught of Dell, IBM, and HP, which have all been battering on the Sun server installed base for four years. And that is why Sun has announced a barrage of competitive replacement and upgrade deals even as it is offering competitive Sparc and Opteron servers.

All of the major server makers have competitive replacement deals, and there is a reason for that. "Of all of the promotions we run, the competitive replacement ones are the most successful," says Pradeep Parmar, product line manager for Sun's Network Systems Group, which is responsible for its X86 and entry UltraSparc server lines. The big deal that Sun is shouting about most loudly is one that targets servers made by Dell by name, but which will also give a 20 percent trade-in credit good toward the purchase of a two-socket Galaxy X4100 or X4200 server for customers who buy between now and March 24, 2006. By contrast, the trade-in deals on the V20z and V40z servers was in the range of 10 percent, and these boxes were twice the size and less impressive than the Galaxies.

Parmar says that the same trade-in credit can be applied to any X86 or X64 server that is five or fewer years old and made by Dell, IBM, or HP, and if customers have other brands of computers, Sun is amenable to making the deal on these boxes as well, but will only do so on a special-bid basis. As an example, Sun says that customers moving from a Dell PowerEdge 2850 using Xeon DP processors can move to a Sun Fire X4200 server with two single-core Opteron 254 processors and boost their performance by 50 percent and get a box that has 2 GB of memory and two 73 GB disks with a $1,297 savings off the $6,485 sticker price. Sun is also tossing in a license for its Java Enterprise System middleware stack on the biggest Galaxy configurations, which raises the value of the promotion on the X4200 to over $1,900.

Sun has a bunch of other interesting deals on the Galaxy boxes. As it did with the V20z, Sun is offering a free entry X2100 Galaxy machine to developers who sign up for a three-year Sun Developer Network subscription, and is offering bigger X2100 configurations for as little as $1,000. (That latter amount is for an X2100 that has a dual-core Opteron 175 running at 2.2 GHz, 2 GB of main memory, and an 80 GB SATA disk, which has a list price of $2,295.) Sun also announced a deal called the Instant Web Services Deployment bundle, which includes a Galaxy X2100, X4100, and X4200 servers and a one year license to the Java Web Infrastructure Suite for $2,795, which is a 78 percent discount on the software. Sun's Customer Ready Systems build-to-order unit also has a deal for customers who buy a rack of 20 Galaxy machines and Sun will cut the integration fees by 33 percent and toss in a free server rack (not rack of servers, mind you) worth about $5,000. All of these deals expire in the last week of March next year.

Sun is also extending its Itanium replacement program to the new Galaxy machines to customers with Alpha-based Tru64 servers or Itanium-based HP-UX servers, which offers a 12 percent trade-in for each HP server that Sun puts into the garbage on the behalf of customers. If you do a deal with more than $250,000 in spending, Sun will toss in a bunch of migration assessment services.

Sun hasn't forgotten about its installed Sparc base, of course. As part of its long-running upgrade programs, the company is giving discounts to customers who move from earlier Sparc generations to the new UltraSparc-IV processors and the uniboards that are based on them. Sun has two deals it is highlighting. The first offers an upgrade to customers with Sun Fire 3800 and 4810 servers using UltraSparc-III chips who move to Sun Fire E2900 or E4900 servers using dual-core UltraSparc-IV processors. The trade-in allowance is 30 percent on this deal, and it is so high because the uniboards used in the two sets of servers are different and require a change of uniboards to use the new processors. On the second deal, customers who have older Sun Fire 4800 and 6800 servers using UltraSparc-III chips can get an UltraSparc-IV hardware upgrade kit, which includes a 1.35 GHz dual-core uniboard as well as a chassis upgrade kit, which is necessary because the dual-core chips require new power supplies. This deal gives a 35 percent discount and runs until March 26, 2006. It actually predates the launch of the much-improved UltraSparc-IV+ chips--and intentionally so because Sun is going to need time to ramp up the UltraSparc-IV+ chip volumes.

In the wake of the Panther chip announcements last week, Sun rolled out an Upgrade Advantage Program revamp that provides 20 percent trade-ins on older Sparc server boxes and up to 40 percent trade-ins on uniboard trade-ins for customers who move to "Amazon" server frames and Panther-based uniboards. This deal applies to Sun Fire V490, V890, E2900, E4900, E6900, E20K, or E25K servers running the Jaguar chips. Sun is only offering a 25 percent trade-in on earlier generations of uniboards.