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Sun Brings Back Top Solaris Exec After Stint At Apple

Just as Sun Microsystems is prepping the Solaris 10 "comeback kid" release of its Unix operating system, the company announced that Tom Goguen, former Solaris product group manager is coming back to evangelize Solaris. Goguen left Sun in the late 1990s to work for an Internet startup called Eazel, which was founded by the creators of the Macintosh interface who were trying to make the Gnome interface for Linux more Mac-like. Eazel went bust in May 2001, and everybody, including Goguen, went to work for Apple as part of its Mac OS X efforts and expansion into the server market.

Argus Systems Ports PitBull Security Software to AIX

Argus Systems, a Savoy, Illinois, maker of security software software for Solaris and Linux platforms, announced that it has ported its PitBull family of products to IBM's AIX Unix platform.

PitBull Foundation is the company's core product, and it is a layer of software that, the company claims, eliminates vulnerabilities associated with Unix the root or superuser account; the software also protects applications and operating systems from attacks from within a company or outside a firewall. Argus has been selling the product on Solaris, and now it has been ported to AIX. Argus also sells a program called PitBull LX, which is a security layer that wraps around Linux or Unix applications and prevents hackers from exploiting known bugs in the application software to gain access to the systems. PitBull LX also protects sensitive information and does not allow hackers to deface Web sites. Both PitBull Foundation and PitBull LX essentially provide a finer granularity to root access than Unix and Linux themselves. PitBull LX was available for Solaris 8 and commercial Linuxes based on the 2.4 and 2.6 kernels, and now it is also available on AIX 5L 5.2. It is unclear when support for the new AIX 5L 5.3 release will become available.

Cray Takes Big Writeoffs, Cuts Revenue Projections for 2004

Supercomputer maker Cray, which is in the midst of three major product transitions, gave Wall Street a bit of a shock last week as it announced that it would post a loss of $111 million in the third quarter and scaled back its sales projections significantly for 2004. In the quarter, Cray posted sales of $45.9 million, down 35 percent, but more than double the sales it posted in the second quarter of 2004.

The supercomputer market, and particularly the very exotic, high-end machines that Cray has, in its various incarnations, always sold makes for volatility in sales. This is one of the reasons why Cray bought OctigaBay for $115 million this March; the Canadian supercomputer maker had created a product that could scale down to relatively small high-performance computing (HPC) systems as well as scale up to very large boxes with teraflops of power. By having many different style of computers--the XT3 parallel Opteron machines that comprise the "Red Storm" Linux super, the XD1 Linux-Opteron machines designed by OctigaBay, and the X1E vector processors--Cray hopes to cover more HPC workloads and more customers, and therefore get a bigger piece of the HPC pie.

As enthusiastic as current and potential Cray customers have been about its new technologies, what Wall Street counts is money, and Cray seems to have been facing some issues in this area. But to be fair, Cray is selling very large HPC gear and its sales are dominated by big deals. Shifting a few deals forward a quarter or more can have a radical effect on immediate sales. Because of the high volumes in the server market at large, vendors are less susceptible to huge revenue swings.

For the quarter ended September 30 and for the remainder of the year, Cray is facing the nightmare of all server makers: parts shortages.

"While shipments of both the Cray XT3 and Cray X1E systems will start in this quarter, due to a parts availability issue with key components, we will not ship sufficient new systems in time to generate as much revenue as planned," said James Rottsolk, Cray's CEO in a statement accompanying the company's financials.

The parts shortages, which are apparently due to yields from IBM Microelectronics for X1E multichip modules (which were running six months late) and router chips for the Red Storm machines, combined with lower than expected sales of the X1 vector machines will knock out roughly $35 million to $45 million in sales this year for Cray. The company had been expected to post around $200 million in sales for 2004, but now estimates that it will only hit somewhere between $155 million and $165 million. On a conference call with Wall Street analysts, Rottsolk said that Cray had been expecting brisk sales from the government sector, and that did not materialize, particularly with the Cray X1E kickers coming down the pike at the end of 2004 and ramping up through the first half of 2005.

Last week, Cray's chief financial officer, Scott Poteracki, said he is leaving the Seattle-based company to move back to California, and Kenneth Johnson, Cray's current general counsel and former CFO, has taken over this role. Poteracki is set to become CFO at MTI Technology Corp, a storage systems integrator based in Tustin, California. Poteracki's departure does not seem to be related to Cray's current financial woes.

Cray's $111 million loss for the quarter amounted to a $1.27 per share loss, compared to net income of $8.5 million or $0.10 a share in the year ago quarter. The biggest charge is a $69.8 million charge that more or less reverses a tax asset that Cray booked in the fourth quarter of 2003. Cray also write off $8 million in excess X1 supercomputer inventories. Rottsolk said that about 60 percent of product sales in the quarter came from Red Storm supercomputer for Sandia National Labs and the engineering work related to its future "Cascade" vector supercomputers; most of the rest of sales in the quarter came from the X1s. The remainder of the writeoffs covered restructurings and the OctigaBay acquisition. Rottsolk said that the Red Storm project, which Cray took on two years ago to cover the engineering costs of a new product line (which is now productized as the XT3), has gone from being a project that might have yielded 4 percent profits, is now running at breakeven.

Cray is looking forward to pushing sales of the X1E, the XT3, and the XD1 in 2005. Cray has no debts and left the quarter with $47.2 million in cash in the bank, so it is remaining calm and still expects to have sales in the range of around $300 million next year.

Oracle Raises Its Final Bid for PeopleSoft

Oracle has given PeopleSoft what seems like its millionth, but what will actually be its last, offer to acquire the company: $24 a share, or $9.2 billion. That price is where PeopleSoft stock was trading in early January 2004, and it represents about a 19 percent premium compared with where the companies stock has been trading recently. Larry Ellison said that this price is final and non-negotiable, but that other merger terms are subject to negotiation. Oracle is giving PeopleSoft's board of directors until November 19 to recommend that shareholders accept the deal. Oracle needs to have shareholders tender more than 50 percent of the company's shares to do the deal, and the company says that if it does not get that level of support from PeopleSoft's shareholders, it will walk away.

PKWARE Launches PKZIP Server and SecureZIP Server Products

PKWARE has announced a refresh of its PKZIP and SecureZIP product lines, including a new line of PKZIP Server and SecureZip Server products that feature integrated e-mail and FTP capabilities, in reaction to the way people are using the products today. The Brown Deer, Wisconsin, company, which only six months ago created the SecureZIP product from PKZIP, announced the availability of the new server products on Unix, Windows, and Linux, and said it is working on bringing the same capabilities to its OS/400 and mainframe products.

PKZIP has come a long way from its roots in file compression, and it is now an enterprise-strength, cross-platform data distribution tool with built-in security. The new PKZIP Server products include integrated Simple Mail Transfer Protocol (SMTP) and FTP support; support for event logs and Simple Network Management Protocol (SNMP) traps; self-extraction of files; and integration with antivirus software. In addition to these functions, some versions of the new SecureZIP Server products include an OEM'ed version of RSA Security's BSAFE encryption software (for Public Key Infrastructure certificate-based encryption and authentication), and Lightweight Directory Access Protocol (LDAP) integration.

PKWARE has also shaken up its product line a bit, so here's a look at the new packaged offerings. The base PKZIP Server product for Unix and Linux servers costs $400 per server and features basic compression and password-based encryption, in addition to virus scanning and SYSLOG or SNMP support. To get the FTP and STMP capabilities, one must purchase the Enhanced Data Processing Module, which costs another $200 per server. Similarly, PKWARE offers a base SecureZIP Server product for Unix and Linux, which includes all of the features of the base PKZIP Server product, in addition the more advanced FTP and SMTP server and RSA's PKI certificate-based encryption capabilities, and costs $1,800. To get LDAP support, through the optional Directory Integration Module, it costs another $360. PKWARE also offers an equivalent Windows version of PKZIP Server and Secure Server, with the same upgrade modules and capabilities, for the same prices.

The OS/400 and mainframe versions of these new products are in beta and could be out by the end of the year, PKWARE officials said. The company's OS/400 and mainframe products share a common code base, and the company is extremely cautious about testing it before rolling out new releases.

IDC Plots Steady Software Sales Through 2008

The market for packaged software products, including operating systems, middleware, and applications, is growing again after a decline last year, according to IDC. The market researcher is predicting that worldwide software sales (including perpetual software licenses as well as software rented on an annual or a monthly basis) will rise by 5.1 percent this year, to $189 billion. IDC says further that the compound annual growth rate for worldwide software sales between 2003 and 2008 will be about 6.9 percent, which suggests that the market growth will accelerate, pushing sales to about $250 billion or so.

While this seems good, it is only so by recent comparison. "Even though the software industry is recovering from its first-ever decline, the double-digit growth rates experienced in the last decade will not return in the foreseeable future," said Anthony Picardi, senior vice president of global software research at IDC, who put together the software forecast. "Issues of complexity, security, and software quality, as well as a myriad of changing macroeconomic factors, all pose continuing challenges to industry growth."

In 2003, one third of total software sales were to five vendors: Microsoft, IBM, Oracle, SAP, and Computer Associates. As for trends, IDC says that the Linux platform gave it seventh-place in the software market, well behind various Unixes, Windows, and MVS mainframe platforms. However, IDC expects that, by 2008, the Linux platform will move into the fourth position. As is the case in other parts of the IT industry, North America is and will remain the largest software market, and Asia and Central Europe are the fastest growing software markets.

META Group Says IT Salaries Will Be Up 10% to 15% Through 2007

Being a human resources manager or an IT manager is rarely an easy job. In bad economic times, you have to lay off people and deal with tight budgets, and in the good times you have to cope with fast-rising salaries and employee turnover. The analysts at IT consultancy META Group say that they expect IT salaries to increase by 10 to 15 percent in the next three years, and will represent approximately 55 percent of the typical IT budget by 2007.

META says the economy is going to pick up in the next year, and IT shops will be hard-pressed to keep their best talent from seeking out "greener pastures" where they can get better pay and new challenges. META suggests that now is the time to add performance-based compensation packages, as well as implement employee morale, recruitment, and retention programs (including key things like flex time and telecommuting options). Application developers, security specialists, and network administrators are the hardest IT employees to hold on to, according to META.