Linked by Adam S on Thu 23rd Dec 2004 13:05 UTC, submitted by Usman Latif
Oracle and SUN Sun Microsystems is focusing on Opterons and Solaris x86 for a good reason. Sun has figured out a way to make x86 hardware cheaper than anyone else. Sun is hoping that by leveraging its cost advantages the company will be able to ensure the success of its x86 hardware and Solaris.
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Too much speculation
by MJ on Fri 24th Dec 2004 20:22 UTC

I find this article to be an interesting piece of work; however, I think the author has speculated too much in situations where he shouldn't. The article contains some conspiratorial and factually incorrect claims, and some that I just disagree with as a matter of opinion.

In particular:

Some of Sun's x86 gains will surely come at the expense of its high margin Sparc business so the company has to compensate for that loss.

This is something that I hear all the time, and it doesn't reflect the fundamental reality about why Sun got serious about the x86 server business. The suggestion that selling x86 solutions comes at the expense of the SPARC side of the business is specious. Selling x86 solutions actually allows Sun to keep business that they would otherwise lose to companies that are selling x86 hardware. One of the reasons Sun had been doing so poorly once IT companies' spending was constricted, was precisely because companies had less money to spend and wanted to buy x86 hardware. By not offering x86 solutions, their customers (or prospective customers) had to go elsewhere and obtain other products. Sun doesn't lose business by offering x86 hardware, rather they keep business that they otherwise would might have lost.

Also, I would call SPARC comparatively high-margin with respect to x86. I don't think anyone can afford to sell microprocessors at really high margins.

A price war will only hurt Intel's profitability as AMD isn't making too much from server processors.

AMD has been making lots of money from Opteron. I don't understand the basis for this assertion.

[T]he company will likely need to support an Itanium port as well.

Sun isn't going to do this. They attempted to port Solaris to Itanium many years ago; however, Intel hampered the process and screwed Sun over at every turn. The port was never completed, and Sun has no interest in reviving it. There also is no plausible business justification for doing so. Sun already has a cheap x86 compatible 64-bit platform.

Dell spent $464 million on R&D in all of 2003, and Dell is much bigger in terms of revenues than Sun.

Dell doesn't need to do any R&D, which is why their budget for it is *so* small. Comparing Sun to Dell in this respect belies a rather serious misunderstanding about the differences between the two companies. Just as another point of comparison, Microsoft spent almost $7 billion on research in 2004:

http://www.fastcompany.com/magazine/89/microsoft.html

If anything, the question to ask wouldn't be why is Sun spending so much on R&D, but really, why aren't they spending more?

Sun is releasing Solaris under an open source license, but it is mostly a marketing ploy to gain mind-share

This is a disingenuous statement that is unduly cynical. I've met the engineers responsible for getting OpenSolaris off the ground, and they really are interested in building a community around OpenSolaris. Whether this will actually happen or not has been debated here ad nauseam. However, I think it's unfair to say that this is *only* a marketing ploy.

If Sun manages to sell millions of servers, Solaris development costs will get dispersed over the large number of units shipped and become irrelevant. Also, Solaris will displace Linux as the open source operating system of choice, and this will allow Sun to steal IBM and HP's Unix customers.

Volumes are critical; however, the suggestion that massive x86 volumes will obviate Linux is laughable. Linux is here to stay, and people should avoid getting stuck in the simplistic zero-sum OS game. The success of Solaris x86 does not come at the expense of Linux. Also, Sun will ship their x86 servers with Linux or Solaris, so volumes sold doesn't have a direct correlation to which OS is being installed. Further, Sun has been qualifying their x86 servers for Windows installations, so it's equally plausible that a customer with a Windows license could purchase x86 servers without any OS and install Windows later.

However, lack of x86 support for AIX and HP-UX may be an issue for IBM and HP customers that Sun could exploit to their own advantage.

Microsoft will be very supportive of Sun's attempts to push Solaris as the open source operating system of choice.

I seriously doubt this. Microsoft believes that Windows is the one true operating system. Microsoft also derives a lot of financial benefit from software development on their platform. I don't think that they would push anything other than Windows. Microsoft and Sun are still competitors, I wouldn't count on MS helping Sun out.