Sun, Intel Server Pact Likely, Reports Say

Sun Microsystems may start buying server chips from Intel in a deal that could be announced Monday, according to media reports.

A deal would mark an expansion of Sun’s strategy to support the x86 chip architecture for both its Solaris operating system and server hardware. In 2003, Sun put Advanced Micro Devices’ (AMD) Opteron chips in a wide range of low-end servers that are sold with a choice of operating system: Linux, Sun’s Solaris or Microsoft’s Windows.

Representatives of Sun and Intel contacted in London could not comment on the reports.

Buying chips from Intel would offer several advantages for Sun, said analyst Nathaniel Martinez, a program manager who covers the European server market for IDC.

Data centers are increasingly replacing Unix machines using reduced instruction set computing (RISC) processors with cheaper x86-based servers, Martinez said. Using both Intel and AMD chips will allow Sun to fine-tune its hardware offerings in addition to pushing its Solaris OS to a wider market, he said.

"They already have feedback from the market that x86 for Solaris is working fine," Martinez said.

It would also be a good move for Sun since Intel has increasingly closed the competitive gap with the smaller and nimbler AMD, whose chips attracted vendors for their power-saving features and multicore technology, Martinez said.

As a customer of both AMD and Intel, Sun could also gain leverage. "It’s a good way to protect their margins," he said.

Sun’s embrace of x86 technology also put it in an interesting position with Hewlett-Packard and IBM. Most of Sun’s Solaris installed base runs the OS on x86 machines sold by those vendors.

A deal with Intel would allow Sun to sell those Intel-based servers directly, and perhaps also capture the service contracts that underpin Sun’s strategy of giving the Solaris OS away for free.

"Now if they start supporting Intel as well, they’ll be able to regain some of those customers 100 percent," Martinez said.

Last week, Sun cut the price of support plans for Solaris in a move to make it more competitive to Linux offerings from Red Hat.

-Jeremy Kirk, IDG News Service (London Bureau)

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Copyright © 2007 IDG Communications, Inc.

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