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Sun Snaps Back at HP

Sun Microsystems took some time to snipe back at Hewlett-Packard Monday, responding to HP's attempt last week to turn perceived weakness on Sun's part into an HP migration plan.

On Friday, HP offered a "Linux lifeline to Sun customers" in the form of a sales and service program intended to help Sun Solaris customers move to Linux. The company said Sun customers who sign up for its plan will get a combination of assessment, porting and migration services valued at about $25,000, covering up to three applications the customer wants to move to an HP ProLiant server running Linux. The customer would get use of the server for up to 30 days for proof of concept testing, and the plan also includes an HP StorageWorks storage area network assessment.

But Sun moved to poke holes in the plan Monday, calling the plan little more than a "PR campaign" with "little substance, no real money and no value proposition."

"HP's Enterprise Systems Division continues to lose money at an increasing rate, and creating the illusion of buying business at $25,000 a pop is not going to help improve its bottom line," Sun said. "In addition, HP's focus today is clearly on PCs, printers and consumer products."

Sun also noted that the offer is exclusive to Linux, and told HP customers that raises questions about the company's commitment to the HP-UX operating system and Itanium-2.

Additionally, Sun said that customers interested in a Linux solution should look to it first. "For those Sun customers wanting a Linux solution, Sun offers the same industry standard Linux OSes as HP, but at lower cost -- making it the most cost-effective Linux x86 solution available today," the company said.

HP's plan was a shot across the bows at Sun, and a response to Sun's own 'HP Away' program, launched in July in an effort to take away HP customers faced with the prospect of being forced to migrate from Alpha processors and the Tru64 operating system to Itanium-based systems running HP-UX.

Sun's HP Away program offers a two-week Alpha/Tru64 to Solaris OS migration assessment service. If the customer decides not to proceed with the Tru64 to Solaris migration, Sun absorbs the cost of the assessment. The company also offers to defer payment for the entire migration -- including Sun services, servers and software -- until completion of the engagement, up to 90 days. And if the customer goes with the deal, Sun offers to take care of the application porting through its professional services group in concert with its ISV partners, systems administrators and Sun's iForce centers.

HP's offer also sought to play on Sun's perceived weakness, coming on the same week the once high-flying systems vendor warned that it would run a loss of between 7 cents and 10 cents per share in the most recent quarter, a significantly higher loss than the roughly 2 cents per share loss analysts were anticipating. To compound its woes, Merrill Lynch technology analyst Steven Milunovich, in an open letter/research note on Thursday, urged Sun to slash as much as 15 percent of its workforce and focus on being a niche player in mission-critical computing or risk being acquired -- or worse.

"Sun's HP Away is a substantial program with a real value proposition to solve the problems, issues and headaches caused by HP abandoning its installed base," said Larry Singer, Sun's senior vice president, global market strategies. "This is a last gasp effort by HP to show they are still serious about the enterprise, and not just a consumer products company."

For his part, Illuminata analyst Gordon Haff, responding to HP's plan on Friday, said these sorts of programs are typical.

"This is really the type of thing that companies do all the time. They see a competitor who has a weakness and they go after it," he said.

Haff also noted that discounting is a day-to-day reality in the industry, and customers looking to switch can often negotiate the sorts of discounts that these plans offer -- even if no such plan is on the table.