Sun to The Head of The Class?
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Reporter's Notebook If there were a question of whether computing machines running multi-core processors can disrupt the current licensing landscape, Sun Microsystems answered it this week when it launched the new UltraSparc T1 machines.
During a press event in New York at which Sun unveiled its eight-core, 32-thread UltraSparc T1 servers, Oracle President Chuck Phillips said the database maker would charge one-quarter of its license fee for machines running the T1 processor.
This means customers could run eight copies of Oracle database software on a T1 server for the price of two copies, Phillips explained as an example.
The announcement, coming at the end of a charged event, drew loud applause from the audience and giddy praise from Sun CEO Scott McNealy.
Before leaving the stage, the normally staid Phillips jokingly told McNealy about the new UltraSparc T1000 and T2000 servers: "You'd better sell a lot of them," drawing laughter from the crowd.
While the moment succeeded as a gesture of light-hearted exchange between two high-tech leaders, there was an undercurrent of seriousness. Let's face it: The two companies have a lot at stake.
Since the dot-com implosion, Sun has lost Unix share thanks to low-cost, x86-based commodity servers from Dell, or Unix systems based on IBM's Power architecture.
Or as McNealy put it: Sun hasn't been the popular kid in school for the last few years, wearing the "right alligator or horsy on its shirt."
"Dell was the cool shirt to wear," he said.
McNealy said Sun is looking to burn that trend with innovation that will set it apart from the competition that put the clamps on Sun's sales in the Unix space.
Multi-core machines, and pricing for the software that goes on them, are such a new entity in the high-tech space that major vendors are betting on the fact that customers will clamor for the new innovations.
So Sun's multi-core mission is clear: make powerful, yet small servers, sell them for lower than what Dell and IBM sell their machines for, and get enough ISVs to buy into it and make their software cost-effective to run on Sun servers.
While Sun is making an empirical gamble based on customer demand, agreeing to cut the costs on its per-processor model is crucial for Oracle.
Customers have loudly let Oracle know that charging per processor for machines that have two, four, six or even eight processing engines or threads on a single chip wasn't going to win their hearts, or keep the money vacuum from their wallets. They felt like they would be gouged if they wanted to start using dual-core or even multi-core systems.
To Oracle's credit, the company responded in July, agreeing to price its database and application server software by designating each socket on a multi-core processor as three-quarters of a chip.
Then this: charging one-quarter of the price to make it more cost-effective for customers to buy Oracle software and run its on Sun machines.
This is a smart move for Oracle, but cutting the costs as much as 75 percent from its original per-processor model is just as much a risk. And Oracle knows it.
Phillips may not have been joking after all when he told McNealy he'd better sell a lot of T1s.
But listening to McNealy and Co. reiterate how much faster, less expensive and less power consuming the new T1s are than machines from Dell, IBM and HP, it was hard not to get caught up in the excitement of the promise of a new beginning for Sun as it charges toward 2006.
Has there ever been a company for whom the bell has tolled or that has been so maligned despite having $4.5 billion its coffers?
The company may have been down, but never out. As McNealy said, the dot-com boom came and winked out, leaving Sun with this seemingly unshakeable label as a proprietary company despite having been one of the open source purveyors with BSD Unix.
To put Sun's 2005 achievements this year into perspective, I asked Randy Kerns, vice president of strategy and planning for Sun's data management group, if he noticed the change in the company's approach from when he covered Sun as a storage analyst before joining Sun prior to its purchase of StorageTek this year.
Indeed he did.
"I think there is a sense of urgency," he said. "This is a company that has been known for having such great technology, but didn't necessarily get it out there and get its message across."
I'll substitute another word for urgency: Fear.
Fear can make people do many things, and fear was the great motivator behind Sun, which has seen IBM and Dell peck away at Unix share and heard analysts call for a company overhaul.
With McNealy's unflappable confidence, and guest stars such as Symantec CEO John Thompson and Oracle President Chuck Phillips showing up to bless the new systems, Sun did a fine job of showing off its renewed computing efforts.
Now we will sit back and watch the execution.