SAN FRANCISCO -- Honing their competitive edge, two Silicon Valley-based heavyweights reinforced a 20-year old relationship with a new partnership entitled "Oracle Makes Sun Unbreakable."

At a press conference in here, Santa Clara, Calif.-based Sun and Redwood Shores, Calif.-based Oracle said they would work together to consolidate resources including development, reference architectures, service partners and third party integrators as well as future engineering efforts.

Despite constant pressure from IBM , Dell Computer and Hewlett-Packard , Oracle chairman and CEO Larry Ellison and Sun chairman and CEO Scott McNealy were pleased with their new endeavor.

"Together we're running a virtually linked company here," McNealy said. "We have two separate companies at arm's length. We run our company on his stuff, he runs his company on ours. We often find each other's problems more often. I even have keys to Larry's yacht."

The No. 2 business software maker said it would support Sun's new ventures into its full line including a new emphasis on Solaris SPARC processors, Solaris running on x86 chips and Linux systems running on Sun products. Oracle also said it would integrate its software to run well on Sun's cross-platform management software N1. The two companies have also agreed to ship the Oracle9i Database, Real Application Clusters, Application Server, Collaboration Suite and E-Business Suite on Sun servers running either Red Hat Linux or Solaris x86.

"[The competition] admits we are faster and we can scale. The only thing they keep hitting us is on cost and we are achieving that today," Ellison said.

To answer that concern, Sun took the wraps off of two new servers; its Sun Fire V60x (USD $2,450) and V65x (USD $2,650), which it says are 30 percent less expensive than the IBM x335 or the HP DL360G3 and 50 percent cheaper than a Dell 2650 running Windows Server Standard Edition. The new Sun Fires include 2.8 or 3.06 GHz Intel Xeon processors, six PCI-X slots and support for up to 12 GB of memory as well as redundant, hot-swappable power supplies and the StorEdge 3310 SCSI Array.

The two new rack-mount servers help round out Sun's year old x86 on Solaris rollout currently dominated by its LX50 blade server -- the strategy that revived both Sun's x86 for Solaris campaign and its return to 32-bit systems.

"Maybe we got overfired up about 64-bit," McNealy said. "We have found an amazing appetite for x86. It's funny because when we said we might not do x86, we got tons of letters in protest."

Sun also said it has entered into a global alliance agreement with Red Hat to distribute the company's Linux operating system, and to broaden the use of each other's technologies. As part of the agreement, Red Hat will distribute Sun's Java Virtual Machine (JVM) with Red Hat Enterprise Linux. Sun, in turn, will sell and support all x86 versions of Red Hat Enterprise Linux including Red Hat Enterprise Linux AS, Red Hat Enterprise Linux ES and Red Hat Enterprise Linux WS. Red Hat Linux will come as an option on the new Sun Fire servers.

Currently, Sun bundles all of its software platforms in its hardware such as its Sun ONE application stack. The company has recently shifted to a quarterly release schedule to update its software as well as its Solaris operating system at one time. Sun executives told internetnews.com that it will address how it updates software it might carry from other vendors when Sun's new licensing structure called Project Orion is released in version 1.0 later this year.

Ellison and McNealy have had a longstanding relationship in their support of Java and extreme hatred of Microsoft . The relationship has been strained of late with Ellison boasting how well his software runs on Intel chips and McNealy bowing out of his keynote at the last minute of Oracle Open World while Ellison sailed in the America's Cup yacht race.

But all seems well now that the two companies have joined the Business Process Execution Language (BPEL) effort. Sun and Oracle say they will lobby for a separate Web services choreography specification, Web Services Choreography Interface (WSCI), under the auspices of the World Wide Web consortium.

Today's news may also be overshadowed by external forces impacting both companies. Bloomberg News is reporting that Oracle is suing Qwest Communications International. Denver-based Qwest is accused of abusing licenses and infringing copyrights to Oracle's database software.

Sun is also garnering a lot of attention as investors are convinced the company will be the target of a hostile takeover. Analysts speculate that IBM or Cisco Systems are likely candidates with enough cash to pull off the deal. HP and Dell are still considered "dark horse" candidates to purchase Sun's extensive R&D and best selling UNIX platform.

McNealy said that while the two companies have been working together to streamline how well each other's platforms work, but said they are separately run.

Ellison quipped that he might get the locks on his yacht changed.