Sun Slashes Entry-level Server Prices

Hardware server vendors continue to undercut each other in terms of price while they try to outdo each other in terms of server performance.

Sun Microsystems
Tuesday became the latest outfit to wage an assault on rivals HP and IBM when it pared prices on its entry-level,
Sun Fire V480 and V880 models by as much as 20 and 25 percent, respectively.
The Santa Clara, Calif. company also boosted the speed of its V880 machine
by 17 percent with the inclusion of 1.05 GHz UltraSPARC III Cu processor
because it sold so well.

The Sun V880 machine is used to consolidate multiple applications on a
single server in a variety of markets, including education, telecom,
financial services and government. More than 250 universities in the U.S.
use Sun Fire V880 and V480 systems in their IT infrastructure, including
Stanford, John Hopkins, and Cal Poly Pomona Universities.

Pointing out that rivals such as IBM and HP cut prices aggressively on its
server lines, Warren Mootrey, director of marketing for volume system
products, Sun Microsystems, said his employer was able to make pricing
adjustments for a couple of reasons.

For one, Sun’s entry-level volume sales, particularly for the V880 have
increased. For another, commodity processing costs for Sun’s UltraSPARC
chips have gone down. Both these factors had no impact on their margins, Sun
felt comfortable enough to make the v480 and v880 machines more attractive

According to IDC’s worldwide server report for the first quarter of 2003,
Sun enjoyed its greatest degree of success in selling 8-processor servers,
its V880, than Dell, HP or IBM.

“That success combined with the phenomenal acceptance of our Sun Fire V480
server has helped us grow significant revenue market share in this
category,” Mootrey said. “With these reductions in price and the increase in
performance, we expect to penetrate the market even more by providing
enterprise-class systems at low-cost computing prices.”

Mootrey told that beginning Tuesday customers can
purchase a two-processor, 4GB memory system for $19,995, down from $22,995,
a savings of 13 percent. A four-CPU, 8GB system is $43,995 from $34,995, a
20 percent decrease while the four-CPU, 16 GB system sells for $42,995, down
from $46,995.

The Sun Fire V880s feature even more decreases, Mootrey said. A 2-CPU
machine with 4GB of memory is $32,995, down from $36,995, but the real value
lies in the 4-CPU, 8GB system, which is selling at a quarter less its
original retail value — from $59,995 to $44,995. More powerful systems such
as the 8-CPU, 16GB system and the 8-CPU 32 GB systems are selling for
$85,995, down from $99,995, and $109,995, down from $129,995, respectively.

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