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.
