SAN JOSE, Calif. Just six months ago, Sun Microsystems Inc. chief architect Andy Bechtolsheim was lampooning Intel microprocessors as power hogs. Advanced Micro Devices' CEO, Hector Ruiz, was a darling of Wall Street, where rumors were rife that Dell soon would adopt AMD's Opteron chips.
How times have changed. Today, Sun's engineers are polishing off one-, two- and four-way Xeon server designs and planning even larger systems with the Intel CPUs. Meanwhile, Wall Street is pummeling AMD for being on the losing end of a price war that analysts think threatens its business model.
The wheel has turned full circle in servers, and it will likely turn again soon.
Sun jumps on X86
Sun last week adopted Intel's Xeon pro- cessor in a move that reflects the practical business philosophy of its new chief executive, Jonathan Schwartz. The deal parallels Apple Computer Inc.'s embrace of Intel processors in 2005.
"Perhaps the most interesting part of the [hardware] relationship is [that] we're pairing up to do some collaborative engineering around larger systems, where larger implies greater than four sockets," wrote Schwartz in his blog.
A day later, Sun announced its first profit in five quarters and the promise of a second year of revenue growth following four disastrous years in the wake of the dot-com crash. Sun said its second-quarter revenue hit $3.56 billion, up 7 percent from the year-ago quarter. Profits were $126 million, compared with a loss of $233 million a year ago.
The company cut 12 percent of its work force, or about 4,500 people, last May. In the past year, it has rolled out a handful of compelling systems based on Opteron and Sparc processors.
"I saw their turnaround taking hold a year ago, and it's finally manifesting itself in profits," said Nathan Brookwood, principal of market watcher Insight64 (Saratoga, Calif.).
As a final plank in its comeback, Sun joined its server competitors in supporting both Intel and AMD X86 chips. Hewlett-Packard Co. started the trend about two years ago, adopting AMD's Opteron as well as Intel's Xeon and Itanium CPUs. IBM and Dell soon followed suit.
"Now all the big server suppliers are taking a chip-agnostic strategy," said Brookwood. "Instead of these OEMs needing to evangelize a particular chip architecture, they are getting out of the way and letting users decide what they want. That's how it should be, but it's radically different from how things were just a year or so ago."
"There is a change in how we are going after the marketplace and putting some of our past rhetoric aside," said Schwartz, referring to the sometimes caustic, sometimes comic comments former CEO Scott McNealy would level at competitors including Intel and Microsoft. "One of my first tasks [after becoming Sun CEO in 2006] was calling Paul [Otellini, Intel's CEO] to see how we could collaborate."
Sun has shipped servers since 2004 using AMD's Opteron CPUs. Schwartz said that selling X86 servers using Intel's Xeon as well will open up "an enormous ex- panse of market opportunity."
Brookwood said he doesn't expect the deal will make much of a dent in the number of AMD CPU systems Sun ships. Instead, Sun is likely to gain business that has gone to other Xeon server vendors, he said.