"Now all the big server suppliers are taking a chip-agnostic strategy," said Nathan Brookwood, principal of market watcher Insight64 (Saratoga, Calif.).

Hewlett-Packard started the trend about two years ago adopting the Opteron CPU from Advanced Micro Devices as well as Intel's Xeon and Itanium CPUs. IBM and Dell followed suit over the last year, embracing AMD as well as Intel for server processors.

"Instead of these OEMs needing to evangelize a particular chip architecture, they are just getting out 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," Brookwood added.

"There is a change in how we are going after the marketplace and putting some of our past rhetoric aside," said Schwartz, referring to caustic and sometimes comic comments for chief executive Scott McNealy leveled at competitors including Intel and Microsoft.

"One of my first tasks in taking up my bright, shiny new job was calling Paul to see how we could collaborate," added Schwartz who became Sun's chief executive in 2006.

Sun has shipped servers since 2004 using AMD's Opteron CPUs. Schwartz said Sun opens up "an enormous expanse of market opportunity" by selling x86 servers using Intel's Xeon as well.

Brookwood said he doesn't expect the deal will greatly curtail the number of AMD CPUs Sun ships. Instead, Sun is likely to gain business that has gone to other Xeon server vendors, he said.

Sun will ship servers with one, two and four Xeon CPUs starting before June, and it will collaborate with Intel to develop eight-way or greater systems, the companies announced. For its part, Intel will endorse and help optimize for its Xeon chips Sun's Solaris operating system.

A handful of systems makers including Unisys already ship Intel Xeon servers using eight or more processors. Sun already ships an eight-way server based on AMD's Opteron.

Because Intel's Xeon does not include the memory controller and other logic bundled into an Opteron, Sun will have to build or buy a relatively complex chip set for its planned eight-way or greater Xeon systems.

Details were scarce on how Sun and Intel will collaborate or how Sun will differentiate its Xeon systems from a competitive crowd.

Intel chief executive Paul Otellini said he would like to see Sun support in Solaris the I/O Acceleration Technology and demand-based switching it is building into its Core Duo processors. Schwartz said the companies could synchronize their plans for supporting server virtualization at the chip, system and network levels. "We will put deep engineering resources into Solaris," said Otellini.

The deal marks the end of direct competition between Sun and Intel in server CPUs, though Sun will continue to develop Sparc processors and servers.