Why Intel Alliance Widens Sun's Appeal

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Sun Microsystems Inc.'s new entente with Intel Corp. is partly about computer chips. But chief executives of the onetime antagonists put even greater emphasis on software.

As part of a deal reported by The Wall Street Journal yesterday, Intel said it agreed to use its engineering resources to make Sun's software more appealing to business customers. Intel plans to help companies create and refine application programs to work well with Sun's Solaris operating system, which needs such support to gain a greater foothold in software for server systems.

WALL STREET JOURNAL VIDEO

Intel CEO Paul Otellini and Sun Microsystems CEO Jonathan Schwarz² discuss Sun's agreement to use Intel chips in its servers and what it means for the market space.

Intel, which also gains the right to resell Solaris, joins Advanced Micro Devices Inc. as a supplier to Sun of microprocessor chips based on a popular design called x86. Over the long term, Sun and Intel say their engineering teams will work together to exploit features of each other's products and to improve them.

"This definitely changes the game in the operating system landscape," said Jonathan Schwartz, Sun's chief executive, during a news conference yesterday in San Francisco.

It also changes the rhetoric between the companies, which have often argued about chip technology and other topics. Sun, which originally offered Solaris to operate with computers that use its Sparc microprocessors, was relatively late in promoting the software for the x86-based servers that are now commonplace in computer rooms. Though Sun says seven million copies of the operating system have been downloaded, most such machines run the Linux operating system or Microsoft Corp.'s Windows.

But Paul Otellini, Intel's chief executive, said Solaris is a favorite for "mission-critical" applications that require high reliability and performance -- and in markets such as financial services and telecommunications where Intel hopes to play a bigger role. He said Intel can benefit from Sun's expertise in software that exploits multi-core chips -- which pack two or more processing units on each piece of silicon -- and in "virtualization," which allows computers to run multiple operating systems.

John Enck, research vice president for market researcher Gartner Inc., said the deal should broaden the appeal of Solaris among "white box" server makers with little-known brands -- and possibly even among big Sun competitors such as Hewlett-Packard Co., International Business Machines Corp. and Dell Inc.

Mervyn Adrian, an analyst at Forrester Research Inc., said the deal will also allow Sun to tune Solaris to work better with Intel chips, and to take advantage of virtualization technology that Intel is building into its chips.

But Al Gillen, an analyst at the research firm IDC, noted that customers are already able to run Solaris on x86 servers. While Sun should sell more servers now that it has adopted Intel microprocessors, "it doesn't fundamentally change the market opportunity for Solaris," he said.

John Fowler, a Sun executive vice president who helps lead its hardware development, predicted it will deliver machines with Intel's Xeon chips late in the first half of 2007. Sun also plans to keep exploiting AMD's strengths, he added. Where Xeon-based systems typically have sockets to install up to four chips, Sun already sells systems with up to eight of AMD's Opteron chips; when the number of microprocessors on each Opteron doubles next summer to four, those eight-socket machines could have 32 electronic brains, Mr. Fowler said.



	January 23, 2007