Sun stumbles in server space
Disappointing quarterly results could be tied to struggling high-end Unix business
By Scott Ferguson systems business. and Intel—increased by 26 which earns around the
Sun microsystems When the financial percent. same percent of revenue
President and CEO results were released, sev- Overall, Sun’s server rev- from the U.S., at approxi-
Jonathan Schwartz eral analysts noted that enue dipped 1.8 percent mately 30 percent, posted
has been restructuring the the company seemed to in the quarter, to $1.47 11. 2 percent growth in [the
company for more than a have lost ground in one billion. first quarter 2008] and 6
year, embracing industry- of its most well-known While Schwartz and percentgrowthinthe U.S.
standard technology such product areas, specifically Sun executives blamed Sun appears to be losing to
as Intel chips and rolling the high-end Unix server the slowing economy in its competition.”
out its own UltraSPARC business with its line of the United States for the At the high end of the
T2 processor, which Unix market, a few
is more of a commod- Losing ground players such as IBM,
ity chip. Sun saw its global server revenue slide in the fourth quarter of 2007 while Hewlett-Packard and
T h e c o m p a n y others’ grew, according to IDC: Sun are competing for
also has been open- anincreasinglyshrink-
Revenue Q4 2007 Revenue Q4 2006 Percent
sourcing a signifi- change ing market, although
cant amount of its IBM $5.75 it remains a market echnology, hoping $5.72 0.5% withhighmarginsand
to extend the reach HP $4.3 $4 6.3% good profits.
of its offerings, such In its most recent as the Niagara chips Dell $1.5 $1.4 6.8% report of the server
and Solaris. Sun $1.45 - 2.4% market, IDC found
However, despite $1.49 that Unix revenue
thesemoves, Schwartz Fujitsu $666 $622 7.1% grew at only 1.5 per-
and other Sun officials c ent i n t he fou r th
foundthemselves May 0 1 2 3 4 5 6 quarter of 2007, for
Dollars in billions
1 before analysts and Source: IDC a total of $5.2 billion.
reporters answering Growth is strongest
questions regarding their systems based on SPARC company’s current finan- in the midrange of the
disappointing quarterly processors. cial woes—about 35 per- Unix market, IDC said.
financial numbers. In an analysis, Josh cent of its sales are in the With the market essen-
The company announced Farina, of Technology Busi- United States—Farina tially flat, Joe Clabby, presi-a $34 million loss for its ness Research, reportedthat noted in his analysis that dent of Clabby Analytics,
fiscal third quarter, a sig- Sun shipped 4. 6 percent IBM turned aprofit during said IBM has been able
nificant drop from the $67 less SPARC-based systems the same time period. to grow by taking market
millionitearnedduringthe in the quarter compared “Overall, Sun reports share away from Sun’s
same quarter last year. with the same time last that the uncertain U.S. SPARC systems as well as
Those results could lead year, which made it the sixth economy led the company HP’s servers based on Ita-to Sun cutting up to 2,500 straight quarterly decline to post a year-to-year rev- niumprocessorsfrom Intel.
positions as it looks to for the company’s high-end enue decline in [the first One reason could be IBM’s
refocus its energies. systems. At the same time, quarter of 2008],” Farina Migration Factory program,
One source of this sud- the company’s shipments wrote in an e-mail. “How- which offers aggressive pric-den downturn in the com- of x64 servers—machines ever, I’m hesitant to believe ing and services to encour-pany’s fortunes seems to based on processors from that the U.S. economy was age switching from HP or
be the company’s high-end Advanced Micro Devices the key factor, since IBM, Sun systems to IBM servers
