Sun Unveils New Servers Amid Downturn In Demand
(03/21/01, 10:44 a.m. ET) By Nicole Volpe and Peter Henderson, Reuters
Sun Microsystems Inc. was set to unveil four new servers Wednesday, even as the outlook for the sales of the workhorse computers used to run everything from websites to stock exchanges seemed bleaker than it was earlier this year.
The four new machines are aimed at the midrange of the market for servers that sell for roughly $100,000 to $1 million, and are based on the company's new Ultrasparc III processor. They come with as many as 24 processors, and will be made available on a limited basis in the current quarter, Sun (stock: SUNW) said.
John Shoemaker, Sun's executive vice president of system products, acknowledged that corporations were reluctant to buy more computers in uncertain economic times, and that he was unsure how that would affect sales of the new machines.
“When it comes time to sign a purchase order, they're just not signing,” he said. “The question is, how will that affect ramp up of the product?”
He said Sun would make enough of the computers available to meet demand next quarter, the company's fourth fiscal quarter.
“We are shipping this product in volume as we announce it,” Shoemaker said, speaking about the current fiscal third quarter. “We are shipping in volume but not to demand.”
Sanford C. Bernstein analyst Toni Sacconaghi said that Sun has not been able to produce enough of the lower priced products based on the Ultrasparc III processor, including workstations and low-end servers.
“If the low end hasn't been as available as most people expected, what does that mean for the new products and their availability?” he asked.
The new machines are key to Sun's bid to fend off rivals such as IBM (stock: IBM) and Hewlett-Packard Co. (stock: HWP). IBM in the fourth quarter of last year took the lead in the midrange global market for servers running the dominant Unix operating system, according to market research firm International Data Corp.
However, Sun won the top spot from IBM in the U.S. market for servers last year, according to IDC.
Sun executives expressed hope that new products and a tougher economic environment would allow Sun to make market share gains.
“We feel like we are continuing to gain share,'' Shoemaker said in the telephone interview, adding that he expected orders to trickle in as customers test the new machines.
“My guess is they'll buy it in ones and twos,” he said.
IBM said on Tuesday it had stepped up its own internal efforts to lure customers from Sun, by expanding a program designed to instruct Sun customers to use IBM's own Unix operating system, AIX.
The program, code-named ASAP, is billed by IBM as a way for users of Sun's Solaris operating system to break the habit within three days. IBM estimates ASAP, which stands for AIX for Solaris Administrators Project, has helped to take more than $150 million worth of Unix business from Sun since IBM started the project last fall. |
