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To: Rob Young who wrote (136140)	5/26/2001 9:26:27 PM
From: tcmay	Read Replies (3) \| Respond to of 186894

Box makers often have no choice! >from Rob Young at May 26, 2001 8:08 PM >I guess the thinking from many OEMs is they will grow >their Unix share. But I think Sun (among others) must >have seen the handwriting on the wall and backed away >from Itanium for the shrinking margin reason. > >Two, three or so years from now ... how much hardware >do you think HP will sell if their HP/UX IA64 product runs >just as well on Dell based servers and the Dell box is >30% cheaper? An interesting point, but the rejoinder is: neither Sun or H-P nor Dell would have a choice in the matter. You raise the possibility that Sun pulled back from the Itanium deal because they feared a flood of low-cost 64-bit server boxes. Well, if there _IS_ such a flood, will Sun somehow be magically protected from the overall competition? This is kissing cousin to a box maker in 1984 saying to themselves: "There's going to be a flood of these low-cost boxes made with Intel processors. I think we'd better just stay safely in our niche where we sell non-DOS machines for a lot of money." This didn't help them as the world adopted DOS/Intel en masse. If in fact Dell and Gateway and H-P start selling "commodity 64-bit servers," Sun can no more hide than Fortune Systems could hide in 1984. I'm not saying the 64-bit Unix/Oracle/transactions server market is the same as the PC market was, but there are strong similarities. And the history of companies hiding because they feared head-on competition has not been bright. Sun probably has their own reasons for not pursuing the Itanium with as much vigor as Dell and H-P are, but keeping protected profit margins is probably not it. >A complicated scenario all around but I believe that many >are making big fat margins on their boxes and wish to >protect those margins as long as they can. "I expect people in Hell want ice water, but that don't mean they're gonna get it." (Jessica Lange in a movie from the 80s.) >Solaris is the de facto Unix (judging latest market share >studies for growth and total numbers). They have grown >that in the face of marginal performance. They would be >foolish to give up those high margins on the UE10000 as long >as they are selling them. We could be seeing a kind of replay of the Macintosh history. Sun might do much better to leverage its Solaris OS on the lowest cost hardware boxes they can find. --Tim May

To: Rob Young who wrote (136140)	5/26/2001 10:24:32 PM
From: THE WATSONYOUTH	Respond to of 186894

A complicated scenario all around but I believe that many are making big fat margins on their boxes and wish to protect those margins as long as they can. The margins on these high end UNIX boxes are huge. Clearly, in the face of competition from IA64, these margins will have to come way down to preserve market share. The question is who is in the best position to absorb these lower margins. Surely not SUN. I don't think HP either. Possibly Compaq. But, I think IBM is in a very good position. They design and manufacture their own chips. With Intel charging $3K-4K a piece for these 64 bit processors, I see no cost advantage to an IA64 box if IBM wants to compete on a commodity basis. I've heard it said that an entire 4 chip Power4 MCM (8 processors) will cost less than $4K. My guess is that when Power4 debuts and Louser retires, Palmisano will give the go ahead to dramatically drop the prices on these high end UNIX boxes to gain market share and bring the prices in line with equivalent IA64 systems. IBM is not nearly as dependent on hardware margins as it was in the past. As more and more of these systems become commodities, a higher percentage of profits will come from service and software. THE WATSONYOUTH

To: Rob Young who wrote (136140)	5/26/2001 11:33:06 PM
From: Paul Engel	Read Replies (1) \| Respond to of 186894

Re: "... how much hardware do you think HP will sell if their HP/UX IA64 product runs just as well on Dell based servers and the Dell box is 30% cheaper?" Under those conditions, HP will sell NO HARDware if they only offer their PA-RISC systems. Paul