After exiting the market last year in face of stiff competition, Sun next week is expected to introduce a new blade server as it fills out its x64-based product line, which has been a bright spot in the struggling company’s financial picture.

At Sun’s quarterly news announcement on Tuesday, newly-appointed CEO Jonathan Schwartz and Executive Vice President John Fowler are expected to unveil a number of new products, including a blade server that features modular PCI-Express on the backplane, eliminating the need for mezzanine cards on each blade; a high-performance technical server that scales from four to 16 processors; a media server; and an Opteron-based archival storage appliance, according to sources.

The products are the next in a line of servers designed by Sun co-founder Andy Bechtolsheim, who returned to Sun when it acquired server maker Kealia in 2004. Sun introduced its first systems designed by Bechtolsheim in the fall, rolling out the low-cost Sun Fire X2100 and the enterprise-class X4100 and X4200.

Since then Sun has seen growing demand for the systems, joining IBM as the only server vendors to outpace the market in x86 server sales in the first quarter of 2006, increasing its factory revenue by 84%, according to IDC. Sun’s x86 market share, however, still languishes at around 2%, according to Gartner.

Despite the boost in its low-end server sales, Sun faces challenges. It has rarely posted a profit in the past five years, reporting a net loss of $217 million for the most recent quarter. CEO Scott McNealy stepped aside in April, and shortly after taking the helm Schwartz announced a companywide reorganization that will include between 4,000 and 5,000 layoffs.

At the same time, Sun views its low-end offerings as key to its plan to return to profitability. This week’s announcements illustrate Sun’s commitment, analysts say.

“Sun took a long time in getting these products to market but can still reap advantage by being a latecomer,” says Vernon Turner, group vice president and general manager, enterprise computing, at IDC. “These product launches will be a test for Sun . . . as we get a glimpse of how the company will be run in the future.”

In the new Sun Blade system, ten 4-socket Sun 8400 blades reside in the Sun Blade3 8000 chassis. The starting price for the chassis and a dual-core blade server is $19,940.