Sun combines servers, storage businesses

Unification will promote integrated systems

Sun Microsystems is combining its servers and storage businesses to better sell computing systems to data center customers.

The announcement was made Monday on the blog of Sun CEO Jonathan Schwartz, in which he said the move would “radically” sharpen Sun’s focus on storage.

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Sun Microsystems is combining its servers and storage businesses to better sell computing systems to data center customers.

The announcement was made Monday on the blog of Sun CEO Jonathan Schwartz, in which he said the move would “radically” sharpen Sun’s focus on storage.

While there has been some weakness in Sun’s storage business, an industry analyst says the move makes sense for other reasons. Robert Armatruda of IDC says industry leaders HP and IBM have also taken steps to combine server and storage sales for the sake of improving their total system hardware and services businesses.

John Fowler, executive vice president of Sun’s Systems group, will head the combined server-and-storage business, while John Benson, senior vice president of storage, will report to Fowler, a spokeswoman says.

The systems team will focus on the convergence of server, storage and networking technology, Schwartz explained. “Talk to any data center administrator, and that's what they want to hear -- they live in a world of managing the . . . interactions of that trinity [of] computing, storage and networking.”

There is precedent for Sun combining product lines, Schwartz noted, citing the combination of its x86 with its SPARC-processor servers and the 2006 introduction of Thumper, the code name for the Sun Fire X4500 Server that combines server and storage functionality. Schwartz notes that the X4500 reached a sales run rate of $100 million after two quarters of shipments.

But Sun’s overall storage sales are weak. Revenue from Sun’s sales of external disk-based storage hardware plummeted 36% in the second quarter to $176.2 million, from $275.6 million in the same quarter of 2006, according to the research firm Gartner. Sun’s market share shrank to 4.8% from 7.7%, in seventh place among the top seven named storage vendors.

The Gartner numbers don’t include internal disk storage, which would describe Thumper. IDC second-quarter numbers for external and internal disk storage revenue show Sun revenue down 3.1% from the year earlier.

Sun also sells tape storage technology not counted in those figures, but IDC tape industry analyst Armatruda says Sun is also showing weakness there. Sun, which recorded sales of $800 million in 2006 for tape hardware and tape drives, sold only $360 million in the first half of 2007. Those figures do not include the actual tape.

Still, Armatruda says Sun’s combination of its server-and-storage sales efforts makes sense.

“It’s really a way of making sure they can integrate storage much more completely with their servers,” he says.

And although Sun was criticized by some market analysts for its $4.1 billion acquisition of tape storage vendor StorageTek in 2005, Armatruda says the deal can generate significant services revenue for Sun on top of that from selling tape and hardware.

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