Sun to rein in spending, expand partnerships

Sun, smarting from 12 consecutive quarters of revenue declines, last week announced expanded subscription pricing models, new features for Solaris – including plans to open up the source code for portions of the operating system – and a partnership with Fujitsu that analysts say could help get the company back on track.

Sun executives used an event in Shanghai, China, last week to tout the company’s plan to simplify network computing, with announcements that ranged from the Fujitsu partnership to per-user pricing for Sun’s Java Enterprise System middleware. Also in the plan are pay-per-use pricing for storage systems and a new self-healing, self-managing file system for Solaris 10, which is slated for release by year-end.

Sun President and COO Jonathan Schwartz reiterated that the company is looking to create an open environment around Solaris. Sun would not discuss timing or details of the plan, including what licensing model it would use, but analysts suspect the company would open up source code for Solaris in a similar fashion to Java.

“If they do open source Solaris, it likely will be on a restrictive license, something akin to Java, that lets them maintain fairly tight control over its development and use,” says Gordon Haff, an analyst at Illuminata. “But they are making a lot of aggressive, break-with-their-own-history types of moves, which is something that has served Sun well in the past. None of this guarantees ultimate Sun success, but it certainly gives them a chance to succeed.”

Haff notes Solaris is now open to some extent if users sign non-disclosure agreements before looking at the source code.

“Merely opening up the source in the sense of allowing people to look at it is really not a radical departure of where things are today,” he says. “The goal for Sun is to get more community development going, really as a way of enabling Solaris on x86 to better compete with Linux.”

That might help cut research and development costs, which amounted to about 16% of revenue last year.

In the company’s most recent quarter, which ended in March, it had a $750 million net loss on $2.6 billion of total sales.

In another move that will reduce the R&D load, Sun announced an expanded partnership with Fujitsu to merge the companies’ scalable processor architecture (SPARC)-based server systems by 2006 in an effort to deliver a single line of Solaris servers. Fujitsu already sells machines based on Sun’s SPARC chips and Solaris operating system.

“Consolidating the product lines is a good move for Sun. It will save them some R&D costs, as well as costs of going to market,” says Jamie Gruener, a senior analyst at The Yankee Group. “But Sun has to be very careful that they don’t look like they’re abandoning their installed base.”

In other announcements, Sun:

• Formally introduced a pay-per-use storage model, in which users are charged as little as 2 cents per megabyte, per year.

• Announced new storage arrays, including the Sun StorEdge 6290, which will allow Fibre Channel fabric-based replication, point-in-time copies, data migration and centralized management services, and is a product of Sun’s acquisition of Pirus in 2002.

• Unveiled the carrier-grade Netra 440 server, starting at $14,000, with new ruggedized storage arrays.

• Extended its Java Enterprise System to support Linux, with plans to support Windows and HP-UX.

Senior Editor John Fontana contributed to this report.