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San Francisco, CA — Stephen Shankland reported for CNET News: Sun Microsystems sharpened its assault on the server market Wednesday, describing a two-pronged strategy that takes advantage of Intel-based servers while dropping the prices on non-Intel systems. On the one hand, Sun announced its first Cobalt model servers, which are based on the Intel-compatible chips from AMD and run the Linux operating system. On the other, it showed off its first Netra server using its own UltraSparc chip and Solaris operating system and costing less than $1,000, as expected.

“Today we go after the cost-sensitive server marketplace. Today we go after all those customers that have been buying low-cost Wintel solutions,” Sun President Ed Zander said Wednesday at a news conference in San Francisco. The company has sold more than 250,000 Netra and Cobalt servers in the last year, Zander said, “and we expect this to increase substantially over the next year.”

For years, Sun argued its focus on Solaris and Sparc was a benefit because it didn’t have to trouble itself so much with multiple hardware systems. The adoption of the Cobalt line is essentially an admission that Sparc hardware isn’t cheap enough for some uses. Zander said Sun has no plans to shift the Cobalt line to Sparc and Solaris.

Palo Alto, Calif.-based Sun is the dominant seller of Unix servers and has passed Compaq and Hewlett-Packard to become the No. 2 overall server seller after IBM. But Sun’s hasn’t been successful in displacing lower-end “Wintel” servers from Compaq, Dell, IBM and Hewlett-Packard that typically use the Windows operating system and Intel chips.

With the new products, though, Sun isn’t trying to get customers to replace the myriad of Windows servers used for tasks such as feeding print jobs to local printers. Instead, Sun is aiming its new products at service providers, which are paid to handle customers’ computing tasks, by hosting Web sites for example.

Rack ’em and stack ’em

The service provider market needs slim servers that are bought by the dozen and that can be stacked up as densely as possible. All the new servers from Sun today are slim machines aimed at this “rack-’em-and-stack-’em” market, where servers are gauged by their thickness.

Even though it’s difficult to design machines this skinny that don’t overheat, numerous companies are angling for the market and many have a head start on Sun in some ways.

HP this week began selling servers “1U” thick–that’s 1.75 inches–with two Pentium III processors, catching up to Dell, Compaq, IBM, Network Engines, VA Linux Systems and others. Sun, by contrast, currently fits only one CPU into the 1U size.

And a new entrant, RLX Technologies, has gathered many former top Compaq server executives to sell its high-density “Razor” servers based on comparatively low-temperature Transmeta CPUs.

Neil Knox, head of Sun’s Netra group, said a 1U, two-processor design from Sun is “on the drawing boards.” The system will be useful for tasks that require more processing power, such as application servers that run Web site programs instead of just delivering Web content.

Sun estimates the rack-mounted server market will be worth $38.3 billion by 2004, said John MacFarlane, executive vice president of Sun’s service provider group.

“Our targets are Dell, Compaq, IBM–anyone trying to get out of the PC debacle and move into the server market,” MacFarlane said.

Sun’s Netra and Cobalt lines are intended for different types of buyers, MacFarlane said. The Netra machines are for customers that install their own software, whereas the Cobalt “server appliances” come with their own software to handle specific tasks. Setting them up takes only 15 minutes, MacFarlane said.

Sun’s first server appliances

Sun debuted two new Cobalt server appliances, said Stephen DeWitt, former Cobalt chief executive and now general manager of Sun’s Cobalt server appliance group. The Raq XTR is Cobalt’s fifth-generation machine for companies that host Web sites. And the CacheRaq 4 is the company’s fourth-generation for “caching” information around the Internet to reduce delays for browsers downloading Web pages.

The booming hosting market is a battleground estimated to generate $17 billion in revenue by 2004, DeWitt said. “It’s about who can offer the biggest set of services at the lowest price to the broadest set of customers,” he said. “This is a huge gold rush.”

One problem with server appliances, acknowledged by Compaq and others, is that they are likely to undercut general-purpose server sales. DeWitt, however, disputes this contention. “This isn’t cannibalizing the traditional server market,” he said.

The XTR has a starting price of $4,799. The CacheRaqs begin at $1,799.

New Unix servers too

Sun’s Netra line is closer to the heart of Sun, which long has boasted of the power of its Solaris and Sparc designs.

Sun upgraded its Netra T1 server, originally released in June 1999. The new AC200 and DC200 models come with faster 500MHz CPUs and more memory. The company also added the E1 system, a module that expands the input-output abilities of other Netra servers.

DC power is a critical feature that appeals to telecommunications companies that need systems that can run on batteries.

The Netra X1 starts at less than $1,000 for a model with a 400MHz UltraSparc IIe CPU, 128MB of memory and a 20GB hard disk, Sun said.

All the new Netra machines store their identity on a removable card the size of a credit card. The feature allows administrators to unplug the card from a broken server and move it to a functioning one, allowing the new one to take over.

Sun said that companies using the Netra servers include Verio, Enron, Exodus, Level 3, Digital Island, Excite@Home and UUNet.

The AC200 and DC200 models have starting prices of $2,995 and are available now. The E1 expansion devices cost $1,595 and will be available March 6.

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