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back to article Big Sparc crunches Sun's Q2

Server and operating system maker Sun Microsystems has reported financial results for its fiscal second quarter, and the news was as bad as Wall Street expected. Sun's sales fell 10.9 per cent to $3.22bn in the quarter, and the company booked a loss of $209m. Sun was pushed to the loss by a $222m restructuring charge relating …

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Anonymous Coward

More of Timmy's schadenfreude?

"...and the news was as bad as Wall Street expected"

Shyeah right, they expected a 10 cent per share loss and Sun posted a 15 cent per share profit, excluding transient lay-off charges. That's *just* what they expected.

After the .com pop, Sun had to (and did) work hard to recover, getting back into the black for half a dozen consecutive quarters before this latest economic landslide....but Sun is still hanging tough, with cash significantly in excess of long term liabilities. This means that even if the creditors call in their debts, there's money to pay them (unlike other notable collapses in recent times).

Further, the core strategy has a longer term view. After the bubble burst, the birth rate of traditional large institutions dropped to almost zero. New IT industry darlings would evolve differently. Smart folks with no money had to prototype their ideas as cheaply as possible, with what they were most familiar with - open source products. Then if the idea takes off, VC funding inflates it rapidly into a business. Do they throw it all away and buy an IBM mainframe and Oracle? Rarely...they scale up what they've already got creating a fertile pull-through sales channel.

Hence, open source is one of the most prolific adoption vectors for technology today. There's debate to be had on whether that ship has already sailed and plenty of folks may disagree - but either way, it's not a short term strategy so I say let those doomsayers keep on with their rain dance; even a broken clock is right twice a day!

I confidently predict that Sun will survive the recession and I expect that all the pain in the interim will re-sharpen Sun's edge while blunting the competition. Yeah, it's just my 2-cents but this is the comments section. Deal with it :)

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Anonymous Coward

Cue Matt Bryant

'nuf said.

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Alert

Services

Once again services eked out growth in a difficult economy. Once again they are being punished for hardware sales being down.

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Happy

RE: Cue Matt Bryant

Actually the article just about says it all. The only point I'd disagree with is the assumption that Sun customers switched from top-end SPARC to Niagara, as the figures don't add up. The reality is the customers switched to IBM pSeries and hp Integrity, both of which saw bouyant revenue and gains in marketshare more in-line with the decline of high-end SPARC than the meagre gains in Niagara.

Either way, the reality is still the same - Sun is bleeding red ink at a high rate.

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Anonymous Coward

Re: Matt

Actually, my guess is that HP's growth comes from the old EOL PA-RISC junk out there. IBM may be taking share, but I really can't imagine that HP-UX would attract much more than a sniff.

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Happy

RE: Re: Matt

Seeing as you can do more on the new Integirty kit for a lot less than the price of the old PA-RISC kit, if that were true then hp would at best be standing still or making less without growing market-share. As hp is growing in both it must be eating up someone else's share, and that someone else is obviously Sun.

Besides, you're forgetting that - unlike SPARC - Itanium can run multiple OS in the same chassis, so it's not just hp-ux getting a sniff, it's also Red Hat, Windows and OpenVMS eating up SPARC Slowaris share.

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Dead Vulture

RE: Re: Matt

Actually, though you say that you can run RHEL, Windows, and OpenVMS, the vast majority is HPUX. The numbers for the other OS's is closer to Linux on mainframe, which the MF'rs like to trumpet, but is really quite low. Once PA-RISC users are forced to the inferior Itanium or to SPARC or POWER, Itanium will stop it's slow growth and start trending down.

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Happy

Re: RE: Re: Matt

Integrity growing in market share? That's absurd. Yes, they are growing in revenue, but that's because they are over priced. Analysts show SPARC shipments are 3.5x more than Integrity (let's not play the high-end game that HP likes to play, OK? We're talking overall shipments, not just one segment) Sun has 46.4% of the Unix shipments last year, that leaves HP and IBM to fight over the rest... Sun had year over year gains in market share gains in Unix of over 2% while HP was flat and IBM actually lost almost 1%... HP-UX is dieing and with it Itanium, as Linux is not growing on Itanium (shrinking), VMS is obviously dead, and who really runs Windows on Itanium?

HP's future is Linux on X64 and if you can't see that then you are blind. That future is coming fast.

You really should do your reading for yourself and not rely on HP's FUD site for your information.

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Happy

RE: ACs

RE: RE: Re: Matt

"Actually, though you say that you can run RHEL, Windows, and OpenVMS, the vast majority is HPUX...." Which includes all those Slowaris shops moving their high-end apps off Slowaris onto Integrity. Obviously for them hp-ux is more than good enough.

"....Once PA-RISC users are forced to the inferior Itanium or to SPARC or POWER, Itanium will stop it's slow growth and start trending down." Firstly, why should the PA-RISC crowd be "forced" to anything? When they are choosing to move off PA-RISC they are taking the simplest route of straight 11i v3 compatibility between PA-RISC and Itanium. This is shown by hp's conversion rate which is why they are not just holding share but gaining it, especially in the high-end. Sun's spectacular fail in trying to poach Alpha and PA-RISC customers from hp is symptomatic of Sun's decline.

RE: Re: RE: Re: Matt

"Integrity growing in market share? That's absurd....." Really? I suggest you take it up with Gartner and IDC then. I'm sure they'll take your word for it.

"....Yes, they are growing in revenue, but that's because they are over priced...." Actually, the Itanium servers are cheaper than the PA-RISC ones they replace. And I believe it is the market that sets the value of a product - if they think it is overpriced they don't buy it - but it seems the market is much happier buying Integrity than any SPARC server, especially for those business-critical high-end jobs. Of course, it could be that the rest of the market is just incredibly stooooopid, and you are the only genius here, but somehow I doubt it....

"....(let's not play the high-end game that HP likes to play, OK? We're talking overall shipments, not just one segment)...." Well, taking overall shipments then hp is number one in servers fullstop! Oh, you want to narrow it down to a few segments then? I wasn't talking just one segment, but you seem to be studiously avoiding the fact that the high-end is the margin-rich area, and Sun is not selling there whilst hp are mopping it up. Sun can sell squillions of small boxes at a tiny margin and they will lose money (like they are), whereas hp can dominate the high-end and make a healthy profit (and lo and behold, they are!). And of course you forget that hp shares components between the Integrity and ProLiant range (that would be the number one x64 range, in-case you've forgotten), which brings hp much better economies of scale than Sun can manage with their tiny Galaxy marketshare. So hp can price-match even Sun's hilarious attempts to buy marketshare and STILL make a profit.

"....Sun has 46.4% of the Unix shipments last year, that leaves HP and IBM to fight over the rest...." I expect those dubious numbers (from the Sun site?) refer to system shipments. If you want to look at revenue and profit then Sun is firmly back in last place. Which means Sun is just losing money on a lot of small systems whilst hp and IBM are making profits off less larger ones. And at the end of the day it's all about profit, which is why the market think Sun deserves to be in the toilet. If Sun was doing as well as you blindly believe do you really think the market cap would be so poor that it is basically saying the market thinks Sun without its cash reserves is a negative?

"....who really runs Windows on Itanium?..." Well, there's this product you may have heard of called Microsoft SQL. It is the most popular database in the World, and it doesn't run on SPARC of any form. It does run very well on Itanium. Lots of Windows shops with large MS SQL apps are growing beyond the 8-way Xeon world and for them the best option is Itanium, usually in hp Integrity servers. And what they are using the MS SQL database for is not the light-load webserving database apps that T1/T2 are used for, but real business-critical apps. Air Products is a good example, they run one of the largest SAP instances in the World on Windows on Integrity. But then I suspect your experience with Windows is a bit limited for you to even take that in.

"....HP's future is Linux on X64 and if you can't see that then you are blind...." Thank you for your concern, but the blind party has been Sun for years. Hp and IBM saw the value of Linux and Windows over a decade ago, Sun just saw a threat to their proprietary software. Hp and IBM built massively profitable businesses by mixing UNIX, Linux and Windows, but Sun just squealed on and on about "Solaris on SPARC" and nothing else, and gradually sank lower and lower. Then, when Sun had to cave in and sell x86, Windows and Linux it just looked stupidly late. Yes, hp has a future with Linux on x64, but they also have a future with Windows and hp-ux, and on x64 and on Itanium, as shown by the healthy profits. Sun's future is spelt out by their market cap - dying on their feet.

"....You really should do your reading for yourself and not rely on HP's FUD site for your information." Why not try reading a few more of The Reg's articles then. You'll find plenty on marketshare, Sun's dire market position, the lateness of Rock, hp's burgeoning profits whilst Sun hasn't made four straight quarters in the black since the dot bomb....

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