"Most Powerful Chip" more accurate than "Fastest"
Niagara 2 is without a doubt the most powerful processor for many workloads. "Fast" is now up for debate. Is a 2.66 GHz Clovertown "faster" than a 3 GHz Woodcrest? In addition, I would note the numbers Sun has released are preliminary estimates, so actual numbers are likely to be higher. Also, Niagara 2 is likely to perform better on Web, Java, and Database benchmarks than CPU intensive benchmarks. So expect the relative performance difference to be much better than 10%, especially if networking or SSL performance is part of the benchmark.
Regarding IBM's claims Niagara and Niagara 2 are for "niche" workloads, I would point out Niagara and Niagara 2 are designed for Internet workloads. From these comments one can only assume it is IBM's official position the Internet is a niche market.
The "light thread" vs. "heavy thread" debate is for the most part, irrelevant. In Internet workloads, user think time and network response times induce more latency than processor performance. The one exception being processes which are inherently single-threaded, like integer linear programming, which is common in supply chain management. Maybe Niagara is not the right processor to run the SAP Central Instance, but it may be the right processor for SAP's front-end processes. And the ultimate "light thread" database workload is TPC-C, which IBM seems to promote as relevant to any customer application.
Regarding virtualization, POWERFAN seems to assume Niagara 2's virtualization capabilities are identical to Niagara 1. I doubt that is the case. The other advantage a radically multithreaded processor has in virtualization is it does not need to time-slice individual threads among multiple VMs/LPARs. IBM's POWER5 Micropartitions incur significant overhead as Micropartitions per processor increase. This is because each time the processor is switched between LPARs, it incurs a context switch, and likely a flush of the L2 cache. This is not the case when the individual threads are not time-sliced between OSs. Instead, in Niagara, the hardware handles the switching of individual threads, and thread contexts are not changed because the thread remains within an OS instance. You may not be able to weight Sun's LDOMs by percentages, but you get 64 threads per processor to weight into your LDOMs, compared to 200 percent (100% per core) with POWER5. 64 is probably enough.
Regarding, the comment about software licensing per core. This is true for platform software like RDBMS and J2EE Application Servers. It is not true for enterprise application software like ERP and CRM (which is licensed per user). So while the Oracle database is licensed per core, the Oracle Financials app riding on top is not. Also, open source web software like Apache is not licensed per core, and that is the heart of the Niagara market. And the platform vendors like IBM, Oracle, and BEA have already adjusted their licensing models for Niagara style processors.
Finally, Niagara represents where the processor market is going. POWERFAN, I suggest you look at what is planned for POWER6+ and POWER7. Rumor has it POWER6+ will be simply a four-core version of POWER6 with little increase in clock rate. POWER6 will likely never hit the 6GHz originally planned. I hear POWER7 is modeled on the Cell Processor rather than POWER6 and will be at least four cores and likely more than two threads per core. I also hear POWER7 may have a lower clock rate than POWER6. AMD's future processor, Sandtiger follows the Niagara path of more, simpler cores. Intel plans to bring back Hyperthreading in a future Xeon so eight or sixteen threads per socket may be the norm for x86 processors in two years.
Sun has shown the way, and today's IBM's POWER vs. Sun FUD is going to look hypocritical compared IBM's own System X messaging and its System P messaging. And once IBM's starts disclosing POWER7 details, IBM will simply look foolish.