Business needs drive longtime rivals to join hands.
After years of animosity and public sniping that often came from the highest levels of both companies, a partnership between Sun Microsystems and Intel made too much business sense for the tech giants to ignore.
For Sun, the announcement of the partnership Jan. 22 is a way of expanding its growing x86 server business beyond those systems powered by Opteron chips from Intel rival Advanced Micro Devices. It also puts Sun on an equal footing with such competitors as Dell, Hewlett-Packard and IBM, which offer both Intel- and AMD-powered devices.
For Intel, its another major OEM to sell to, and one that AMD had claimed as its own for several years. Intel, which had been slow to respond to AMDs technological advances over the past few years, has stepped up and taken the lead in such areas as 65-nanometer manufacturing and quad-core technology.
"There is little doubt that much of the charm of the Sun/Intel pairing lies in the overturning of the companies historical, mutual disdain," said Charles King, an analyst with Pund-IT, in a report. "Two-plus years after initially ignoring the 64-bit x86 boat launched by AMD (and losing one-quarter or more of the x86 server market as a result), Intel spent 2006 refreshing its entire server and PC processor lines with solid new products. In other words, if Sun and Intel were going to get together, it would be difficult to find a better time."
At the San Francisco event announcing the partnership, Sun President and CEO Jonathan Schwartz said his company would produce new Xeon-based x86 servers and workstations later this year. In turn, Intel announced that it will support Suns Solaris operating system and will encourage software makers to support Solaris on Xeon platforms, thus giving Sun access to a much broader audience. The agreement also means that Intel will support open-source communities from Sun, including Open-Solaris, Open Java and NetBeans.
"For us, its an historical moment," Schwartz said, adding that the two companiesboth based in Santa Clara, Calif.have a chance to benefit from the exchange of technologies and engineering expertise each owns.
Schwartz said the time was right for Sun to offer x86 systems that will use single-core, dual-core and quad-core Xeon processors, particularly with the continued growth of Solaris 10 on those systems and the overall financial strength of the company. On Jan. 23, Sun announced revenues of $3.6 billion for the second quarter of fiscal 2007, a 7 percent jump over the same period the previous year. Profits increased to $126 million; Sun lost $233 million during the same quarter of fiscal 2006.
Intel CEO Paul Otellini said the agreement gives Intel a bigger presence in the enterprise server space, especially in the financial sector and within telecommunications. The partnership also enables Intel to collaborate with Sun on issues ranging from virtualization to data center solutions to high-performance computing.
Sun has been really aggressive with its x86 product line, and this is where they have to go," said Gordon Haff, an analyst with Illuminata. "For a while, when Sun was only an AMD shop, that [relationship] proved to be the differentiator. Now, Sun has a much broader and much more mature product line, and the company really needs to be able to offer products from both companies."
For Intel, the deal is another step in its efforts to keep a distance between itself and AMD, Haff said.
"Its a very tough competitive battle between them," Haff said. "For a while there, Intel got lazy, and they kind of viewed themselves as the only game in town."
Henri Richard, chief sales and marketing officer for AMD, in Sunnyvale, Calif., called the announcement a positive result for users.
"AMD believes in competition as a positive force," Richard said in a statement. "Sun was among the first to listen to its customers and offer choice through AMD to a long-monopolized x86 server market. As advocates for choice, AMD recognizes Suns desire to provide the same for its customers."