Unix Vendors Change Tack

Server makers shift focus from high-end systems to midrange offerings.

Competition in the midrange Unix server market is heating up as top vendors such as Sun Microsystems Inc. and IBM shift from focusing on $1 million-plus high-end systems that were popular during the Internets boom years to less pricey boxes more in tune with the constrained budgets of corporate buyers.

Underscoring the strategy shift, three of the four largest Unix server makers promoted new systems aimed at the midrange market, defined as servers selling from $100,000 to $1 million, according to International Data Corp., in Framingham, Mass.

For customers, the intensifying competition is resulting in more attractive prices—for example, Sun slashed costs on its Unix servers up to 41 percent last week—which is welcome news to systems managers struggling with limits on spending.

"Its very tight right now," said Robert Cancilla, director of corporate systems planning for Republic Indemnity Co. of America Inc., in Encino, Calif., which utilizes IBM mainframes. "We are buying, but to purchase anything we need to deal with our senior management committee, and we have to demonstrate a heavy-duty return on the investment in order to fund a project."

In response to such concerns, Unix vendors are integrating some of their most advanced technologies into less costly systems to make them more attractive to customers.

"Until a year and a half ago, you did not see such things as partitioning in the midrange Unix servers; it was pretty much exclusive to the high end," said Jean Bozman, an analyst at IDC, in San Jose, Calif. "But now all the major players are offering it."

Sun executives, in announcing a new $750,000 52-way Sun Fire 12K last week, said the Palo Alto, Calif., company is determined to make inroads in the midrange market, where it has lagged behind Hewlett-Packard Co., of Palo Alto, Calif., and IBM, according to IDC.

"Its a brand-new market for Sun to go and attack," said Clark Masters, general manager for Suns Enterprise Systems Products. "Its been a bastion of success for HP and IBM. Now we plan to go right at them."

While Sun lags in midrange sales, the company is still the leader in global Unix sales, which totaled $22.3 billion last year. Specifically, Sun had a 30.7 percent share of the market—based on revenues—HP had 25.3 percent, IBM had 22.5 percent and Compaq Computer Corp. had 7.7 percent.

IBM, of Armonk, N.Y., which has been aggressively attacking Sun in the Unix space, last week introduced the 16-way eSeries p670, a smaller version of its top-of-the-line p690, unveiled in October, that features the companys new Power4 processors and will sell for between $180,000 and $535,000, depending on how it is configured.

In addition to touting its technology, IBM took aim at Sun on pricing, contending the p670 will cost up to 40 percent less than Sun servers offering similar performance.

Midrange market leader HP announced its latest product offering in the segment last month, introducing the eight-way rp7410 priced at about $250,000 when fully configured.

While Houston-based Compaq had no new products, the company did disclose last week that it has begun piloting Unix systems featuring a newer version of its Alpha processor, known as the EV7. The processor will be introduced to the market late this year in an eight-way server targeted at the midrange market.