Sun Pulls Plug on Cobalt Server Line

In late 2000, Ed Zander (then president and chief operating officer of Sun Microsystems Inc. and now recently tapped as CEO and president of Motorola) said of Suns Cobalt server line: “We think the demand for these high-volume, turnkey devices will explode in the next couple of years. Cobalt is our bet for the future.”

That future lasted only three years. This week, the company announced that it will discontinue the last model in its Cobalt product line, the RaQ 550 server, on Feb. 19, 2004, following September end-of-life notices for the rest of the Cobalt line.

Though Sun has committed to maintaining future security patches and will continue to honor extended service warranties for three years for the Cobalt line, this move leaves customers of the Cobalt line without an immediate upgrade path. Suns designated replacement, the refreshed Sun Fire line, will not be available until early 2004.

As announced at Novembers Comdex trade show, Sun will offer a new family of low-end Sun Fire servers, to be powered by AMDs 64-bit Opteron processor. Industry watchers said the move reflected Suns interest in the x86 sector of that market. Sun said it had developed versions of Linux, Java and Solaris for Opteron-based servers.

/zimages/6/28571.gifTo read more about Suns plans for its Opteron-based servers,click here.

In late 2000, Sun purchased Cobalt Networks Inc., scooping up both the companys low-end server line and Cobalts sales force in a stock-for-stock deal worth about $2 billion. The Cobalt products used MIPS processors, which were in competition with Suns own UltraSparc CPUs.

Still, Sun had seen its server business undercut by relatively small and inexpensive Linux-based server offerings from a wide range of vendors. The Cobalt acquisition was designed to launch Sun into that arena.

Although the Cobalt line of 1U servers proved popular, its installed base has appeared to shrink over the past few years. According to Netcraft statistics, the number of sites hosted on Cobalts has declined from a peak of 3.1 million hostnames and 942,000 active sites in August 2002 to 871,000 hostnames and 527,000 active sites in November 2003.

Another indicator that the Cobalt product line has felt competitive pressure from even less expensive options, such as blade servers: In January 2003, Sun took a $1.6 billion charge against earnings, claiming decreased value of the Cobalt acquisition.

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