Newsmaker: Sun's server guy peers ahead

John Fowler doesn't have the easiest job in the world. As executive vice president for systems at Sun Microsystems, he oversees servers, the product category that generates most of Sun's revenue.

But these are tough times for the one-time Silicon Valley highflier. The company still struggles with large financial losses and has announced layoffs. All the uncertainty has led some analysts to speculate that Sun is destined to become an acquisition target.

Fowler is having none of it. He notes that Sun's server revenue was up in the last quarter--a period during which most server makers suffered declines in server sales. Also, the company's sales of Advanced Micro Devices-based servers grew. And so what if Intel has a new server chip coming out? If demand exists, Fowler suggested, Sun might even adopt the chip. He recently spoke with CNET News.com about these and other issues affecting Sun and the chip business.

Q: What's the benefit of combining the x86 server group with the Sparc group?
Fowler: What's been happening is the two groups have been doing things like sharing mechanical design and doing some aspects of the systems work together. It will be a more clear dynamic when it's all one group. For example, service management software can all be shared very quickly and easily between the systems. The other thing that we can do is, from a portfolio management standpoint, is continually adjusting the family of products to maximize our growth. As you probably know, we grew 7.6 percent last quarter.

There are a lot of opportunities in other areas like the factory operations and supply chain. The x64 group had a separate operations team.

I'd like to be your worst-case scenario customer for a moment. So I'll say, "Well, you lost millions of dollars in the last quarter, and had losses in the previous quarters, and you are laying a lot of people off. How do I know Sun's going to be an independent company?"
Fowler: I think the important thing about looking at sort of paper losses and GAAP losses and all that is that we continue to maintain a strong R&D portfolio and a strong cash position, which is sort of what drove the 7.6 percent growth in the last quarter. We don't have any debts; we have an extremely strong cash position; and we've got a very stable and increasing revenue base, so we're in actually a pretty good spot from that regard.

Obviously we have Solaris and a lot of opportunities to compete against IBM, despite the fact we're smaller in scale.

Right, but you are laying people off. You'll obviously have fewer engineers. Do you worry that you won't be able to continue to innovate at the same pace as IBM or even Hewlett-Packard?
Fowler: I think we've obviously been through a very long history competing with IBM, which has a much bigger work force. If you'll look at their portfolio, there are a lot of businesses that we are in fact not in, so it's not fair to jump or take a direct comparison.

But against Power and the X series products and other parts of the stack, obviously we have Solaris and a lot of opportunities to compete against IBM, despite the fact we're smaller in scale. Remember that IBM has a huge number of people which are actually part of the service group.

In the case of HP, of course, it's a very different profile of a company. Competing against HP obviously involves emphasizing the areas of portfolio where we are different: the Sparc portfolio, Niagara.

Aggravating customer question No. 2. So you are selling a lot of x86 servers. But why should I buy them from you guys? There are a lot of people out there with them.
Fowler: When we develop our products and, of course, we're on the cusp of announcing a whole collection of more products, we work basically on five principles. The five principles are: performance; efficiency--and efficiency relates to both our size and power performance; No. 3 is reliability, which is of course the whole availability track; and then manageability, which is how well can you integrate it into an environment of hundreds and thousands; and then the fifth is what I call longevity.

These are the big five: performance, efficiency, reliability, availability, manageability and longevity. If you look at our x64 products, we have the first four very much nailed.

These are the big five: performance, efficiency, reliability, availability, manageability and longevity. If you look at our x64 products, we have the first four very much nailed. We are fast and extremely power-efficient. We're manageable and have a lot of reliability features, so that makes us clearly a top tier-one vendor.

If you look at our x64 growth rate, we are seven quarters in with really high double-digit or triple-digit kind of growth rates. I can't talk about the growth in the current quarter, but the competitive landscape hasn't really changed. You don't get eight quarters of growth in that rate by accident. People obviously like what we are doing.

The last point I want to talk about is longevity. You're familiar with longevity in the Sparc line. You can install an UltraSparc IV machine and keep upgrading it over time. The products that we are going to introduce next will really bring that to x64. You'll be able to incorporate our blade server into your infrastructure so that future processors, future memory, future I/O (input/output) and other aspects of the system can be continually changed over time without rip and replace. This is quite new for the x64 area, and we think it will really resonate with customers.

The other thing, obviously, in terms of growth is Solaris and x64. We have a majority of Solaris licenses which are actually on hardware other than Sun.

Is that Solaris x86 or that's Solaris everything?
Fowler: Solaris x86. If you look at it numerically, the majority of that is actually on HP hardware. So when you ask why would people want to buy things from me, well people have become interested in Solaris, and they may want to also purchase hardware over time from Sun because obviously we're optimizing and supporting them together.

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