Sun Microsystems has cut prices on formerly high-end servers now being replaced by systems using newer chips, the company said today. The price of the top-end E10000 Starfire server, which often commands prices higher than $1m, has been cut 16 percent, said Sun server marketing head Shahin Khan. Prices for the 3500, 4500, 5500 and 6500 models were cut between eight percent and 32 percent, he said. The systems all are based on the older UltraSparc II CPU. They're being cleared out to make way for newer systems using the UltraSparc III chip. The new CPU runs at 750MHz, compared with the 480MHz top speed of its predecessor, and offers other improvements. But Sun is working to fix a glitch in the chip as soon as possible, Khan said. Sun's product transition, the most important in years, comes amid a slowing technology economy that has hurt Sun as well as its biggest competitors. IBM and Hewlett-Packard have been trying to regain Unix server sales they lost to market leader Sun in the late 1990s, but the market for expensive servers has slowed. Sun for years trumpeted its sales to Internet customers, but as many of those companies have collapsed in recent months, Sun has chosen to emphasize that most of its business always has come from large corporations. Khan acknowledged that the company saw the effects of inventory liquidations by expired dot-coms but said those sales were only "a drop in the bucket". "It may have been a big drop, but it was a drop," he said. In addition to competition from IBM and HP, Sun faces new competition in North America from Fujitsu Technology Solutions, which sells systems that use the same operating system and often the same chips as Sun's servers. Fujitsu has released a slim 1.75in thick server and plans to sell a server with as many as 128 CPUs later this month. Take me to ZDNet Enterprise Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet News forum. Let the editors know what you think in the Mailroom. And read what others have said.