Sun targets new markets with UltraSparc T2

Sun is getting into the business of selling microprocessors — again.

The company on Tuesday plans to announce its new UltraSparc T2 microprocessor, along with plans for servers based on the chip. Sun plans to insert the UltraSparc T2, an eight-core, 64-thread microprocessor, into servers that will hit the market in the second half of the year.

But it will also sell the chip to third-party manufacturers of storage equipment, networking devices, set-top boxes and other computers.

"We don't want to limit ourselves to the server market. The server market won't grow nearly as fast as the storage or networking market," Jonathan Schwartz, Sun's chief executive, said in an interview. "While we are making them, we might as well make them general-purpose enough to sell them to the broader market."

To accommodate these various markets, Sun will also introduce different versions of the T2; some will have fewer cores, and some might consume less energy.

The full-fledged UltraSparc T2 will cost less than $1,000 (£493) — a steep price in any chip market — while the simpler designs will cost less. Sun is already speaking to potential customers, such as several networking and storage companies in different parts of the globe, Schwartz said.

But establishing that business won't be easy for Sun, at least one analyst said.

"People who buy chips like to buy them from people whose main business is selling chips," said Nathan Brookwood, an analyst at Insight 64. "Whether or not they can persuade a Cisco, who has written lots of code for PowerPC, to switch to UltraSparc is going to be a stretch."

Brookwood, nonetheless, applauded the performance of UltraSparc T2 (formerly known as "Niagara 2") and said it will greatly enhance Sun's servers, which got a huge boost when UltraSparc T1 servers were launched.

Sun is also feeling somewhat buoyant these days. It has regained market share in the last few quarters and posted a profit of $329m (£162m) and revenue of $3.8bn (£1.8bn) in the quarter that ended in June. For the same period a year ago, it lost $301m.

Sun tried to sell UltraSparc chips to other server makers in the early to mid 1990s, but the company retrenched. Since then, UltraSparc chips have been used by other manufacturers — Tadpole Computer has sold Sparc-based laptops — but Sun has not pushed this part of the business heavily.

Sun formed a microprocessor group under executive vice president David Yen earlier this year. But until now, the group has concentrated on issuing licences that allow others to produce UltraSparc chips. Sun has not sold the UltraSparc T1 as a separate chip, but only as a component in complete servers.

Schwartz said that customers in some ways are already using Sun equipment in this manner. In customer surveys, Sun found that 85 percent of the buyers of UltraSparc T1 servers use them as servers, while the other 15 percent use them for traditional non-server functions.

Penetration into new markets will also rebound to Sun's software division, Schwartz said. With more UltraSparc hardware out there, more customers will gravitate toward Solaris and Java, he asserted.

Cost, though, probably plays a factor in Sun's decision. Designing a new microprocessor costs millions of dollars, and new chips and chip architectures are required every few years to keep up with the competition. The rapid turnover is one of the reasons that so-called x86 chips took over the server market. Intel and AMD could improve the performance of their chips.

The high design expenses — not to mention manufacturing costs — mean that a chip company has to sell as many units as possible to break even.

Sun isn't the first computer company to go down this path. IBM has sold its PowerPC chip into the networking market for years. Networking accounted for a far larger percentage of PowerPC sales, even when Apple used these chips in its computers.

Intel also sells x86 chips for telecommunications equipment.

Sun executives and engineers will show off benchmarks and other data on the new chip at an event in Austin, Texas, this week. The UltraSparc T2 will have eight cores, with each core capable of managing eight threads. Because each thread on each core can handle an operating system, a single chip can therefore run 64 operating systems simultaneously.

"The benchmarks are absolutely staggering," Schwartz said.

UltraSparc T1 has eight cores, but each core runs only four threads.

The new chip also sports eight integrated encryption acceleration engines, dual ports for 10Gb Ethernet, and an integrated memory controller for faster access to memory chips.