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Advanced Micro Devices and Sun Microsystems today strengthened their partnership and announced a strategic alliance under which Sun Microsystems will offer AMD Opteron-powered servers and develop special versions of Solaris OS and Sun’s Java Enterprise System software optimized for AMD’s 64-bit CPUs. The deal adds second large server company in AMD’s portfolio of partners and the third microprocessor architecture adopted by Sun Microsystems in its servers.

After months of uncertainties and a number of declines, Sun confirmed plans to launch AMD Opteron processor-based servers in 2004. Moreover, one of the largest server companies in the industry will offer both its paramount software technologies for AMD64 architecture – a very promising fact for the Sunnyvale, California-based Advanced Micro Devices.

The strategic alliance between the two companies will include:

  • A full range of AMD Opteron processor-based Sun Fire systems from Sun:  Throughout the course of 2004, Sun will introduce new AMD Opteron processor powered systems. The current roadmap calls for two and four-way servers to be rolled-out within the next calendar year.
  • Solaris OS and Sun’s Java Enterprise System optimization for the AMD Opteron processor: Sun and AMD will collaborate to accelerate the platform development, optimize the performance and increase enterprise adoption for the Solaris OS and Sun’s Java Enterprise System running on the AMD Opteron processor. Currently customers can run Solaris software on AMD Opteron in 32-bit mode. Sun plans to make 64-bit Solaris available on the AMD Opteron processor in the first half of 2004.
  • Future AMD Opteron Processor-based designs: Sun and AMD will collaborate on a portfolio of future AMD Opteron processor-based systems and scalability beyond 4-way AMD Opteron processor systems. The parties will also collaborate on coherent HyperTransport technology implementations.
  • Joint ISV Development Program: Sun and AMD will jointly form an iForce Partner Program for ISVs and developers creating and porting applications to the Solaris OS. This new program will include engineering support from both companies, a seed unit program for ISVs as well as a Sun and AMD Developer Resource Kit.
  • Joint Customer Centric Marketing Programs: Sun and AMD will collaborate on worldwide marketing activities including a customer seed unit program; joint sales activities; as well as joint product, ISV, developer and channel marketing programs.

Even though AMD Opteron processors and cost-effective 64-bit architecture from AMD provides Sun a number of benefits over some of its rivals, it may also put in some difficulties for Sun’s own product positioning. Until now it was clear that Sun offers cost-effective Intel Xeon and AMD Athlon MP 32-bit servers, but insists on using its own SPARC processors for enterprise applications. Since AMD Opteron series is capable of addressing both market segments, the company will have to clearly explain customers the difference between the products it ships. Moreover, the Santa Clara, California-based server company will have to support more combinations of software and hardware, e.g. Solaris for SPARC processors, Solaris for x86 CPUs, Solaris for AMD64, as well as two versions of Linux – for x86 and for AMD64 microprocessors.

On the other hand, Sun Microsystems needs to deploy quite some changes in its strategy to finally return to profitability. The company has been reporting revenue declines for roughly ten quarters. In June 2003 the company announced its uprecedented net loss for fiscal year 2003 was $2.378 billion on sales of $11.434 billion as compared with a net loss of $587 million on sales for $12.496 billion for the 2002 fiscal year. AMD Opteron microprocessors have been receiving a relatively warm welcome from the market and Sun may see some good business opportunities here.

Sun’s main enemy – Intel’s Itanium processor that aims Sun’s main enterprise servers market – will not be attacked directly by the strategic alliance with AMD announced today. The server company will have to continue competing with IA64 in high-end 8P and beyond server market.

AMD, who also has been reporting losses within the last two years, will certainly benefit from yet another huge server partner who will market its Opteron CPUs. Earlier this year IBM adopted AMD’s 64-bit microprocessors for servers, though, IBM’s products generally do not represent a family of solutions for various needs and address only a number of niche-markets.

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