Next-gen chip is the key to a do or die job for Oracle's hardware business: Regain the confidence of 50,000 Sun customers.
Oracle announced a family of Sparc servers on Monday that just might revive declining sales of Sun hardware in the high-end Unix market.
Oracle will undoubtedly use the new servers to woo displaced customers of Itanium-powered HP servers. And a new flagship Sparc SuperCluster product is aimed squarely at Oracle database customers, promising to bring the performance benefits of Oracle's Exadata and Exalogic appliances to the Unix world.
At the center of the new rack, blade, and SuperCluster servers is Oracle's latest Sparc T4 chip, which is said to deliver five times faster performance than Sun's previous T3 chips. Oracle CEO Larry Ellison called it "a gigantic step forward in single-thread performance," a benchmark where Sparc chips previously fell short of competitors.
Plans for the T4 chips were laid out roughly a year ago. But with yesterday's announcement, they're being delivered ahead of schedule and with higher-than-expected performance, according to John Fowler, executive vice president of systems at Oracle.
"This is the biggest single-generation performance boost in Sun's history," said Fowler, a key executive at Sun before it was acquired by Oracle for $7.4 billion nearly two years ago.
Regaining the confidence of Sun's installed base of some 50,000 customers is a do-or-die proposition for Oracle's hardware business after several quarters of declines. Oracle server volumes slid 32% in 2010, according to Gartner data, and the declines have continued in 2011. Oracle last week reported a 5% drop in hardware systems sales to $1.03 billion for the quarter ended August 31.
Ellison defiantly dismissed the significance of high-volume, low-margin commodity X86 server sales last week and vowed that Oracle would focus instead on high-margin engineered systems--like Exadata and Exalogic--as well as high-end servers. This week's Sparc announcements make good on that promise, and according to at least one analyst, the lineup of T4 products will go a long way toward retaining existing Sparc customers.
"This is a tremendous evolution for Sparc, and it's going to be a big appeal to the installed base," said Forrester analyst Richard Fichera in an interview with InformationWeek. "That's the most critical thing they need to do, because they're dead if they can't capture that refresh business."
Oracle is also looking to woo Oracle software customers running on rival Unix servers. On that score, Oracle claimed its Sparc T4-4 server delivers a 33% better price/performance than the IBM Power 780 server and 2.6 times better price/performance than HP's Superdome 2 servers with Itanium processors.
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