John Fowler, Executive Vice President, heads the discussion and Q&A.

Tags: Sun Fire X4450, Sun Fire X4150, Intel Xeon, Solaris

Tags: John Fowler, Sun Microsystems, blade server, 6200 series, data center, Michael McNerney

Tags: Innovating@Sun, Hal Stern, Sun, Ann Bamesberger, Open Work

Tags: Sun Microsystems, KGO, Robert F. Kennedy, Jr., Eco-Live

Tags: HPC, Grid Application Catalog, Hal Stern, Jim Parkinson

Tags: Game Developers Conference, online gaming, Chris Melissinos, Seth Proctor, Jonathan Kaplan, Project Darkstar

Transcript:
Guest: Jonathan Schwartz - Sun
Guest: Paul Otellini - Intel

Jonathan Schwartz - Sun
Well, good morning everybody. I think we’ve got a pretty interesting day ahead of us. What I’d like to do is, first of all, welcome Paul and the Intel team. As somebody earlier remarked, it was interesting to see those two logos side by side up there, with no spontaneous creation of energy around them. We think today really changes the marketplace for Sun, it certainly opens up a new era in our future. We are really looking forward to talking through what it is that we’re all about.

So, what I’d like to do, and maybe give Paul an opportunity to take a little rest here, is actually talk back to a meeting, and I don’t know if you remember this Paul, but when I was announced as the CEO of Sun, that was back in April of last year, I made a series of phone calls, and probably first on the list was a call to Paul to say, surely, there’s more that we could do together. I mean we are really fundamentally engineering companies, we’re both really focused on innovation and opportunity. We then had dinner in a San Francisco restaurant, which Paul enjoyed a great deal, he came to my neighborhood, which I was happy about. We really got to talking about the marketplace, and it really struck me at that point, the more we talked, the more similarly we viewed the market, the more similarly we viewed the market opportunity.

A slide that can give you a little picture of that is really quite simple. The more folks come online, the more services they want to get access to. You want to get access to your Gmail account, you want to get access to your work, you want to get access to the new entertainment services. The more folks we could bring online, the more opportunity on the network, the more opportunity that would drive in the world’s data centers and network operation centers to fuel that demand. This is a very simple idea, but really the volume on the front end of this is what defines our markets. The accessibility, the affordability, and the innovation that really captivates consumers brings people online and creates economic opportunity, and certainly for Sun and Intel back in the world’s data centers.

So, what I thought I could do is just give you a little bit of a perspective on, not only our business model and the way we see the marketplace, but put our relationship today in the context of the business that we’re ultimately building, and then I will turn it over to Paul to talk about some of the things that we’re going to be doing together.

So, if you spend anytime around Sun, you’ll hear us talk about the four S’s. We’re basically in four businesses, and those businesses are Software, Server, Services and Storage. Now, for us those businesses are a Venn diagram, because there is a considerable amount of overlap between them. Customers really don’t want to have to make four entirely distinct and separate and disparate decisions, and similarly as an R&D company, we don’t want to have to do completely independent R&D to go pursue these marketplaces.

So, we want to leverage to the extent that we can the core innovations we have at Sun, the core systems engineering expertise, software expertise, and market expertise. To the extent that we can, that creates a very efficient model for R&D as well as a very efficient mechanism to go pursue the marketplace, but importantly for Sun, we cannot be just about our own intellectual property. We cannot simply attempt to lock piece A to piece B and piece C, that’s not how customers buy as we see in the marketplace, that’s not what ultimately we believe the market actually wants.

So, if you look at how we go pursue the marketplace, we tend to meet customers where they are today. Our servers at this point run both the SPARC as well as AMD, and going forward, the Intel servers we build are not just about running Solaris, they’re about running Windows, they’re about running Linux, they’re about running Red Hat.

The software we ship, and I’ll give you a graphic to really make this point in a moment, dominantly runs off of Sun hardware. The majority of the software that Sun builds is running on Nokia hardware or on Intel hardware or on — certainly non-Sun hardware, HP, Dell laptops and notebooks along with those systems and servers up in the network.

Our storage business tends to be very, very cross platform. A very significant portion of the storage we build in the marketplace, whether it’s archive systems or enterprise storage, attaches to an IBM mainframe or to an HP server, or to a Windows server.

Then finally our services business, customers don’t want to just go to a company they can support only its own products, they need those products in deployment attached to a world of other innovations and opportunities. So, really this is our view of the marketplace. We meet customers at the edges of this Venn diagram and then we do our best to bring them toward the centre, knowing full well, there’s only one customer in the world who only buys from Sun and that’s our Chief Information Officer and we don’t expect to clone him anytime soon.

So, fundamentally behind this is a very simple concept that I know — also, Paul and I spoke about, which is a belief that volume drives value. So, what you see up in front of you here is a chart showing since we announced the open sourcing of Solaris, announcing that Solaris would be cross platform, would run on anybody’s hardware, what happened when we left those downloads free onto the networks? So, you’ll see back in March of 2005, when we began this program, we have come close to, if not, I don’t have the exact numbers in front of me right now, around 7 million licenses total distributed out into the marketplaces, 7 million licenses. What’s truly interesting about those download figures is how significant a proportion of those downloads are actually running on Intel and x86 hardware out in the marketplace, nearly 70%.

So, 7/10 downloads, 7/10 of those licenses of Solaris into the marketplace were not running on Sun hardware, they were running on Intel innovation. They were running on systems built by HP and DELL and IBM, and clearly if there is going to be an indication of opportunity for us to work together, it looked an awful lot like, here is a great motivation. It’s evident that customers wanted us to work together, and so clearly we wanted to do exactly that.

So, I think you’ve seen some of the news come out this morning, but as we were discussing with the media this morning, you’ve seen one out of three elements of this relationship. To just walk you through what in fact is going on. We are announcing today a relationship in which Intel will endorse Solaris, will support it across a broad range of Xeon platforms, will agree to OEM Solaris out into the marketplace, and to ensure that the market gets the support it needs in running and optimizing Solaris on Xeon platforms. This is a market changing event. This totally changes the perspective that a customer has on how they can do business with Sun, and similarly how they can do business with Intel.

So, Intel has agreed to really promote Solaris, to help us collectively go off and build the marketplace and the ecosystem around that, and reciprocally Sun is announcing today that we are going to be building a complete line of Xeon servers as well as workstations, complementing and augmenting a very rapidly growing server business that we have at Sun. You’ve probably seen the double digit growth we’ve posted now for consecutive quarters. This just opens yet more opportunity creates more choice for consumers, and again, not just running Solaris, but running Windows as well as Linux that’s out there.

Lastly, and I think what’s most interesting to me is — in fact our teams had a dinner back in December to help prep them for working together on getting this agreement struck, and it was evident, we had all of the heads of our product businesses there, and similarly Paul had some of his leading products folks there as well. We’re both engineering companies, we’re both companies focused on technology, focused on the advancement of our own technologies, using process, using wisdom about the marketplace to create new innovations that really capture and captivate consumers.

So, we’re also announcing today that we’re going to be collaborating on the next generation of our software leveraging Intel software expertise, the next generation of systems leveraging Intel microprocessors as well as Sun Systems engineering capabilities. What does that hold for the future? Time will tell, we’re pretty certain you all will be paying attention to that, and certainly we think there is just a world of opportunity out in front of us. So, this is really a comprehensive relationship. This is not simply a buy-sell arrangement. This is a mechanism that brings the two of us together and creates new market opportunities and new options as well as new value for both of us.

So, the substance of our collaboration, why don’t I just quickly walk you through this, I think you can read this on your own. Again, from the Intel side, Solaris will now be a Tier 1 operating system in the Intel definition, which again confers upon Sun and the ecosystem built up around Solaris in the OpenSolaris Community, a great opportunity to go drive after the volume leading microprocessors in the marketplace. This really brings Intel’s involvement in not just the product evolution, but also the community evolution around the Open Source Java platform, NetBeans, as well as Solaris. Then importantly, Intel is going to help make sure that we know how to optimize Solaris well for Intel microprocessors, so we end up with a better total solution for customers.

On the Sun side, we’re certainly looking forward to building out uniprocessor Dual and Quad Core processor systems. I think we’ve also suggested that we’re not just going to end there, this is — again, we see the marketplace is growing, both in requirements as well as the need for scale. We’re going to be building out things that are greater than four way, and I don’t think it takes a lot of creativity to figure out what’s greater than four way, but it sounds an awful lot like an eight way. As we go — yeah, six way, probably not. Again, this is a mechanism for both of us to get together to do the engineering, to do the hard work, to invent things that really capture and captivate consumers.

So, with that I’d like to pass the pickle to — actually you have your own pickle. Paul Otellini, Chief Executive Officer in Intel. Thank you very much.

Paul Otellini - Intel
Thank you, gentleman. As Jonathan said at one level the very highest level, this is about Intel endorsing and embracing Solaris and this about Sun endorsing and embracing Xeon, but I think there is a lot more behind that story and to give you some of our perspective on that. I thought it has been just a couple of seconds talking about how we at Intel view the enterprise environment today. At the highest level, the biggest single thing that’s happening is it all data centers regardless of their size are now focusing on evolving to a service oriented architecture and what that means we’ve think about the data center providing the critical services for a company, large or small. It means you start worrying about the cost of that echoes of that environment. They overall ecosystem built out in a particular how you use your equipment.

Thinks like utilization rights of servers are becoming very, very critical particularly in the era of rising energy cause. So, you want to able to use them more, but also have them costless in terms of the overall construct at the data center. As this happens, we look at things that are important to CIO’s and data center managers today. One of the things that’s popped up to us is that Solaris is evolving as a mainstream operating system, as you saw some other rate on the downloads, but it also it’s mainstream and enough itself and just to the equipment the Sun ships.

Now we’ve the opportunity to have Intel Inside many of those boxes, but it is becoming as the slide as the Mission-critical UNIX for Xeon. What is that mean? It means that we can collaborate together to make sure that the feature sets that people are — who buyers are focused on that is availability, reliability, Demand Base Switching, virtualization those kinds of features can be unleashed from the microprocessor through the operating system into the hardware the people buy, this lowers are in customers cost and increases the utilization rights. It’s all very, very good.

All the customers are demanding more, more flexibility, interoperability that also a strong argument for us to work together Sun is in a unique position, rather unique position or being the operating system vendor and the supplier of the hardware. That means, we can collaborate to be able to take advantage of a lot of these deep features been in a microprocessors and surrounding architectures. Then the third point is the Intel architecture is expanding.

It’s expanding upwards into the high end of the data centers and downwards into mobile devices, but if you’re independent software developer, thinking about Solaris now, being able to think about Solaris and conjunction with Xeon, which is the volume leader in the marketplace. It’s really important to you as a software developer. You can now take advance of the install base of the Intel hardware that’s out there from Sun and other vendors, but also focus your efforts on Solaris. In terms on Solaris on Xeon in terms of being able to find new markets for your software. In terms of Intel in the enterprise, the driving feature in the enterprise is Moore’s law. It’s been sold for almost 13 years now and Moore’s law gives us more, more transistors.

Up until very recently, the more transistors met simply higher clock speeds. That’s changed it changed in the last year and it’s going to change. I think systemically going forward to where we’ll deliver more performance, but we do it through delivering multiple cores more and more cores of microprocessors on a single chip. That leads to overall lower power requirements, lower cost but gives people more performance. That transistor budget though the Moore’s law gives us, also gives us the ability think but it is the template to put new features on to the chips. You’re seeing Intel developed things like I/O virtualization.

Virtualization of the kernel capabilities to build or run multiple operating system environments on a single microprocessor, which is been true in mainframes for long time and now is coming down to volume-based servers. Intel — from our perspective has done a good job in the last year, meeting all of our commitments in terms of new products coming into the marketplace. We’ve been at or ahead of schedule on every new server chip we’ve developed and we now have industry leading performance on 28th of the top 29 industry benchmarks for servers in terms of performance or energy efficiency of those kinds of metrics. We were the first to market with quad Core. We started shipping quad Core in the third quarter and ramp that volume up in the fourth quarter.

Now you see our quad Core products setting performance metric records out in the industry. We’re stopping Jonathan talked about a deep collaboration. That collaboration goes beyond today’s products and we’re excited about working with Sun or what we can do tomorrow, not just 2007 but beyond. We have a lot of new and exciting products coming out on the next generation Silicon Technology, which is 45 nanometers. This technology is extremely healthy at our conference call last week. We talked about Intel now, microprocessors built on this technology, booting four operating systems and for those members of the press that are interested we’re going to have a deep breathing on 45 nanometers up in Oregon next Monday.

You can talk to our PR people. If you’re interested in attending that that would be one we can actually see what a construct of this technology is like, look the fab look at the products that have been built on it. I think it will be very exciting for you. We have three fabs coming up on this technology in 2008, but I think I talked enough about the technology maybe I think it would be best now to turn a back over to Jonathan and he can tell you about why he was interested in Intel.

Jonathan Schwartz - Sun
I offered earlier in the day to allow Paul to walk you through this slide. I am, so, thinking about this. This is actually as a very natural collaboration and I want to try to convey to you how we think about our business and how you should look about the some of the strategic moves you’re going to continue to see from Sun as we go drive forward. Every business we built at Sun is independent of the others. They are related to one another, but they cannot be exclusively dependent upon one another. If all we do is built software for our own microprocessors or our own systems. We’ll by definition not be able to go after – majority of the marketplace. The same applies for our storage business.

We cannot simply attach to Sun servers or to the Sun software that obviously misses the majority of the marketplace. By definition, we’re a minority of the marketplace and we’re looking forward to go participate in as broad a market as possible. So, you can dismiss the fact that one looking at our software business, there is a very natural relationship with the volume microprocessor leader in the marketplace. Again if you look at the numbers that are out there, if you look at where people built applications. They’re building them on Intel microprocessors they’re building them on laptops and notebooks, PCs as well as servers.

So, for us, this is an enormous expansion of the market potential, because we can leverage Intel’s brand, Intel’s reach, Intel’s momentum in the marketplace that gives to our consumers to developers as well as the enterprises, more choice and more options that creates more value for Sun. In the fact that we can reach a much, much broader marketplace.

So, frankly along with the technical expertise the fact that when we hurdle together, we end up having engineering interchanges, which create value for both companies. One of the most exciting things here and I think one of the things that is, is really the story underlying all of this. Is the fact that Intel and Sun getting together around the promotion and the endorsement of Solaris changes the game in the marketplace; what was, potentially in question two or three years ago, which is what happens to Solaris. Does it suffer the same fate as some of the other UNIX is in the marketplace that issue is now off the table.

We clearly have volume, we clearly can work together with Intel to amplify that volume and not just – go look at the market as it currently is and sharing a vision of where the market is headed next to what Paul just said? The fact that we can excitedly sit down with Intel and say tell us the features you’d like us to expose through the operating system. We’re already talking about I/O virtualization as well as the next generation of network optimization of application performance. These are the kinds of things we can do working together and again that creates market opportunity for Sun, creates adoption, and momentum behind Solaris, and if there is a better leading indicator for the future of Sun’s fortune, I can’t think of it than the adoption and the proliferation of Solaris.

So, tell us this is a very natural relationship, we’re very appreciative of the work that the Sun and Intel teams have been doing over the past 6 months as we tried to figure out or how is it we worked together. I think we have had a bit of an ebb and flow in our relationship and I think we’ve only been detecting flow in the past 6 months and I think we want to continue seeing that go forwards, so again this is to us, this is a historic moment. This definitively changes the game in the operating system landscape, changes the market opportunity for Sun gives developers that want to use technologies from Sun as well as from Intel new choices, new opportunities, new performance, new economics. The fact that we can give more choice to customers that ISV’s have a higher volume platform now to plan. There is just a tremendous opportunity both for the Intel side as well as for the Sun side.

So, we can do what we do best and in concert with Intel’s obvious strength and volume, and brand out in the marketplace. We can combine forces to really go after a next ways of opportunity. So, again, I don’t think we could be happy with the relationship, more expectant of the benefits. This is going to bring to us and to bring to customers ultimately at the end of the day. It’s all about them any ways. So, with that why not I turn it over to Russ and maybe we’ll field some questions.

Russ
So, we’ve got some folks moving around the room here with some microphones. So, in just a moment, we’ll start, but I’ll do have to ask you or we’re going to be online on the web, so I need to identify yourself and the company you’re with, so that people listening in and can also get that information and with that it also if you like to direct your questions to either of these two, just let us — let me know. So, with that I think we’ll start.

Tom
Hi, Tom Sanders (Inaudible) where will the Intel processor sit next to the AMD line?

Jonathan Schwartz - Sun
Right next to it; different boards.

Paul Otellini - Intel
Yeah, probably different boards; haven’t got on that level of collaboration yet.

Tom
I mean is it going to be — can I choose between a Intel skew and an AMD skew for the identical system or what is it going to look like?

Jonathan Schwartz - Sun
So, I guess two things, one, I’d refer you to John Fallow (ph) and he can talk about specifics of the segments we’re going after. The end of the day, customer will define that. The customer will determine what they want to buy from Sun and what the underlying infrastructure needs to look like? That applies by the way to software as well as hardware because we do an awful lot of business out in the marketplace now, satisfying Window’s demand as much as Linux’s demand.

So, that’s not so much a grand strategic plan about how we carve up the market that’s really a – let’s look at the marketplace let’s go figure out where Intel innovation really creates new opportunity, let’s go after that.

Ian Kinfer - Bloomberg News
Ian Kinfer; Bloomberg News. Jonathan. you mentioned number of facts is one into your decision, but all other the things you said about Intel is pretty much always been true of the Intel in terms of scale, size, power in the marketplace, so why now would be the question place.

Jonathan Schwartz - Sun
Well I think a few things, number one the fact that Solaris was growing as rapidly as that has not always been true. I mean go look at the chart is just been a rocket ride up into the right that changes again. Secondly our server business has been growing double digits and that’s over the past four consecutive quarters on the spot side, triple digits on the x64 side. Frankly I think we’re different company in were obviously coming at this relationship in a very different way.

Thirdly, I think there has been a change in our view of the marketplace and how we want to go after it, maybe leaving some of the rhetoric of the past behind us. Again, one of the first calls I made having gotten my shiny new job was to call Paul and say, “what can we do together?” because clear — of course, we’re going to compete we’re both very large companies. We compete with almost everybody in the marketplace, but where can we go collaborate to create value for both companies, so again this is an either/or relationship for Sun. This is very much in an relationship. I think it is also a reflection on time and place, but maybe I’d also ask Paul to respond to that.

Paul Otellini - Intel
Sure. From our perspective, this is not just a chip deal, that’s certainly is what we’re all about and is important to us from both the credibility standpoint and the commercial aspects of the relationship, but it is not insignificant for us to commit to endorsing Solaris. This means we’ll put deep engineering on it, we’ll put field resources on it and that is from our perspective not just because I like Jonathan, but I think it’s a really good commercial opportunity for us. The install basis Solaris in a lot of places where Intel is not in some cases. Financial services and telecommunication are two markets where Solaris is very strong there being able to offer an optimize environment on Solaris, on Xeon into those marketplaces, make sense for us and it goes beyond the traditional chip sales aspect of the collaboration.

Speaker
The questions (ph) seem to be very quick.

Merv Adrian - Forrester Research
Merv Adrian from Forrester. Can you give us a little color as to when you think you’ll start to ship systems. You said this year, but can you be anymore specific; you think it’s year end, you think it is going to come any quicker on that?

Paul Otellini – Sun
We’re shipping right now; Solaris running on Xeon - go to Sun.com/solaris, get it downloaded, run it. It runs well; it will only run better. And for the specifics of when we start shipping Intel systems, I guess I’d defer to John, late in the first half of 07. Can’t you do better than that John?

Stephen Shankland – CNetNews.com
Stephen Shankland from CNetNews.com. In the past, you guys have been concerned about keeping a cap on your R&D budget; clearly this increases the amount of R&D. You’ll have to do engineering; you’ll to do hardware and software qualifications and certification. I wonder if you can comment on how much of a difference this is going to mean to Sun’s business also in terms of – would just take some supply chain — are you - presumably you think it is going to be justified, but how important is that factor and are you going to be getting any help in those activities from Intel?

Jonathan Schwartz – Sun
Yeah and in fact just to the beginning part; this, is in our view, actually lowers the expense because now we’ve a collaborator who is willing to work with us to court and cultivate and invest in the success of the ecosystem. So, this is a way of making R&D much, much more efficient. We can do what we do best and really now work with Intel to make sure that they can bring all that Intel has to bear against ensuring the success of Solaris. I think the way we look at R&D, we’re not interested in – nor is Paul for that matter in capping R&D. We are interested in the return on R&D.

And so long as we can get a return, we are interested in amplifying that to the extent certainly possible. And I think this is a way of ensuring, we get a better return for the R&D we are doing. Again, Solaris just running on Sun — on SPARC Systems or just running on AMD systems misses the majority of the marketplace. We want to go after the majority of the marketplace. Sun simply delivering SPARC Systems or simply shipping AMD systems misses the Intel opportunity. We want to make sure we can participate in both equally. I think one of the unspoken assets that Intel has is, they got a big software team.

They know an awful lot about software; and the fact that we can get together to optimize Java, we can optimize Net means that we can optimize Solaris; makes their systems look better, makes our operating system look better, makes the overall customer set happier — that’s all goodness as far as I am concerned. And again, I don’t know if you want to add to that.

Michael Singer – InformationWeek
Michael Singer with InformationWeek. Talk about your — you might have alluded to it before, but what were the previous barriers, because both of you had guiders before you took your posts that had a different relationship than you two have today. What was it that broke down those barriers and for you Jonathan and then for Paul? Was it just that you had a new opportunity with Sun that allowed you to take that choice to make this decision today or can you kind of, give us some call on that?

Paul Otellini - Intel
I think it was a bottle of Barolo at Delfina; I think that really - really good bottle.

Jonathan Schwartz – Sun
You know leave history aside, we think — and I think what motivates both of us is, we think there is opportunity – let’s get busy - let’s get after the opportunity. And what do you got, what have we got, how do we put it together in ways that goes off and creates value. So I think, we’re both looking forward and looking at customers — and by the way, just talk to any customer out there; no one could possibly think that this is anything other than a brilliant partnership; all these does is create options and choice for them.

Paul Otellini - Intel
One of the things I think is interesting to observe is that we are coming together at a time when both companies had very positive momentum both in the market and in our products; a momentum behind Solaris, we had a momentum behind the double-digit growth in servers, momentum behind Intel’s new product lines and so forth. And I have always thought that momentum breeds momentum; and the idea that we could get — the two of us working together, could only multiply as what we could have done independently and that was the principal reason for me to really want to do this.

Audience Member
So Jonathan, you’re going to start releasing Dual Processors, Xeon Systems in the first half, which is pretty soon. How long have you actually been developing these systems and also can you comment on when you expect the 4P and uniprocessor systems to come; but basically when did you start working it? How long has this been under cover?

Jonathan Schwartz – Sun
We – and again just so you think about — we don’t take the team that’s working on these systems and have them completely segregated and isolated from every other team at Sun. We have really deep systems engineering expertise; and frankly, the fact that they were only working on SPARC - you know, microprocessors, under-leveraged the talent they had that could enable us to get into new markets. So we have a unified systems team at Sun that builds all the systems we build.

So, in that regard, along with Solaris, which is obviously more than two decades in evolution, we’ve been working an awfully long time in the same space. The question was, when were we really going to commit to build common products. And I think that relationship has been going on for a while, because we’ve seen one another in the marketplace so often.

So I don’t know if I could put a specific date on when did we actually sit down and say okay, what are the aspects and performance and in-outs and how do we go make this — just didn’t work that way. And in terms of the specific ship dates, I am not going to give that to you. You’d give it to the other guy. Yeah, it was a good try still. But again, I’d like to remind you, Solaris runs beautifully on Xeon, is available at Sun.com/Solaris.

Rush
I guess Michael.

Michael Singer - InformationWeek
On the software side, obviously Intel is adopting more the Solaris, but Jonathan talk about Intel software business, and what are the sort of gold nuggets within say TBB or BePro (ph) or what are the things that you’re looking forward to sort of enhancing that you may not already have in Solaris or NetBeans or Java for that matter?

Jonathan Schwartz - Sun
Are you asking him or me?

Michael Singer - InformationWeek
You.

Jonathan Schwartz - Sun
Let me give you a very simple example. Virtualization in a chip is less interesting if it’s not exposed by the operating system. If the operating system doesn’t know how to deal with it or leverage it or take advantage of it that makes the overall systems package less interesting. If we can synchronize and coordinate our releases around virtualization, whether it’s application virtualization, OS virtualization, or network virtualization, that’s only upside. I was with a customer just last week, who is in a very, very high scale and very high value environment, and one of the points they made, which was I think similar to the point that Paul made, is we’re the only company in the marketplace today that delivers both the operating systems and the underlying system infrastructure, the only one.

Now, a few years ago that was viewed as a deficit that was a bad thing, because that wasn’t the future. Well, now the fact that we can coordinate our releases and work with partners to make sure that we sit down with Paul’s team and say, what’s coming up and how can we help you amplify it in the marketplace, that adds value to them and also adds value to us. That applies across Solaris as well as Java. I mean again, to really understand the Sun model, we want Solaris to absolutely scream on Xeon, to blow everyone else in the marketplace away.

Paul Otellini - Intel
If I could just jump in there. The two other areas I think would be interesting, at least from our perspective. Solaris being able to take advantage of Intel’s I/O acceleration technology for the whole I/O part of the system to run faster. Demand based switching, so we can move task back and forth very quickly, exposing that from the hardware to the operating system would be very interesting to us.

Jonathan Schwartz - Sun
Ultimately, if we do a better job of optimizing Solaris on Xeon, because we can, then that means it’s going to win in the marketplace, but we want to present customer with choice, we want to do what we can to amplify the best of everything we build.

Rush
Steven.

Jonathan Schwartz - Sun
Don, you’re silent back there, what’s going on?

Don
Happy to yield the mike down.

Jonathan Schwartz - Sun
I read your blog, I can start asking you questions now. So Don, what do you think of the deal?

Don
So, where do you see now SPARC and Itanium competing in the future, how do you divide the x86 line from the SPARC line, and in your case, Paul, the Itanium line?

Jonathan Schwartz - Sun
We don’t divide it, we try to go after as much market as we can, but these are loosely coupled than highly aligned business, and so we want to see Solaris succeed on all platforms on which it ships. The fact that we’ve got four consecutive quarters of growth behind us suggests there is more than enough opportunity across all the disparate product lines. We want to go after all the opportunity and not just isolate ourselves to one.

Paul Otellini - Intel
I guess for my perspective, the very positive part of this relationship is the ability to work together to get the Xeon based systems greater than four, up and running, and delivering really good results into the marketplace. Sun is a good company to collaborate with from that perspective. I think it will be the wrong thing to do to reopen the religious war or Itanium. Itanium is a separate product line right now, Solaris does not support Itanium. If they decide to support it, we’d love it, if they don’t, that’s just business decision on their side.

Russ
Steven.

Steven
So, related question, which is big-iron on x86, it’s something a lot of people have tried for a very long time, Sequent, all these companies that have vanished into the midst, and it’s something I guess really, IBM is the only enthusiast for, do you think that Sun is going to be the company that finally gets big-iron x86 to break out, Paul?

Paul Otellini - Intel
Gosh, I hope so, but…

Jonathan Schwartz - Sun
He meant to say yes.

Paul Otellini - Intel
The reason I said that is, is that there are other customers working on 8 and above Xeon as well, not necessarily in this country, so you probably don’t have as much visibility to them, but we see that happening elsewhere. I think that in — if you look at, from our perspective, a snapshot or a side view of the Solaris marketplace in terms of some of those very critical mission, mission critical markets and data intensive markets like financial service or Telco, well, the thing is it has to be reliable has heck, that allows us to get Xeon into the space where it isn’t really today.

Jonathan Schwartz - Sun
Maybe then to give you more confidence in that, the single biggest determinant of the success of a high scale x86 system will be the popularity of the operating system that runs on a single socket x86 system. You cannot start by saying I’d like to build a 16 way x86 system, and oh, I would probably need an operating system. No one starts their business on a 16 way system, they all start their businesses and they all start their projects on one way.

So, the fact that we can show up in the marketplace with a one socket system that — I mean again, this is the recipe we know well. What’s led to the success of Sun Systems business is the fact that we’ve had complete binary compatibility up and down the product set. So, the fact that we’re going to be in this space with our own systems, and by the way with an operating system that eats threads for lunch and scales beautifully, should give us a little bit of a boost that maybe some of the other players haven’t had.

Russ
So, I think I’m going to have one more question here. So, if anybody would like to be the last questionnaire, that would be great, if not, we will end early. Michael, give it another go?

Speaker
No question Duncan.

Audience Member
So, the last question is on Service Oriented Architecture, SOA. We’ve heard about writing to the chip, writing to the OS, we write to the SOA stack, so what is it that you now bring to the table, Paul, that wasn’t previously already there with the current processor systems that you have in place Jonathan?

Paul Otellini - Intel
I’m sorry, what is it, that we bring to the…

Audience Member
Yeah, what is that you’re now bringing to SOA that Jonathan couldn’t do already?

Paul Otellini - Intel
Well, on his SPARC side, he’s been doing it for sometime. On the x86 side, I think we’re very comfortable with our first implementation, a visualization. We’ve a second instantiation of that coming down the pipeline that I think is substantially better than the competition. We have other things I talked about earlier in terms of I/O Acceleration, demand-based switching. The terms of the ability for us to use the advance silicon technology we’re about to deploy, to deliver not just performers, but energy efficient performers, leadership, makes the end systems better. SOA isn’t just what it does, its how it does it and how much does it cost, and we think that we help that whole equation in terms of power performance.

Jonathan Schwartz - Sun
Just to amplify what Paul said that, the single biggest issue with SOA in the marketplace — and look SOA is a horrible buzzword, and we can all agree that it represents something, but no can quite identify what it is. The single biggest issue in the data center, just economics, brutal efficiency, environmental capacity, that I think is — that’s become the dominant issue in large scale enterprises, that’s very different than developer productivity, where obviously we’ve been making a lot of progress with NetBeans and the Java platform.

So, I think just ending here, I want to thank Paul specifically and also especially the Intel team. This has been a long time coming and I know there’s been a lot of hard work that’s been put into it. We are thrilled to death with the market opportunities. We’re both going to go evolve and couldn’t be happier with the progress we’ve made to date, and couldn’t be more excited about the progress we’re going to make in the marketplace. So, thank you all very much.

Paul Otellini - Intel
Thank you.

Jonathan Schwartz - Sun
It is much appreciated.

Paul Otellini - Intel
We iterate that from our side, thank you.

Jonathan Schwartz - Sun
Good.

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Tags: Sun, Jonathan Schwartz, Intel, Paul Otellini

Transcript:
Host: Paul Lancour - PodTech
Guest: Jean Bozman – IDC

Paul Lancour - PodTech
Sun Microsystems and Intel Corporation announced a major agreement on Monday, between the two companies. The alliance is centered on Intel’s endorsement of Sun Solaris Operating System and Sun’s announcement that it will be delivering Servers and Workstations, based on Intel’s Xeon processors. The announcement was made by Sun’s CEO Jonathan Schwartz and Intel’s CEO Paul Otellini, in San Francisco. Jean Bozman is Research Vice President of the Enterprise Computing Group at IDC. I caught up with her shortly after the presentation at St. Regis Hotel.

Jean Bozman - IDC
I have covered Sun since the 80’s. It’s pretty much why I wanted to see this because if you look at it in historical perspective. This is very interesting, this is something that a lot of people thought, would never happen.

Paul Lancour - PodTech
Why not?

Jean Bosman - IDC
Because, if you look at the history there were a number of point products that they did work on together if you go back, in the 87 to 90 period, they had a workstation and they had Intel Inside, if you want to say,. And then there was the LX50 more recently, which was an Intel based Server in 2002 and they had sort of Blade Server BX2000 I think, it also had Intel based Blade, but when they made those other ones, is particularly with Microsoft, with AMD, it’s sort of seemed like all the issues they dropped drop in the sense, this is one that I think that people had not anticipated because again, they had these point products, but no big, squashy announcement like this.

Paul Lancour – PodTech
So, they have a history with Intel. This is a much different an announcement that they are making today. What’s going on now in the marketplace for both Intel and for Sun that makes it a good idea for that process?

Jean Bosman - IDC
Couple of things, there are some trends out there. One of the primary, which is virtualization and with this virtualization trend what’s happening is we take something on the x86 server platform, which IDC defines, as an x86 architecture including both, the Intel microprocessor and the AMD microprocessors under that x86 name. If you look at x86, and so many virtualization products out there, in fact that’s last form. Sun talked about its virtualization offerings. What you find is, in old days we had a one server, one OS kind of approach to everything, all across the board.

Today things are a lot more kind of put together almost in the same platform at times and in fact you were able to have Solaris on x86, although you’ve got it from an OEM, who would certify it. For example, whether it was a desktop or server that was available. What this does ,what this alliance does it allows for a deeper kind of engineering and optimization, so that any time you have the operating system in the hardware and worked under the same team, you can speed up the functionality that’s true with any OS hardware combination.

So, but in fact they are working more directly here you can expect some optimization perhaps in some specific areas where Sun really has some speed spots, for example in the networking area, in the Telco infrastructures where Sun is very, very strong. There’s a lot of customized or custom Solaris code within the Telco infrastructure we’ve been looking at that as I can see as a matter of fact. And some of the hardware that is running out it is a little bit on the older side, what this does is, it provides yet another platform for that Solaris code to go to in future.

If you look at it Solaris is a very scalable operating system. Mostly x86 servers that you see today in general I think, I don’t want to name the amount of processors, but they tend not to be very large, is the opportunity for some vendors out there, who might want to make a more scalable servers based on X86 technology so another possibility.

So, there is optimization, there is virtualization, there is new potential partnerships with OEMs and sweet spots within the market, networking, Telco, maybe database, certain areas where Sun can demonstrate an expertise in supporting those workloads. So, we talk about workloads a lot at IDC, we tend to work on it.

Paul Lancour - PodTech
Looking at it from Intel’s point of view, there are market areas that they are not strong in that to — Solaris will allow them to penetrate more deeply.

Jean Bosman - IDC
Well, it’s just that you have to understand that we are in the middle of a period of IT transformation and if you work at it, there are lot of areas Telco was just one example there were others, where there has been a lot of Sun’s trends, financial services, Telco. And again, you have Solaris applications written there already. So, the idea is, here will be more places whether it would be more servers, whether it would be more virtual spaces on those servers either way. There would be more places for that combination to be run out in the environment.

The other things for interests is with virtualization such as VMware, what you are able to have is, you are able to have Solaris next to Linux, next to Windows on the same server. And again that’s a real change from that, one server, one OS, world that we had at the height of the behind of the dot com bubble, this is a different world.

And I think what you see now is it Sun and with Solaris and Java is covering all the major types of platforms they had (Inaudible), they have their own CMT chip multithreading, they still have AMD and now they are adding one more. But I think what they are doing there, is realizing whether there’s going to be a wide IT infrastructure and they want to be active in as many places on the infrastructures as possible, because it’s going to be a lot of end to end applications that are going to spin the whole enterprise and want to be able to run Solaris and Java in as many places as possible.

Paul Lancour - PodTech
Am I right in saying that the big picture on this that is being driven by the hardware in the fact that…

Jean Bosman - IDC
The hardware is being virtualized.

Paul Lancour - PodTech
The hardware is getting the coverage virtualized; they have the Duo and the Quad and the multicore…

Jean Bozman - IDC
There is a lot of power out there.

Paul Lancour - PodTech
There is a lot of power, there is an opportunity to work across operating systems and so that’s what’s driving a lot of…

Jean Bozman - IDC
well and there is something else, all of this is causing or bringing about a lot of customer choice that wasn’t there it works well, and realize that even with today’s announcement, customer still has a number of choices here with this Sun Technology stack, they can go on several processors, including two or three of Sun’s. And they can then again take their software and run on a variety of processors as well. So, it’s just really increasing the number of options that are out there, for people who already have source application, for people who are thinking of writing, or people who are thinking of moving them from one place to another.

Paul Lancour - PodTech
Ultimately the customers are going, is going to shake out ultimately by what the marketplace does. I mean it is not giving as many options to the customers, you can and then…

Jean Bozman - IDC
It’s what so hard for people to understand, if I work at a large enterprise today almost any large enterprise, I can go there and survey those large enterprises and finding a place that doesn’t have multiple operating systems and multiple pieces of hardware, would be the exception, rather than work.

So, there is already a great amount of variety, but before we had the Silos right, so here is this part of the shop, and there is that part of the shop, what’s changing out there again, to this virtualization and then changing the hardware, so that the workloads can move more freely around the network, it kind of place to Sun’s tray this is what we said and the network is the computer. So the more network centric something is, the better Sun could demonstrate this value proposition for. There is they are not going to take over the entire x86 market, this improves their position in it.

Paul Lancour - PodTech
Thanks very much for taking the time with us.

Jean Bosman - IDC
Well thank you. I finally got a Podcast, alright.

Paul Lancour - PodTech
Jean Bozman, Research Vice President of the Enterprise Computing Group at IDC. I am Paul Lancour with PodTech.net.

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Tags: Jean Bozman, IDC, Sun, Intel

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Transcript:
Host: Paul Lancour - PodTech
Guest: John Fowler - Sun Microsystems
Guest: Pat Gelsinger - Intel

Paul Lancour - PodTech
I’m Paul Lancour with PodTech.net. Sun Microsystems and Intel Corporation today announced a major agreement between the two companies. The alliance is centered on Intel’s endorsement of Sun’s Solaris Operating System and Sun’s announcement that it will be delivering servers and workstations based on Intel’s Xeon processors.

The announcement was made by Sun’s CEO Jonathan Schwartz and Intel’s CEO Paul Otellini in San Francisco. Shortly after the announcement I met with Pat Gelsinger, Senior Vice President and General Manager of Intel’s Digital Enterprise Group, and John Fowler, Executive Vice President of the Network Systems Group at Sun, to discuss the announcement. Sun has featured some Intel processors in their servers in the past. I first asked John Fowler how this announcement is different.

John Fowler - Sun Microsystems
The historians will know that we actually used Intel processors actually going back into the 80’s and so from time to time we had products that include Intel processors, but what we did a few years ago was fundamentally change our strategy. The strategy changed in that we took Solaris and we open sourced it as well as making it widely available on x86.

The second change of strategy was we decided to get very serious about building a comprehensive product line out of x86 processors, which at the time we chose AMD and so, we’ve been doing very well. We’re sort of three years in this journey. We’ve been growing it more than 50% per quarter with that product line and so we reached a point where Intel had also recently done a vast improvement in their technology. So, we saw an opportunity to work together on some things.

Paul Lancour - PodTech
And the result of your efforts is Solaris has seen significant growth of late and Solaris is running on — was it 70% non-Sun?

John Fowler - Sun Microsystems
That’s right. Yeah, so there has been approximately seven million licenses distributed and of those 70% are on x64 platforms; the majority of which are HP, IBM, Dell that is, I mean, our numerical volume today is relatively low in that marketplace. So, those are mostly running on non-Sun which is a pretty interesting statistic. We, actually — when we do licenses, we ask people what are they going to use them on, and that’s how we track it.

Paul Lancour - PodTech
So, essentially what you’re saying is that this is a — the marketplace dictated this to a great degree?

John Fowler - Sun Microsystems
Yeah, so what has happened is, Intel has improved their technology and then interest in Solaris continues to go up and so building out a product line that includes the Intel products, and then — most importantly, I think here is, Intel is collaborating with a great engineering expertise and actually improving Solaris and making it better. So, it’s not just that they are just endorsing it. They are actually going to work on making it better with us. So, before we had to do that independently; now we can do that with Intel and that ought to really move Solaris ahead even faster on Intel.

Paul Lancour - PodTech
The collaboration with your teams of designers?

John Fowler - Sun Microsystems
Absolutely, so the engineers will be able to work on lower level features, on performance, on I/O, on reliability, to be able to work on these features in advance of Intel’s Silicon actually being available, so they’re ready to go when Intel Silicon comes out. These features will work on both systems that come from Sun as well as systems from other manufacturers such as Dell, HP and IBM, which is something that’s very important to us and obviously important to Intel as well.

Paul Lancour - PodTech
You say it is also driven not just by the marketplace, by the dictates of the customers, but also by the advances that Intel is making. Can you give us a little more information about that? What’s happening in the marketplace in terms of the hardware that’s making this happen?

John Fowler - Sun Microsystems
Well, one of the things that Intel has done is they’ve recently introduced revisions to their products, the Intel Core 2 Duo products, as you see under code names like Woodcrest and Cloverton, are very, very compelling microprocessor products to build servers out of. So, at the same time we were improving Solaris, Intel was also improving their technology offerings to build servers out of them. So, the timing is right to actually kind of put some of these efforts together, both in terms of a hardware product line that we bring forth as well as what Intel can do to accelerate our activities around Solaris.

Paul Lancour - PodTech
John, thanks very much for taking the time and now I’ll turn to Pat Gelsinger, with Intel. Pat, how’re you doing?

Pat Gelsinger - Intel
Very well, thank you.

Paul Lancour - PodTech
Very exciting day for you today with this announcement and I just want to piggyback on some of the things we were talking to John about, what is going on with Intel? Perhaps you can talk about, more specifically, the — are we seeing a shift in what’s going on in the marketplace that’s different from just a wrapping up or things are going to change drastically in the near future for your business?

Pat Gelsinger - Intel
Well, in data centers new technologies like virtualization, are becoming more important and the result of that is that this ability to take advantage of new capabilities like we’re doing in hardware and combining that with software and system features, like what Sun has a great strength in, is a great technological partnership and marriage. Our objective in this is to uniquely deliver those into the industry. That’s why today’s announcement is very exciting to us. It is a company who has those competencies, working with our engineers and delivering breakthrough capabilities into the industry, as we think no one else really can.

Paul Lancour - PodTech
One of the things that was being talked about today in the presentation is Moore’s Law being not just clock speed but also being able to diversify the way you use the chips. I wonder if you could give us a little more information about that.

Pat Gelsinger - Intel
Certainly, what we’re seeing is, is that very quickly we’re moving up to higher core count systems, higher thread capabilities as well as new technologies like virtualization, I/O technology, demand-based switching. The result of that is, is that the demands on the system to take advantage of that and to fully deliver those capabilities, really required this intimate co-operation of hardware and software.

That’s really what the great opportunity with Intel and Sun coming together today is, is to take advantage of technologies where Sun has shown tremendous capabilities in their Solaris offerings and to combine those with what we’re doing in Silicon and deliver the full capabilities of Moore’s Law into the industry.

Paul Lancour - PodTech
What was this specifically about Sun that was appealing to Intel when making this agreement?

Pat Gelsinger - Intel
Sun has, with the Solaris Operating System, the Java capabilities, what they’ve been doing in their Intel Architecture based systems over the last couple of years has shown a great ability to deliver and grow in this segment of the marketplace, and particularly at the higher end of the marketplace where our traditional share hasn’t been as strong. So, now this is an opportunity for us to extend the reach of Moore’s Law as we never have been able to before.

Paul Lancour - PodTech
Let’s talk about the specifics of the deal, so Intel has endorsed Solaris, Sun is going to be building out servers that will be out later this year?

Pat Gelsinger - Intel
Yes, the Sun has announced that they will be offering a full range of Xeon based platforms in the marketplace. The first of those will be out in the latter part of the first half of this year. So, very soon engineers are working like crazy to get those done and a full line from UP’s through MP’s enterprise, Telco workstations, so, a very broad set of product offerings.

In addition to that Intel has announced that we will be putting dedicated engineering and working with Sun at their development efforts in Solaris as well as on Java. We also have a comprehensive marketing strategies as well that go behind the relationship and then maybe the most important element is the deep technical collaborations that go behind those, which mean that it’s a multi-generational, multi-year, multi-generations of technologies and products into the future.

Paul Lancour - PodTech
Great! Well, thanks for taking out the time today to talk with us Pat and congratulations.

Pat Gelsinger - Intel
Thank you very much. A great pleasure.

Paul Lancour - PodTech
That’s Pat Gelsinger, Senior Vice President and General Manager of Intel’s Digital Enterprise Group and John Fowler, Sun’s Executive Vice President of the Network Systems Group. I’m Paul Lancour for PodTech.net.

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