After years of battling Microsoft Corp., Sun Microsystems Inc. has set its sights on Linux vendors, seeking to jump into a low-end but high-volume market that it's been accused of ignoring.
Sun executives plan to meet today with Wall Street customers to tout the company's aggressive move into an area dominated by vendors that sell systems running so-called commodity chips and low-cost Linux software.
The beleaguered server and software maker says tests show its Solaris operating system, running on a server with Advanced Micro Devices Inc.'s Opteron microprocessors, is cheaper and performs better than a similarly configured system running Red Hat Inc.'s Linux.
"There is a large-volume party going on at the low end," said Anil Gadre, Sun's chief marketing officer. "To be candid, we have not been a participant in that party."
Sun, which made billions of dollars selling high-end systems with its own Sparc chips and Solaris software during the tech boom, lost business as customers realized less expensive chips and low-cost software like Linux could serve their needs.
But, analysts say, it's not clear whether Sun's latest drive into cheaper servers will help its financial situation.
In its last fiscal year, Sun lost $388 million on sales of $11.19 billion, compared with a loss of $3.43 billion on sales of $11.43 billion in 2003. Its 2004 losses were buffered by Sun's $1.95-billion gain from a settlement with Microsoft.
"There are questions around how well Sun can do making money off of those low-priced products," said Gordon Haff, an analyst at research firm Illuminata.
Sun also finds itself in the awkward position of criticizing and embracing Linux, the operating system that it uses in some product lines but competes against in others.
Linux was developed by a community of programmers, with no company owning the intellectual property.
Red Hat, like Sun, makes money by offering support and services to companies that choose to use Linux, which is freely available. Sun, however, also sells its Solaris operating system, which is proprietary.
The company's next version of Solaris, which is expected to be available this year, will allow users to run all their Linux software without having to make changes to the underlying code.
Sun also plans to make Solaris open source, though it has not specified the terms of the license.
Shares of Santa Clara, Calif.-based Sun closed unchanged at $3.94 on Nasdaq. They have lost more than 16% of their value this year.