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View from the Hill:

The Emerging Bright Spots in the Sun Compatible SPARC Systems Market

Zsolt Kerekes - Publisher
Zsolt Kerekes is the editor
and publisher of the
SPARC Product Directory
and STORAGEsearch.com
January 09 - 2002 article by Zsolt Kerekes
See also:- article:-the Rise and Fall of the SPARC Workstation Market
article:- Looking Back on Sun's Cache Memory Problem
article:- 2001 a Year to Forget - Storage Retro by Jean-Jacques Maleval
Squeak! - The Top 10 Storage Software Companies
article:- Looking Back at 3rd Party SPARC Technology Firsts
articles, SPARC News, STORAGE News, Market research, SPARC History

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Last year was the worst year in Sun's 20 year history.
The combination of the IT recession, 9/11, and Sun's shooting itself in the foot with technical problems in its cache memory (thereby blowing away its hard won reliability image advantage over Wintel) and the slowness of developing faster SPARC processors could leave you with the false impression that all was doom and gloom in the SPARC systems market.

Not so.

Despite the computer industry having a bad time in 2001 (lowlights included the first ever year to year decline in PC shipments, and the biggest ever losses in the semiconductor market) there were a few bright spots emerging which you may have missed, if you thought Sun's fortunes were typical of the SPARC market as a whole.
  • The rackmount SPARC server segment continued showing double digit year on year revenue growth as customers turned to telco style packaging to reduce cost of ownership. This trend was also reported in the Intel architecture server market, and was a very fast growing segment for Dell Computer. Because rackmount configurations require a high degree of customisation and testing to meet specific user requirements, this is a segment that's not actually dominated by Sun, even though many (but not all) of the companies in this market area do use Sun motherboards. The "pile them high and ship them fast" strategy which worked so well for Sun in the boom dotcom days, doesn't work in this more conservative market segment.
  • The military SPARC market started apprehensively in 2001 as manufacturers and integrators expected to feel the cold winds of the budget cuts promised by the Bush administration finally working their way through to them. But 9/11 changed all that. Most integrators in this market have been reporting publicly (and privately) an upsurge in spending. For the US government national security has replaced tax cuts as the #1 priority, and the underinvestment in security and and defense during the last few years is now seen as a mistake. 2002 and beyond will see high growth rates for companies in this area.
  • The fault tolerant high-availability SPARC server market saw many companies reporting very high double digit revenue growth in 2001. Originally this was a niche segment within the telecom market, but I expect that this kind of system will branch out into the mainstream, and the whole segment could easily see 50% year on year growth in 2002. Although Sun has a toehold, it is really a bit player in this market. Nevertheless Sun benefits from supplying cPCI SPARC motherboards to some of the HA SPARC companies (although Force Computers actually ships more SPARC cPCI cards than Sun.)
  • The SPARC portable market, like the Intel portable market, has not seen the same down downturn experienced on the desktop. While figures are not available, we've seen a new entrant Naturetech coming in to challenge the market leader Tadpole. Several other companies also have toeholds in this market, and if the desktop market continues to decline during 2002, we may see more viable alternatives appearing in a portable format.
Outside the SPARC market, other fast growing segments in the enterprise computing market included:-
  • Solid state disks (which many users are turning to, to speed up their SAN access). This segment saw a 500% year on year increase in buyer interest during 2001, and despite falling memory prices, many SSD makers reported high double digit revenue growth during that period. I expect this to accelerate during 2002, as more users become aware of the benefits of using this type of technology.
  • Many companies in the Tape library segment reported double digit revenue growth during 2001 while remaining profitable. Increasing volumes of digital data everywhere make libraries the most cost effective way of archiving network information.
  • The wildcard, and unexpected success story in 2001 was the huge surge in interest in iSCSI. The cutback on IT spending has made this look like an attractive option for mid range users who have not yet wired up with Fibre-channel. It offers the promise of getting some SAN functionality by leveraging existing IP networks. Capability is one thing, but performance is another. But many users will be happy to use the off-site disk synchronization offered by iSCSI and don't really need the faster performance of fibre-channel in their internal networks. There are few real products in this market, and many vendors have been taken by surprise by the speed with which this new concept has been picked up by the user community. If "interest" translates into "buying" then this will be one of the fastest growing product areas in 2002, and could do much to restore the sagging fortunes of Cisco and other IP switch makers.
And what about Sun?

Although, the prospects for many SPARC companies look good for 2002, Sun, like most large corporations will be slower than more nimble medium sized competitors to react to changing customer needs. It demonstrated its inability to do that in the fast growing network storage market in recent years, where despite its best efforts it has lost significant market share. It may be 2003 before Sun again reports quarterly revenues as good as its historic highs.

In 2001 Sun proved what many in the semiconductor market have been saying for years, that Sun's strength lies in writing C code, operating systems and compilers, and not in chip design. Unless Sun can cure the constipation in its chip design area to get faster products out the door, it will lose more enterprise server market share to the faster Intel chips.

This may be the best opportunity ever for Fujitsu to show its chip making prowess. The 2GHz SPARC chips are what the market is waiting for.
later...

Gartner Dataquest Reports on the Server and Workstation Markets in 2001

SAN JOSE, Calif. - January 30, 2002 - in 2 press releases today Gartner Dataquest reported on workstation and server shipments in 2001. The results, below, are preliminary. Final statistics will be available soon to clients of Gartner Dataquest's related research programs.
Sun Microsystems
2001 Unit Shipments
(Market Share)
Sun Microsystems
2000 Unit Shipments
(Market Share)
Workstations 283,298 (19.6%) 336,367 (20.7%)
Servers 254,053 (5.8%) 289,231 (6.7%)
Source:- Gartner, Inc.
Workstations

The year 2001 marks the first time in the history of the workstation market that the industry experienced a decline in shipments from the previous year. Dell extended its lead as the No. 1 vendor in worldwide workstation shipments, as its market share grew to 32.4%. IBM was the only other top 5 vendor in 2001 to experience an increase in shipments from the previous year

Servers

The worldwide server market in 2001 experienced its lowest annual growth rate in unit shipments since 1996. Worldwide server shipments totaled 4.4 million in 2001, a 1.8% increase from 2000. Compaq remained in the top spot with 23.3% of the worldwide market share, followed by Dell and IBM, with 16.1% and 15%, respectively. Dell and IBM were the only vendors to record positive year-over-year growth. ...Gartner profile
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