Sun Looks for a Sparc

The Sun Microsystems (SUNW) revival pitched its tent in New York on Tuesday, where the company treated the faithful to the unveiling of a much-anticipated new server line.

The product launch, at the heart of Sun's efforts to remake itself, presents an opportunity for the company to rekindle interest in its Sparc processor business and to broaden its customer base.

But while analysts say the new servers are a great technological innovation from Sun, success in the market is far from guaranteed.

The company rolled out the new servers at its network computing event, along with a simultaneous blitz of news releases and customer testimonials. Among the early adopters of the product: eBay(EBAY) and Air France.

The servers are based on Sun's UltraSparc T1 processor, formerly code-named Niagara, which the company initially had planned to release in 2006. The first T1-based systems available are the Sun Fire T1000 and T2000, which start at $3,000 and $8,000, respectively.

Sun shares were up 1.5% at $4.06 in midday trading.

Sun says that the servers are specially optimized for Web-based tasks like processing online commerce transactions. The T1 processor at the heart of the servers features up to eight cores, each capable of running up to four threads, for a total of 32 simultaneous threads.

They're also incredibly power-efficient, a trait that's become increasingly important for corporate technology buyers whose datacenter operations require massive amounts of energy to keep running.

Sun is giving customers a significant performance gain at a fraction of the energy consumption and a fraction of the price of the competition, says David Yen, EVP of Sun's Scalable Systems Group. "Altogether it's going to drastically change the economy for the modern data center," he says.

The big question for investors though is whether the new servers will drastically change Sun's place in the server market. Its Sparc-based servers appear to be falling out of favor with corporate customers.