Hewlett-Packard ( HPQ - Get Report) and Sun Microsystems ( JAVA) have formed an unlikely alliance in an attempt to combat the recession. The server rivals unveiled the partnership Wednesday, touting a multi-year deal to distribute Sun's Solaris 10 operating system on H-P's Proliant servers and blades. "We're so excited about Sun and H-P getting together," said John Fowler, executive vice president of Sun's systems business. "It dramatically expands the available market for Solaris on x86 servers." Sun has already clinched similar deals with IBM ( IBM ), Dell ( DELL), Fujitsu Siemens and Intel ( INTC - Get Report), but the H-P deal offers a major boost to Solaris. H-P is the dominant player in the market for servers built with x86 processors, according to the latest figures from technology analyst firm IDC, a scenario that Sun is keen to exploit. Despite throwing its weight behind open source technologies such as Solaris, Sun has not had the easiest of times in recent years. The firm, which faces stiff competition from H-P and IBM, has been struggling with falling sales and an increasingly tough economic climate, resulting in a recent slew of job cuts. With some of Sun's server lines taking a pounding, the Santa Clara, Calif.-based firm is shrewdly attempting to piggy-back on H-P's popular x86 family. Clearly aiming to challenge Microsoft ( MSFT - Get Report) Windows and Linux software in the x86 space, Sun also promised further integration of Solaris and H-P software. The partnership, however, had little effect on Sun's share price, which slipped 21 cents, or 4.25%, to $4.73 Wednesday as the Nasdaq fell 2.08%. H-P investors were also unmoved by the deal, and the tech giant's stock slipped 3 cents, or 0.1%, to $29.59.
On the surface, Sun appears to have more to gain from H-P than vice versa, although the latter says that its x86 customers were clamoring for Solaris. "This agreement represents a very important milestone - customers can now standardize on a single provider," said Mark Potter, general manager of H-P's BladeSystem and Insight software businesses. "Now there is a single point of purchase, contact and availability." However, the tech behemoth has no plans to distribute Solaris on its Integrity line of servers, according to Potter. "Integrity and HP-UX are very closely linked," he said, explaining that the servers will continue to run H-P's version of the Unix operating system. Potter was also quizzed about H-P's ongoing relationship with linux specialists Novell ( NOVL) and Red Hat ( RHT), which also distribute their software on the company's x86 servers. "There's no impact to these other relationships with what we're doing," he replied, adding that H-P will also be working with its channel partners to sell Solaris on x86 hardware. H-P, which was seen as one of the tech stocks most likely to weather the recession, recently reported a 13% drop in its first-quarter profit. Despite a rocky first quarter, however, H-P's long-term story is still intact thanks in part to its booming services business, which Sun is clearly hoping to take advantage of. At least one analyst thinks that the deal gives H-P another bullet for its "elephant gun." "We believe HP wins by promoting increased options for customers, particularly for mission critical sales of its ProLiant servers," wrote Stuart Williams, senior analyst at Technology Business Research (TBR), in a note released Wednesday. "Among existing Sun customers, HP now has a stronger value proposition." The analyst, however, believes that Sun stands to gain the least from the agreement. "HP will gain support revenue that might formerly have gone to Sun," he explained. "
But Sun could win just through the expansion of its addressable market -- HP has a commanding lead in both the x86 and blade server markets."