Sun Expands Its Server Galaxy

The company looks to spark its shares by beefing up its blades offerings.
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Sun Microsystems

(SUNW) - Get Report

will launch a line of blade servers on Monday based on a new design that it hopes will change the competitive landscape and the sluggish nature of the company's shares.

The new servers, developed under the "Galaxy" title, have been highly anticipated not only because of Sun's absence from the red-hot blade server market. They're also the initial products from a multiyear development project led by Andy Bechtolsheim, the highly respected Sun co-founder who returned to the company last year.

Sun is touting the servers as having price, performance and power advantages versus competing offerings.

They use

Advanced Micro Devices'

(AMD) - Get Report

Opteron processors, with the initial launch consisting of two Galaxy servers that each have two dual-core processors. The product line, being marketed under the Sun Fire xSeries brand, will eventually expand to accommodate servers with eight dual-core chips. The two Sun Fire blades will be priced from $2,100 to $2,600.

"This will improve significantly our competitiveness in the marketplace," said Graham Lovell, senior director of x64 servers for Sun.

Also on Monday, Sun will introduce a single processor blade server priced at $750, and the company will begin to offer support services for the

Microsoft

(MSFT) - Get Report

Windows operating system.

Lovell said this, too, would help Sun's competitiveness. "We're getting some excellent opportunities with customers that want to standardize on our platform, but they need us to support multiple

operating systems," he said.

The new servers have been a long time coming for investors.

Sun's stock has languished between $3 and $5.50 for the past two years as it has worked to stabilize its business in the wake of the dot-com fallout.

The company has

said repeatedly this year that it is moving beyond stabilization and into a new era of growing revenue. Sun has made two significant purchases in recent months, snapping up

StorageTek

and

SeeBeyond

, it has coalesced all of its product offerings around a vision equating computing power with electricity, and it is riding a partnership with AMD to push its servers.

The latest servers grew out of work Bechtolsheim was doing at Kealia, a start-up that Sun acquired in early 2004. He had left Sun in 1995 after helping found the company in 1982. Bechtolsheim built the first network workstation and was responsible for several of Sun's most successful products.

After leaving Sun, he went on to pioneering networking systems work on Gigabit Ethernet technology that eventually formed a cornerstone in

Cisco Systems'

(CSCO) - Get Report

switching family.

Bechtolsheim has been working on server technology since Kealia was founded in 2001. While under development, the Galaxy servers sparked an excitement rarely seen in the staid world of corporate computing power. The boxes are designed to run faster at lower temperatures than standard servers, and they're also designed to look good, with a brushed aluminum finish.

"The attitude toward Andy is that if it's coming from him, it's got to be good," said Michael Cohen, director of research for Pacific American Securities and an owner of Sun shares. Cohen expects the new servers to help Sun in its perennial battle against

IBM

(IBM) - Get Report

,

Dell

(DELL) - Get Report

and

Hewlett-Packard

(HPQ) - Get Report

.

"It's likely to give them a differentiated offering," Cohen said, "with the power to affect future revenue."