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April 18, 2004

Solaris x86 pricing attacks Linux, Windows

There has been a lot of change lately at Sun Microsystems Inc, and it does not look like it is going to abate any time soon. Sun is in the midst of trying to transform itself, a Herculean task akin to that which rivals IBM Corp and Hewlett-Packard Co have suffered through.

By CBR Staff Writer

Sun is trying to become a more aggressive software player, and Solaris, perhaps the crown jewel of the company, has been undersold, particularly the X86 variant. This is changing.

This week, Sun will announce that it is offering a special promotional price on Solaris for x86 that will run through the end of the year. Under the deal, says Jack O’Brien, group marketing manager of x86 platforms at Sun, the company will sell block licenses of Solaris for x86 on any of the 200 machines (most are non-Sun gear) that are supported in its hardware compatibility list at a substantial discount for customers who buy Solaris licenses in blocks of 100, 500, and 2000. In a switch the bulk Solaris for x86 licenses will include one year of support as well as the licensing fee for a machine.

Solaris comes bundled for free on any of Sun’s Sparc-based servers. (Sun may peel the money out of each workstation and server sale and give its Sun Software unit credit for a piece of the sale, of course.) If you buy a Sparc server, it includes and unlimited user license to the software for all of the processors that are possible to plug into the machine.

On x86 iron, Sun charges real money for Solaris, since it does not generally get the sale. Although, Sun will very likely start bundling Solaris on its own Xeon and Opteron machines to make them more attractive not only as potential Solaris platforms, but as alternatives to Linux, Windows, and even other Unix servers.

Solaris for x86 pricing works like this: on a uniprocessor machine, it is priced $99; on a two-way machine it is $250; and on a four-way or larger machine it is priced $1,500. Standard support (7×12) costs $560 per server for uniprocessor or two-way machines, while premium support (7×24) costs $640. Standard support for a four-way machine costs $960 a year. When you add that up over hundreds or thousands of processors, it can be quite pricey.

Sun wants to simplify the Solaris sale and get a recurring support revenue stream to boot. That is why Sun is announcing an annual volume subscription licensing service that is easier to manage and provides some price breaks. Under this annual method, Sun is charging $50,000 for an annual license to Solaris 9 for X86 running on any 100 servers in a shop.

This license is good for any kind of X86 server — Opteron, Xeon, or otherwise — regardless of the number of processors in the box. Sun is just counting footprints. That works out to $500 per server with standard support. (Premium support costs a little more) Buying 100 licenses and support for an reasonable mix of servers (say 40 uniprocessors, 50 two-ways, and 10 four-ways) would cost $91,460. This bulk buying really drops the cost of Solaris 9 on X86, since that works out to a 45% discount. However, after the first year, since both the license and the maintenance have to be renewed, the discount is not as dramatic. It would cost $60,000 to buy support for that mix of machines under the old pricing, and it will cost $50,000 to re-up the license and maintenance in years two and beyond. Still, that’s still a 17% discount.

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While this is great news for the Solaris faithful, Sun is really chasing Linux and Windows, says O’Brien. Take the 2,000 server example. Under the new deal, it would cost $800,000 to license Solaris 9 for 2,000 X86 servers, again regardless of how many CPUs or what type are in the box. Sun did the math on what it would cost to buy Red Hat’s Enterprise Linux ES (which costs $799 per machine), and when you multiply that out, it is a few bucks shy of $1.6m. (Red Hat is in essence only selling support, so the software is technically, thanks to the GPL, free.)

To put Microsoft Corp’s Windows Server 2003 Standard Edition on 2,000 x86 machines would, by Sun’s math, cost $4.4m, including standard support. Sun did not say how many seats it put on each machine, but Microsoft charges a per-CPU license fee as well as a per-user fee for Windows and for its other database and middleware software that runs on top of it.

O’Brien said that up until now, Sun’s Solaris for x86 pricing has been aimed at keeping near the roughly $800 price level that both Red Hat and Novell’s SuSE have set for an annual support contract for two-way 32-bit Intel and AMD x86 servers. Solaris for X86 costs $250 and standard support costs $560 on such a machine. Now, it can do it for anywhere between $500 a server (100 units) down to $400 a server (2,000 units). This is compelling economics.

Under this deal, Sun’s sales reps and its partner channel can sell Solaris for X86 in this bulk manner. And they can use normal discounting practices on top of these lower prices.

This article is based on material originally published by ComputerWire

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