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Sun server sales swoon

Things aren't going well after Oracle's acquisition of the independent Sun Microsystems. Despite Oracle's best, early efforts, Sun server sales fell in Q2 while rivals Dell, HP, Fujitsu did well.

The early numbers are in and it looks like Oracle's stewardship of the Sun Microsystems server franchise isn't going as well as claimed. And the figures, from the second quarter this year, reinforce survey findings showing Dell rebounding big-time in server sales.

For the second quarter of 2010, the first full quarter of Oracle's ownership, Sun server unit revenue fell nearly 11% (10.9%) compared to the year-ago quarter, according to market researcher Gartner. All other server rivals except IBM -- which saw revenue fall 2.7% -- experienced revenue growth in that period. Category leader HP's revenue rose 26.7% and Dell saw a whopping 39.5% rise in server-based revenue.

For more on Sun/Oracle:
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Oracle support hikes irk Sun shops

Oracle-Sun x86 hardware gets Intel Xeon upgrade 

Sun server sales nosedive

In terms of server units, Gartner reported a 26% decline in Sun servers shipped compared to 23.3% growth for HP and 35% growth for Dell 35%. Fujitsu -- the other non-Sun purveyor of SPARC-based servers -- saw 24.9% growth in units shipped. Gartner analyst Jeffrey Hewett said the bulk of Fujitsu unit sales growth for the quarter came from X86-based, not RISC-based models.

Vendors in the "other" category grabbed 37.7% growth. The decline in Sun server sales was less pronounced than in the first quarter when its ="target="_blank">server revenue fell almost 40%, according to earlier Gartner numbers

Aggregate server shipments worldwide for the second quarter grew 27% with revenue growing 14% for the second quarter, according to Gartner.

Granted, Oracle's full ownership of Sun started just the month before the period in question, but the acquisition had been in the process for nearly a year.

Oracle has posted a decline for the first half of the year, Hewett noted. Much of this is probably because customers are still waiting to see what Oracle's plans are. "Oracle has just begun to communicate its approach to building from the Sun business and that picture is not complete at this point. Until it is, customers are likely to buy servers from Oracle only when they really need replacements; that will not translate to growth in the short term," Hewett noted.

But, it's clear that many Sun shops are not happy with what they've seen so far. They don't like how Oracle has enforced stringent and more expensive hardware support policies or the confusion around the future of Solaris, OpenSolaris and the SPARC chip. And these latest market share numbers belie Oracle claims that Sun customers are happy with Oracle's ownership.

What's happening at a large HR consulting firm exemplifies what is occurring in some Sun hardware shops. This company is moving its Oracle databases off Sun SPARC-based systems onto HP Intel Nehalem boxes running Linux.

"Nehalem is just changing the game," said a system administrator at the firm. "Everything you put there just runs better. There's no reason to run SPARC anymore from what we've been told." The firm currently has about 250 Sun SPARC boxes, but the maintenance costs are "killing us," he said, and the goal is to reduce that number down to 30-40 systems in the next two years.

An IT manager of a large New England utility told earlier this summer that price-performance analyses motivated the company's decision to move from legacy Sun SPARC hardware to IBM Power Systems. Irritation over Oracle's handling of OpenSolaris convinced a large West Coast Sun shop to start moving its OpenSolaris/ZFS storage systems over to NetApp. He said future hardware purchases will come from HP -- not Sun.

This is all highly anecdotal, but it is significant that several big Sun shops -- data center customers that stuck with the independent Sun Microsystems through its financial worries of the past several years -- are moving off the platform since Oracle's buyout.

Oracle was a master at buying and integrating software companies. But from the start of its bid for Sun, even Oracle proponents said the company had no understanding of how hardware differs from software. Many Sun shops remain unconvinced that Oracle will, as CEO Larry Ellison has promised, spend more on SPARC and Solaris R&D than the independent Sun Microsystems.

Some said Ellison's vision of data center iPods or appliances, built from the ground up on Sun-labeled hardware (albeit running Linux and Intel chips), and Oracle middleware and databases, makes a lot of sense given the penetration of Oracle's database in large accounts. Others said customers will not lock in with that appliance worldview, especially given the expense of Oracle support and that company's heavy-handed compliance audits.

Alex Barrett contributed to this report.

This article was updated Thursday evening with additional Gartner comment.

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