This past week Sun shipped the first servers based on its recently announced Niagara UltraSPARC T2 processor. The 1U Sun SPARC Enterprise T5120 and the 2U SPARC Enterprise T5220 meet the need of rack users, whereas the Sun Blade T6320 addresses the blade market. Although these are not general purpose servers, they do include some innovations and features that make them ideal for certain applications. Built-in virtualization, integrated on-chip cryptographic acceleration, eight floating-point units, and 10 Gigabit Ethernet integrated into the chip combine to make this generation of servers attractive for a wider range of markets than the past generation CoolThreads servers.
We applaud Sun for being the first to enter this emerging market for highly multithreaded servers. Although these servers are not general purpose servers, the current crop of Niagara 2 servers are good enough to address a number of market segments that could potentially be very large. Sun has seen great success with the first generation of Niagara, currently generating over $200 million per quarter and growing at 225% per year. With the new Niagara 2 servers, Sun should see this growth rate accelerate sharply as it moves into new markets. But how long can this growth be sustained? These servers could have had a significant impact on the market two years ago when Intel and AMD were producing dual-core processors. Now the market is producing quad-core processors with 8-cores on the drawing board. It’s just a matter of time before Intel and AMD enter the market with their own versions of Niagara. Sun cannot afford to sit on its laurels; it must continue to innovate to stay ahead of the competition.
The bottom line is these new Niagara 2 servers have the potential to dominate markets such as the Web-serving, streaming media, and any market where application parallelism is prevalent. With multiple threads and embedded cryptographic acceleration, these servers can not only serve Web pages, but they can efficiently process Web transactions as well. With high throughput, great performance per watt, and a good price, there is no reason not to buy these servers. Sun may also see some success in the HPC and entertainment markets due to the processors' greatly enhanced floating-point performance. These will certainly be great products for Sun. But the question is for how long? Will the Niagara 2 servers finally awaken the sleeping giant Intel just as AMD did with Opteron? Only time will tell.
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