Analyst: Sun prepping to use Intel inside its servers

Sun Microsystems has had one partner in the low-end server market--Advanced Micro Devices. That appears to be changing, according to a research note from Bank of America Securities analyst Sumit Dhanda.

In the report published Friday, Dhanda writes:

"Our checks indicate  that  Sun  Microsystems will  begin  using  Intel's  Xeon processors (previously dubbed Woodcrest) for its fast  growing  x86/x64  server product lines. Having used exclusively AMD's Opteron solution for the past 2-3 years due to its  performance  advantage  vs. older Intel's Xeon products, we believe that Sun has put the wheels in  motion to rekindle the relationship it once had with Intel on x86 servers."

Dhanda says development on these Intel-based Sun servers is taking place on the engineering level today with volume production expected in late 2007.

If true, Sun's hedging of its server processing bets would be a small victory for Intel in its battles with AMD. Intel is trying to regain lost market share from AMD.

Dhanda acknowledges that Sun is a small player in the x86 server market, but it remains one of the fastest growing suppliers.

"We  believe that AMD's advantage - namely in power consumption - played a pivotal  role  in Sun's decision to use Opteron exclusively for the  last  2-3  years.  Now  that Intel's new Xeon processors are boasting better  performance/power  consumption vs. AMD's Opteron (based on 3rd party benchmarks), we believe that  Sun,  among many other server vendors, is exploring use of Intel processors in its x86 server line."