Sun Microsystems announced faster UltraSparc IV+ processors on Tuesday, just in time to address analyst concerns this week that the company's high-end servers had a sour quarter.
The UltraSparc IV+ has led something of a comeback at Sun, with the company recouping some of the market share it had lost to rivals in the years after the dot-com bust. The new processors run at speeds of 1.95GHz and 2.1GHz, compared with earlier models at 1.8GHz.
In the quarter ended December 31, UltraSparc server revenue increased 18 percent, one of a series of relatively strong quarters for the product family. But two analysts this week said it looks like the momentum has faltered, based on discussions with Sun sales channel partners.
"Our channel checks suggest that Sun's fiscal third quarter (which just finished at the end of March)--especially in the U.S.--was weaker than prior quarters, especially in high-end servers and storage," Toni Sacconaghi, a Sanford C. Bernstein analyst, said in a Monday report. "We continue to believe that Sun's goal of 10 percent operating margins is not a slam dunk and that recent server momentum may be difficult to sustain."
Sacconaghi, who downgraded Sun from "market perform" to "underperform," also believes Sun is being hurt by not having servers using Intel's newer dual-core and quad-core Xeon processors, models the company plans to add by the end of June.
Merrill Lynch analyst Richard Farmer still sees Sun as "an attractive turnaround story," but also voiced concerns Monday. "Despite a solid first month, our preliminary checks indicate Sun struggling to sustain last year's momentum in the balance of its seasonally weak March quarter," Farmer said. "Higher-end servers sound more than seasonally weak while the low end appears stronger."
Sun has numerous Sparc changes in store. In the first half of the year, it will introduce the most direct successor to the UltraSparc IV+ line, brand-new "Advanced Product Line" models co-developed with Fujitsu and using Fujitsu's Sparc64 processor.
Next come new variations in Sun's own line. The company's current eight-core Niagara chip can juggle 32 tasks at once, but the Niagara 2 will double that to 64. The first Niagara 2 systems are scheduled to arrive in the second half of the year, with dual-processor Niagara 2 models slated for the first half of 2008.
Sun's higher-end cousin to Niagara, a 16-core chip code-named Rock, will arrive in the second half of 2008.