Dwindling High End

How meaningful is it that Sun has canned 200 employees of its Sparc group? Probably the answer ranges from "not very" to "very." The layoffs represent about 7 percent of the group's personnel; that's nearly one in 10 employees for Sun's high-end server efforts. Pair that up with a recent Gartner report noting that sales of high-end servers are off and likely to stay that way, and the tea leaves aren't too hard to read: Commodity x86 servers are simply becoming a cheaper, more flexible option for many levels of business. Sun's been fighting that battle for a number of years now and trying as hard as it can to diversify from its proprietary, high-power platforms. These firings are just another acknowledgement of that reality by the company.

So why do other outfits keep pushing the high end? Rapport, a startup that says it has customers already, is readying a processor with 256 cores for release next year. Can you say compute-intensive? I thought so. The fact is, there's always going to be a market for high-end servers. The vast majority of businesses in any number of fields--biotech and genetics, financial services and trading, automobiles, etc.--will depend on high-end server performance, whether it comes from a supercomputer or from racked, high-performance servers with a lesser footprint. The trick is whether companies making high-end servers can interest businesses farther down the food chain in that kind of performance. That's the space Sun was largely sitting in a few years ago, and the reactions of Sun and other high-end companies such as Unisys and NEC that have pooled their efforts suggest that there's just less business to be had there.