Is Oracle Ready to Dump AMD From Sun's x86 Server Lineup?

Now that the honeymoon is over between Oracle and Sun Microsystems, some pruning is starting to take place, and AMD's Opteron processor may be one of the first victims. Sun traditionally offered both AMD and Intel processors in its x86 server lineup. Now, it's looking like AMD's Opteron won't make the cut under Oracle's ownership.

Sun is known for its UltraSparc family of RISC processors, which compete against Intel's high-end Xeon x86 processors. In recent years, Sun adopted both Intel (NASDAQ: INTC) Xeon's and AMD (NYSE: AMD) Opteron server processors, an acknowledgement of the dominance (and customer demand) of x86 in the server world.

The rumors first hit the Internet last month with a lengthy blog post by Gary Burgess, senior vice president of research and operations at Australian market research firm IDEAS International, who had attended one of the Sun Welcome Events Oracle (NASDAQ: ORCL) hosted around the world to explain its Sun strategy to its customers.

The blog post included a number of interesting nuggets about Oracle's Sun strategy. For instance, Burgess said Oracle intends to release the UltraSparc T3 in the second half of 2010. The T3 processor, the third in the "Niagara" line, is a 16-core CPU with eight threads per core. Sun last discussed the processor, known by the codename "Rainbow Falls," at the Hot Chips conference last summer when it was still an independent company.

Burgess went on to say that Oracle plans to focus its efforts on products that run enterprise workloads and that he expected emphasis on four-socket and eight-socket x86 platforms. Oracle was one of many enterprise server companies showing off prototypes at the March launch of Intel's Xeon 7500, the server processor aimed at the high-end of the market.

But Burgess also noted that Oracle had nothing to say about the use of AMD's Opteron in its future products. "It appears that the company may focus on Sun x86 servers using only the Intel processor architecture," he wrote. "IDEAS speculates that is probably a reflection of how Intel has been able to turn things around of late, especially with its latest generation Nehalem family of server processors it has brought to market in phases over the past 12 months."

That kicked off chatter among blogs and news outlets alike. An Oracle spokesperson declined to comment, and an AMD spokesman said "We do not comment on rumors and speculation."

Semiconductor analyst Nathan Brookwood said Oracle's done nothing to indicate it plans to continue to support AMD chips. "I've spoken to [Oracle] about x86 and they were touting all the wonderful stuff they are doing with Intel and they don't say diddly squat about AMD. I conclude that since they talk about Intel and don't talk about AMD, there is some substance to those rumors," he told InternetNews.com.

Brookwood, research fellow with Insight 64, said he thinks the move makes sense for Oracle, since the x86 portion of Sun's business is small. "It always struck me as bizarre that Sun used to have a product line with almost as many SKUs as a company like HP with ten times the volume," said Brookwood.

Cuts Coming to Sun

In other Sun-related news, Oracle announced plans to let go of more Sun employees. The news was disclosed in a SEC filing on June 4 that said Oracle plans to reduce the size of its Sun workforce primarily in Europe and Asia and would take a charge of between $550 million and $650 million for employee severance and between $40 million to $60 million for contract termination costs.

Oracle has already begun the process of informing the affected employees.

Andy Patrizio is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.

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This article was originally published on Jun 11, 2010
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