Sun beats IBM, HP for server deal

SAN FRANCISCO: Sun Microsystems Inc. said that it has won a multimillion, multiyear contract to sell computer servers and storage equipment to No. 2 office product retailer Office Depot Inc., broadening the network computer maker's customer base.

The deal includes high-end Sun Fire 15K servers, storage gear, mid- and low-end servers -- all running on Solaris, Sun's version of the Unix operating system -- and using its proprietary Sparc microprocessors.

Company representatives of both companies declined to provide further financial details.

Office Depot started working with Sun more than eight months ago to revamp its technology infrastructure in the supply chain and merchandising areas, said Patty Morrison, chief information officer of the Delray Beach, Florida-based retailer.

Sun beat out International Business Machines Corp. and Hewlett-Packard Co. for the contract, Morrison said, adding that Office Depot remains a major customer of the two Sun rivals.

Office Depot's choice of Sun, Solaris and and Sparc runs counter to the trend in the technology industry toward the popular Linux operating system and servers using microprocessors that are compatible with Intel Corp. systems.

"The (software) applications' ability to run on Linux is pretty limited right now" for what Office Depot needs, Morrison explained. "Unix provides for us a highly secure environment that is supported -- yes, you're paying for that, unlike Linux where you take a degree of risk in terms of support and liability."

Sun Microsystems said the Office Depot win was its biggest retail deal so far in fiscal 2004. The Santa Clara, California-based company is in its second quarter.

Sun has retained its strong presence in financial services and telecommunications, markets that have been among the hardest hit since the economic downturn that began in late 2000.

However, Sun has been losing market share to rivals HP, IBM and Dell Inc. as Linux and so-called industry standard servers, those using Intel-compatible chips, have surged in popularity.

As worldwide server sales rose 2 percent in the third quarter from a year ago, Sun's server revenue market share fell to 10.8 percent from 12.1 percent over the same period, according to research firm Gartner Inc.

Sun Senior Vice President Marge Breya noted, however, that the Office Depot win shows Sun's momentum in the retail industry.

"We're a good eight to 12 months into each of these projects" with Office Depot, Breya said. "We're very encouraged and think Sun has a lot to offer."

The deal involves three projects. Sun and Office Depot will phase out IBM mainframes, replacing them with Sun Fire 15K servers, and Sun Fire V480 and V880 servers, including back-up storage tape. Office Depot will use Retek software to forecast demand and manage inventory, among other functions.

In a second project, Office Depot will use a Sun Fire 15K server, several V480 and 280R servers and high-end StorEdge SE9900 storage equipment. Office Depot will use Manhattan Associate's warehouse management software.

Finally, Office Depot will use Sun Fire v880, V480, and 280R servers to run software from Documentum, owned by data storage company EMC Corp., that will tie together Office Depot staff, processes and information.

Reuters