Sun and Fujitsu to combine Unix server businesses – report

Sun Microsystems and Fujitsu are to combine their server businesses as early as 2004, according to a report out of Japan.

The Nihon Keizai Shimbun is reporting that Sun and Fujitsu plan to standardize their Unix server architectures and have a Fujitsu subsidiary manufacture the gear. Both companies currently make Sparc/Solaris servers, which would make combining their operations a complementary move.

The paper did not cite any sources in its story.

Sun officials declined to comment on speculation about a potential deal but did confirm that Sun's CEO Scott McNealy met this week with Fujitsu Chairman Naoyuki Akikusa and other executives. The report went on to state that the executives talked about preliminary details and plan to reach a final agreement later this year.

"Throughout the years, Fujitsu has enjoyed a close partnership with Sun Microsystems and the two companies have had a number of discussions about the benefits of working together to deliver the best solutions to our customers," Fujitsu said in a statement. "Those discussions are continuing. At the present time, however, nothing has been decided with respect to expanding the scope of our current relationship with Sun."

Beyond shaking up the server market, a deal between Sun and Fujitsu would leave TI the odd man out. TI currently makes Sun's UltraSparc processors, but the report out of Japan said that Fujitsu plans to produce the Sparc chips in Japan. Both Sun and Fujitsu would design the processors.

A TI spokesman said that Sun should field all calls speculating about a deal with Fujitsu.

"From where we are standing, we see no change in our business with Sun," the spokesman said. "We are full speed ahead with our support for Sun."

That's all well and good, but if the Nihon Keizai Shimbun is to be believed, Sun and Fujitsu are already hammering out the nitty-gritty details of their union. The paper reports that Fujistu would manufacture the high-end Unix systems, leaving Sun to crank out midrange and low-end gear.

Both Sun and Fujitsu have seen their hardware sales slump and could benefit from a shared production process. While Sun holds a much larger Unix market share than Fujitsu, Fujitsu's Sparc64 processor is often said to be a better performing chip than Sun's UltraSparc product.

A deal between the two companies, however, poses many questions. What version of Sparc processor would they standardize on? What will Sun do with its N1 server software strategy and low-end multicore processors? The mind boggles.

Again, if the report is true, this would also signal a move by Sun CEO Scott McNealy to answer some harsh industry criticism. Sun would share Sparc design costs with Fujitsu and likely cut back on the number of engineers it needs. This would be the type of cut some analysts are asking for. ®