Q1, and Do Operating Systems Matter?

We just reported our earnings for Q1. The way this works (for those that don't already know), we issue a press release to the news agencies after the markets close, then Mike Lehman (our Chief Financial Officer) and I host a conference call to provide color and context. Financial and other analysts from around the marketplace dial in, our VP of Investor Relations walks through the financials, then Mike I provide some overall context before opening up the line for questions.

Here's a page with links to the presentation materials, and the audio transcript. The whole process is a tad anachronistic.

It was a busy week overall - in addition to presenting our financial report card for Q1, I was the keynote just prior to Larry Ellison at Oracle Open World. You can see (and watch) that presentation, here. (You might need to scroll down to the middle of the page... and if I look particularly pale, I wasn't feeling great - to any other parents of small children, you'll understand the source of my malaise in three simple words, "Back to School.")

On another topic, if you're looking for Sun's opinion on Oracle's decision to fork Red Hat, here are some comments Greg Papadopoulos (Sun's Chief Technologist, you can tell by the way his hair behaves) and I made during a regularly scheduled interview with Hal Stern. Hal, an inveterate bloggeur himself, leads Sun's field Systems Engineering community (the technical folks closest to our customers, otherwise known as "the system in Sun Microsystems.").

(Update: For those whose news readers don't show the video images in-line, see Video 1 and Video 2 directly at YouTube.)

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If you want the quick summary of the videos, not that it'll surprise anyone, it comes down to this: I'm really glad we invested so heavily in Solaris over the past five years, making it freely available, making it open source, and making it available on HP, Dell and IBM, not simply Sun.

Adoption matters.

Posted on 08:44AM Oct 31, 2006 | Comments[20]

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A Picture's Worth...

We seem to have struck a chord with the unveiling of Project Blackbox last week. And given some of the early reactions, I thought I'd answer a few of the questions that have surfaced, then point everyone to a video Dave Douglas, the VP in charge of the program put together to talk about our motivations/priorities. First, the questions...

Q: Why'd you paint the prototype Blackbox black - won't that absorb more radiant solar heat and worsen cooling challenges?
A: Sorry to disappoint, but we painted it black because it looked cool for the launch event, that's all. Customers can paint them whatever color they want (or leave them unpainted).

Q: But someone could steal a container in a parking lot.
A: Of course they could. They could also steal the Mona Lisa if it was left in an unguarded parking lot. So don't leave a million dollar datacenter in an unguarded parking lot. Put it in a guarded basement or warehouse, or bolt it to a concrete pad or rooftop, and you won't have that problem - and although we expect most datacenters to be operated inside a building, the locking apparatus on a shipping container is more secure than most office parks.

Additionally, a Project Blackbox container does have multiple levels of security built in, from tamper, motion and GPS sensors, to a simple hookup for easy integration into existing building security systems. But nothing compares to basic perimeter security.

And for the most part, the customers who need offshore supercomputing or datacenters in remote locations aren't worried about someone casually picking up an unmarked 20,000 lb. container and driving off with it.

Q: But containers get knocked around and ripped open, how will Blackbox handle that abuse?
A: The same way a container full of china or crystal would - by ensuring high service levels during transport. Not everything is transported in the same way as a container full of concrete rubble. Remember, we ship containers full of computing equipment already, that's one way material gets from Asia to deployments around the world.

Q: But how would I service the components someplace like a roof?
A: Just as you service your power generator or cooling plants, today - by taking the elevator, and walking on to the roof. But our experience shows the next generation of network service deployments have come close to eliminating the need for on-site operators. If that's not how your application infrastructure has evolved, you probably wouldn't want this on your roof.

Q: My company only runs end of life HP PA-RISC and Tandem machines, can I use Blackbox anyways?
A: No - at least not yet. Blackbox isn't for repackaging end of life datacenters, it's to provide scalable infrastructure for next generation deployments.

Q: What OS's will it run?
A: Anything that runs on Sun's industry standard Niagara or x64 platforms - Solaris, Linux, BSD and Windows, to start. (And no, you don't have to be a Java shop.)

Q: Will you run your competitor's hardware?
A: In time, yes, but our competitors will need to adapt their product lines for high efficiency cooling. Most don't take it as seriously as we did with this project.

Q: Who would need one of these in a disaster area?
A: We didn't mean to fixate on this, but we saw the impact SunRay technology had on the relief efforts in New Orleans during hurricane Katrina. What the relief agencies needed were thousands of zero maintenance network clients to process victims and deliver aid services - with very rapid time to deployment in very poor power/environmental conditions. We solved the problem with centralized network infrastructure, not with laptops, and it worked beautifully.

And before you ask, if the relief workers or insurance agents needed to do video editing or 3-D CAD modeling, SunRay's would've been a very poor fit - they would've been better off with high end PC's. But that wasn't what they were trying to do - SunRay's don't replace PC's any more than your Blackberry does.

Q: What's been the customer response?
A: Equal measures of a) nervous laughter, b) incredulity, c) profound curiosity and a recognition that we're working on the right problems for the future of datacenters. And we have an enviably beefy pipeline of customers and integrators wanting to talk to us, which is the right starting point. Remember, we're not planning on commercial/revenue shipment until 2007.

And finally,

Q: Does this replace every datacenter on earth - are they going to shut down now that Blackbox exists?
A: Absolutely not. Blackbox serves a segment of the marketplace, those customers focused on rapidly scaling out next generation infrastructure, or looking for alternatives to today's deployment options. We don't expect everyone to run out and shut down their datacenters - we do expect a great many of our customers and prospects to think seriously about how they'd rather spend $250,000,000 and two years. Again, not for everyone. Just like the internet when it began :)

Over to you, Dave... (UPDATE: the embedded YouTube video doesn't seem to show up in some newsreaders, so click here to view it on YouTube's site.)

Posted on 02:04PM Oct 23, 2006 | Comments[23]

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Introducing Project Blackbox

As I've been saying for a while, our customers - more specifically, a segment* of our customers - face a diversity of tough challenges. What does the CIO in midtown Manhattan do when she runs out of roof space or power? How does an aid agency deliver basic connectivity to 5,000 relief workers in a tsunami stricken metropolis? What does an oil company do when they want to move high performance analytics onto an offshore platform or supertanker? Or a large web services company do when they want to cookie cutter their infrastructure next to a hyrdroelectric plant for cheap power - within weeks, not years?

None of these are easy problems to solve - especially one computer at a time. They're more commonplace than you'd think across the globe. And now you know the motivation behind our asking a simple question, "what would the perfect datacenter look like?"

Improving upon its father, the traditional datacenter, it'd have to be more space and power efficient. Very high performance, and designed for machines, not people with plush offices. It'd have to be available within weeks, not years. And portable, to allow customers to deploy it anywhere - in a disaster area, or next to a hydro generator.

But let's start with the most basic question. How big would it be?

In the world of vertically scaled, or symmetric multi-processing systems, pools of CPU's share access to a common set of memory. But the size of a given system has a physical and logical limitation: it can be no bigger than the private network used to connect all the disparate internal elements.

But the future of the web is clearly moving toward horizontal or grid computing. In a grid, a conventional network is used to connect collections of smaller*, general purpose elements (like Sun's Niagara or Galaxy systems). The question of "what's the biggest grid?" has no obvious answer - they can be as big as you want. Just as at TACC, where they're building the largest supercomputer on the planet out of general purpose elements.

So a while back, we asked a few talented systems engineers a simple question: is there an optimum size for a horizontally scaled system? Interestingly enough, the answer wasn't rooted in the Solaris scheduler or a PhD thesis. It was rooted in the environmental realities faced by the customers I cite in the second paragraph. And perhaps more interestingly, in your local shipyard.

Shipyard?

The biggest thing we could build would ultimately be the biggest thing we could transport around the world - which turned out to be a standardized shipping container. Why? Because the world's transportation infrastructure has been optimized for doing exactly this - moving packets containers on rails, roads and at sea. Sure, we could move things that were bigger (see image), but that wasn't exactly a general purpose system.

So the question at hand became, "how big a computer can you build inside a shipping container?" And that's where the systems engineering started.

First, why are servers oriented in racks and cooled by fans front to back? To maximize convenience for humans needing to interact with systems. But if you want to run a "fail in place" datacenter, human interaction is the last thing you want. So we turned the rack 90 degrees, and created a vastly more efficient airflow across multiple racks. And why not partially cool with water in addition to air - if you burn your hand, do you wave it in the air, or dunk it in a bowl of ice water? The latter, water's a vastly more efficient chiller.

A non-trivial portion of an average datacenter's operating expense is the power required to chill arbitrarily spaced, very hot computing platforms - vector the air, augment with a water chiller, and cooling expense plummets. As does your impact on the environment. Did I mention the eco in eco-responsible stands for economics? For many companies, power is second only to payroll in datacenter expenses. (Yes, the power bill is that big.)

And that's how we started to go after power efficiency.

Second, if you can generate power for less than the power company charges you, why not do so - put a generator next to the chiller in a sister container, and you've got access to nearly limitless cheap power. (Heck, you could run it on bio-diesel.)

And if power rates or workload requirements change and you want to relocate your container - good news, the world's transportation infrastructure is at your disposal. Trains, trucks, ships, even heavy lift helicopters. You can place them on offshore oil rigs. In disaster areas. In remote locations without infrastructure. To wherever they're most needed.

Finally, in most datacenters I vist, I see more floor tiles than computers. Why? Because operators run out of power capacity long before they fill up their datacenters - leading them to waste a tremendous amount of very expensive real estate with racks spaced far apart. In a container, we go in the opposite direction - with plenty of power and chilling, we jam systems to a multiple of the density level and really scrimp on space. And it can run anywhere, in the basement, the parking garage, or on a rooftop. Where utilities, not people, belong.

With a ton of progress behind us, and enough customer interaction to know we're on to something, that's why we've unveiled our alpha unit, and gone public with the direction. We've done a lot of detail work, as well, working to integrate the container's security systems into enterprise security systems. It knows where it is via GPS (you can locate them via Google Maps, if that's your bent). Sensors know if the container's been opened or moved. We've even done basic drop tests (one, accidentally) to deal with transportation hazards (the racks inside can handle an 8g impact!). And we've explored camouflage options, too (you really don't want a big Sun logo screaming "steal me, I'm full of RAM!" on customer units).

Every customer we've disclosed has had a different set of concerns or challenges. None in my mind are insurmountable. But we don't have all the answers, of course, that's why we'll be working with key partners and integrators (one customer wanted the container to detonate if it was breached - er... perfectly doable, just not something Sun would do).

At a top level, we know there is no one hammer for all nails.

But in this instance, there might be one blackbox for all of network computing.

Specs and details to come - and in the interim, here are some great photos and usage scenarios (I especially like the Mars Rover companion - that was Greg's idea).

____________________________________

* more on this later.

Posted on 03:09PM Oct 17, 2006 | Comments[52]

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A Simple Comparison

For those that have been leaving comments, I first want to say I appreciate your time and energy. I read them all (both gruff and gracious).

But let me try to clarify a simple point.

I was talking to the CIO of a large financial institution last week. He told me he was in the midst of building out two new datacenters, spending $250,000,000 (yes, a quarter of a billon) on one, more than that on the other. He was beyond frustrated (as I'm sure was his CFO).

I asked him how long it was going to take, he said nearly three years. Years.

And then Dave Douglas reminded me that two to three years is longer than it took for YouTube to incorporate, build out their infrastructure, scale their business to serve the entire planet - and get sold.

So if time to market matters - in responding to market opportunity or a natural disaster - surely something's got to change. It's not as though datacenter's are at any risk of disappearing - like I said, there has to be a place to put network infrastructure - but no one could deny it's time for a tectonic shift in how we think about the problem.

Posted on 11:58PM Oct 15, 2006 | Comments[20]

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The Death of Yesterday's Datacenter

An executive from a mobile phone company recently told me the feature most requested by buyers in their fastest growing geography (India) was an LED flashlight. Not a camera, but a flashlight. Edison would never have guessed (obviously). Nor that electricity would one day be on airplanes, lunar landers or deep sea submarines.

Nor would we have imagined that network connectivity and computation would end up on drill bits. Or on ocean going supertankers. And that's exactly what I was told last week by the CTO of a global energy company. They use sensors on spinning drill bits to extract seismic data, which then guides the bits as they descend into the earth (I had no idea you could actually steer a drill bit). And they do this on offshore drilling platforms. And after they pump crude into supertankers, they use data from sensors spread throughout the ships to monitor vibration, fluid dynamics and rotational physics - to keep the ships, and their precious sloshing cargo, moving safely in the right direction.

I was similarly surprised to hear a global relief agency describe the IT challenges of managing a disaster - starting with a need to supply computing capacity to remote disaster locations without power. More painfully, without desktop system administrators.

And then there's what Disney's up to, passing out trackable stuffed dolls to kids in their theme parks, so parents can follow them (as Scott would say, "that's not Big Brother, that's Dad..."). By tracking clusters of dolls, the operator can tell parents how long the lines are for a ride, and determine where to place concession stands (in front of waiting patrons, of course). And there's the wave of DVD players and consumer electronics all becoming network computers - check out the logo on the far right of Panasonic's new DVD player...

All of the above are examples of putting computing closest to the source of value - and responding in near real time to a changing physical world. No one projected those applications 50 years ago.

So where's it all headed?

As usual, Greg has some really good thoughts about the biggest issues. But among the most interesting questions of where is computing headed relates to the value of the one place we all thought to be the perfect location for computing: the datacenter.

Now I understand that IT infrastructure has to be put somewhere. But the whole concept of a datacenter is a bit of an anachronism. We certainly don't put power generators in precious city center real estate, or put them on pristine raised flooring with luxuriant environmentals, or surround them with glass and dramatic lighting to host tours for customers. (But now you know why we put 5 foot logos on the sides of our machines.)

Where do we put power generators? In the engine room. In the basement. Or on the roof. And we don't host tours (at least in the developed world).

The original intent of the datacenter was to accomodate not computer equipment, but the people who managed it. Operators who needed to mount tapes, sweep chad, feed cards, and physically intervene when things went wrong. Swap a failed board or disk drive, or reboot a system.

Therein lies an interesting quandary - at least from our internal analysis, the availability of IT infrastructure is inversely correlated to foot traffic. The more people allowed in a datacenter, the more likely they are to kick a cord out of the wall, break something trying to fix it, or just bump into things trying to add value.

As the best systems administrators will tell you, the most reliable services are built from infrastructure allowed to fail in place, with resilient systems architecture taking the place of hordes of eager datacenter operators. Instead of sweeping chad, they do periodic sweeps of dead components - or simply let them occupy space until the next facility is brought on-line. (Known as "failing over a datacenter.")

Very few operators involved, yielding very high service levels. (When there are nearly 1,000,000 people in the world who make their living off eBay, downtime goes well beyond an annoyance.)

Which again begs the question, where's computing headed? As highlighted by some of the scenarios above, into the real world, certainly.

Perhaps a more interesting question should be - why bother with datacenters at all? Surely it's time we all started revisiting some basic assumptions...

Posted on 11:30AM Oct 10, 2006 | Comments[58]

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Sun Brings The Cheap Revolution to Supercomputing

The collective IQ of San Francisco has risen this week, with the arrival of nearly 4,000 Sun "customer engineers" from across the globe. Customer engineers encompass a very broad community at Sun, one that includes systems and support engineers, product developers, and a diversity of other technical functions all focused on supporting customers.

In the spirit of perfect timing, my speech to the group coincides with our winning just about the biggest prize in all of supercomputing last week, a contract to build a 400 Teraflop system, the world's largest, for the Texas Advanced Computing Center (known as TACC). TACC is ironically conveniently located in Austin.

Their press release is here. And here are few things to think about.

First, the "cheap revolution" is winning out in high performance computing - Sun won because we could supply general purpose infrastructure and open source software, which in combination allows TACC to decommission their legacy proprietary Intel systems, and avoid having to use a customized solution. As I discussed here, general purpose systems and operating platforms have emerged as fast enough to displace proprietary and specialized systems. On a performance per watt basis (which is one of the metrics used to measure system efficiency), the numbers are staggeringly in favor of Sun's new wave of open innovation (which is why PG&E offers rebates for Sun's systems in California).

The win is a comprehensive one for Sun - starting with our free and open source Sun Studio compilers, N1 Systems and Grid management platforms (also free/open source), and deployed on an absolute blizzard of SunFire/Galaxy servers, 1.7 Petabytes of our newest Thumper (x4500) systems, all archived and secured by our StorageTek tape platforms. (As one executive said to me recently, "whoever said 'tape is dead' has never spoken to a customer that produces a terabyte of data every couple of minutes.") Like I said, it's a true systems win.

So yes, we won on performance, but we also won on the economics of open platforms vs. proprietary alternatives, and the environmental and operational efficiency of what we offered. (As Dave Douglas says, the "eco" in "eco-responsible" stands for economics, too). But ultimately, it was our ability to integrate the components to solve the problem, rather than dropping off a big box of cheap parts. And who demonstrated that total advantage?

Engineers, of course. Customer engineers.

Which makes the win so well timed - with nearly 4,000 of them in town, I can say to just about the entire customer engineering population, you are the 'system' in Sun Microsystems. From winning Java technology on BluRay to the world's biggest supercomputing facility, you can't capture those opportunities with a web site and an button. It takes expertise, on site, and a big commitment from customer engineering. So to the TACC team, and all those helping to win equally world changing deals across the planet (as we speak), thank you.

You make a huge difference to our customers, and to Sun.

Viva la Revolución!

Posted on 09:55AM Oct 04, 2006 | Comments[8]

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One Small Step for the Blogosphere...

I've been an officer of a public company for a while, and I've had access to confidential information for a good while longer. And I'm used to holding my tongue on issues that'd be deemed material to Sun's financial performance. Like a pending acquisition or big sale, or data related to how our quarter's going. In a public company, there are very strict laws surrounding how information's disclosed.

So a couple years ago, when I first started blogging, I and our illustrious general counsel were far less worried about what I was saying, than where I was saying it. For example, I couldn't use my blog to announce our quarterly performance, or disclose a material transaction. I had to use a press release, or a conference call (with a telephone operator, no less!).

Why?

A regulation known as "Reg FD," or Regulation Fair Disclosure - which attempts to ensure no one audience gets preferential access to material non-public information. It's a great concept, designed to prevent selective disclosure, or actions that might advantage one investor over another.

Unfortunately, Reg FD doesn't recognize the internet, or a blog, as the exclusive vehicle through which the public can be fairly informed. In order to be deemed compliant, if we have material news to disclose, we have to hold an anachronistic telephonic conference call, or issue an equivalently anachronistic press release, so that the (not so anachronistic) Wall Street Journal can disseminate the news. I would argue that none of those routes are as accessible to the general public as a this blog, or Sun's web site. Our blogs don't require a subscription, or even registration, and are available to anyone, across the globe, with an internet connection. Simultaneously.

Now we happen to have a like-minded Chairman at the United States Securities and Exchange Commission (the 'SEC'), Christopher Cox. So Mike and I sent along a rather formal note last week, requesting a clarification to Reg FD, one that would permit our (and everyone else) using the internet (eg, a company blog or web site) to release material information. Without a press release or operator assisted conference call. We are, after all, the primary source of such material information - there's no point in going through an intermediary if what we're after is fair disclosure and full transparency. Let the light shine in, don't buy a flashlight.

We've had enough interaction with the Chairman (and read enough of his writings) to know he understands the utility of the internet to inform investors - but until we see a formal revision or clarification to FD, we'll still be limiting what we disclose via blogs and the internet. And consuming trees with press releases. Which can't, in the long run, be all that desirable.

But we'll take it one step at a time...

I've attached the letter below (and yes, before you ask, we did fax it, and send by overnight mail).

-------------------------------------------------------------------------------

Via Fax and Federal Express

September 25, 2006

The Honorable Christopher Cox
Chairman
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

Dear Chairman Cox:

You have been a leader in the drive toward bringing greater transparency and access to information for individual investors. Indeed, you recently challenged us to the capitalize on the full potential of the Internet for the benefit of the American investor: "So the question for us today is how do we put the current communications technology to the service of the American investor. How do we harness the Internet which is serving so many customers in so many other ways to deliver the maximum benefit to those in our regulated capital markets." (Chairman Cox Remarks to Interactive Data Roundtable, June, 12, 2006).

Sun Microsystems fully supports and applauds your recognition that the Internet is a "great instrument of national and international communication... [and] also a critical engine of American productivity." (Id.) We have been on the same side of the issue from a technology perspective - from the evolution of open standards for document interchange (such as the Open Document Format), identity interchange (Project Liberty) to the drive toward open source (OpenSolaris and OpenOffice). Our view is that now is the time to fully exploit the innovation that only the Internet can yield in creating the most transparent environment possible for keeping all investors promptly and equivalently informed.

As adopted, Regulation Fair Disclosure's requirement of widespread dissemination can be met through the filing of a Form 8-K or "through another method (or combination of methods) of disclosure that is reasonably designed to provide broad, non-exclusionary distribution of the information to the public." (17 C.F.R Sec. 243.101(e)(2)) To date, the SEC has not taken the position that the Regulation's "widespread dissemination" requirement can be satisfied through disclosure through the web-postings alone. While that may have been a pragmatic approach in 2000, we believe that the proliferation of the Internet supports a new policy that online communications fully satisfy Regulation FD’s broad distribution requirement.

Our corporate website (www.sun.com) currently receives on average of nearly a million hits per day. This website includes a blog that I write as CEO of Sun Microsystems (www.blogs.sun.com/jonathan), as well as the blogs of over 4,000 of our other employees. My blog is syndicated across the Internet by use of RSS technology; thus, its content is "pushed" to subscribers. This website is a tremendous vehicle for the broad delivery of timely and robust information about our company. It is our view that proprietary news outlets are insufficiently accessible to the broad majority of Internet users and individual shareholders. It is certainly the case that the Internet represents a broader user base than those able to afford subscriptions to traditional forms of media and thus usage of this or any other freely available company blog or web site should be considered sufficient in satisfying the objectives of Regulation Fair Disclosure.

In 2001, upon the one year anniversary of the effective date of Regulation FD, Commissioner Unger requested a study designed to assess the implementation of the regulation. (“Special Study, Regulation Fair Disclosure Revisited,” U.S. Securities and Exchange Commission, December 2001, modified November 29, 2003.) Even then, the roundtable group recommended that “the Commission should embrace technology to expand opportunities for issuers to disseminate information online. The Commission should make clear that options such as adequately noticed website postings, fully accessible webcasts and electronic mail alerts would satisfy Regulation FD.” (Id.) The evolution of the Internet makes these recommendations even more compelling today.

We truly believe in the utility of the Internet - as a means of driving transparency throughout all governmental and corporate processes, as well as greater accessibility of health care, education and social services. Indeed, it is a principle on which Sun Microsystems was founded. We encourage you to look to the Internet to achieve the Commission's objectives of greater investor access to information and would welcome the opportunity to further discuss with you our views in this area.

Sincerely,

Jonathan Schwartz
Chief Executive Officer
Sun Microystems, Inc.

cc. Michael Dillon, General Counsel, Sun Microsystems, Inc

Posted on 02:35PM Oct 02, 2006 | Comments[29]

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