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Dell to Offer Sun Software in Servers

Posted on: Wednesday, 14 November 2007, 21:00 CST

By JORDAN ROBERTSON

SAN JOSE, Calif. - Dell Inc. has agreed to install Sun Microsystems Inc.'s Solaris operating system in some of its servers, the companies announced Wednesday, signaling Sun's latest truce with a former rival.

The chief executives of both companies announced the multiyear partnership together on stage at the Oracle OpenWorld conference in San Francisco. Financial terms of the deal were not disclosed.

Dell and Sun make servers that compete with each other. Sun commands 13 percent of the worldwide server market, while Dell commands about 12 percent, according to the latest data from market research firm IDC.

While Sun risks losing server sales to Dell because of the partnership, it stands to increase adoption of its open-source software products, and that could mean a substantial boost in revenue from related support services.

Once one of Silicon Valley's most combative companies, Santa Clara-based Sun has been reaching out to former foes since Jonathan Schwartz became CEO in April 2006, taking over from pugnacious co-founder Scott McNealy.

The company now views partnerships with its one-time enemies as a key way to ensure its long-term financial health. It announced a partnership with IBM Corp. in August that will allow Solaris to run on IBM servers. And in September it indicated it would build servers with Microsoft Corp.'s Windows operating system installed.

Round Rock, Texas-based Dell also is trying to regain its financial footing by altering core sales strategies, having lost its No. 1 worldwide ranking PC sales to Hewlett-Packard Co. last year. It has shaken up its management ranks, laid off thousands of workers and started selling PCs through retailers.

Dell hopes the partnership with Sun announced Wednesday morning will broaden its offerings to large corporations.

Sun shares fell $1.25, or nearly 6 percent, to close at $20 on Wednesday. Dell shares fell 60 cents, or just over 2 percent, to $27.61.

Source: Associated Press/AP Online

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