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Sun Expands Alliance With Microsoft

Sun Microsystems Inc. will begin building servers with one-time foe Microsoft Corp.'s Windows operating system installed directly inside of them, instead of forcing customers to install the ubiquitous software on their own or defect to a competitor for one-stop shopping.

The agreement announced Wednesday is the latest twist in a truce the companies, once bitter rivals, hammered out in 2004, when Sun pocketed $1.95 billion in a settlement payout from Microsoft over antitrust and patent allegations, and both companies vowed to make their products work better together.

Sun will begin incorporating Microsoft's Windows Server 2003 software into its so-called x64 servers, which are corporate computers that run on 64-bit microprocessors from Intel Corp. and Advanced Micro Devices Inc. Servers are the computers in corporate data centers that process large amounts of data such as Internet traffic or financial calculations.

The companies said in a joint statement that Sun's machines with Windows pre-installed will be available within 90 days.

Although Sun customers have been able to run Microsoft's operating system on Sun servers for several years, Sun would not install it in the factory. That left customers who wanted Windows in the lurch unless they wanted to install in on their own or already had licensing contracts with Microsoft, in which case Sun would install it.

Microsoft, the world's largest software company, stands to gain from the agreement because of Sun's reach in the server world. Sun is the world's No. 3 server seller with 13 percent of the worldwide market, behind IBM and Hewlett-Packard Co., according to the latest data from market researcher IDC.

The agreement includes a nod from Sun and Microsoft to the momentum surrounding so-called virtualization technology, which allows computers to run more than one operating system, saving hardware and electricity costs while boosting the performance of giant, energy-sapping machines.

Sun and Microsoft vowed to make sure their respective operating systems worked well with one another's virtualization technologies, a commitment that could help both companies prosper from the trend toward data center consolidation and urgent efforts by technology managers to reduce energy costs.

The further embrace of Microsoft highlights Sun's attempts to shed its image as that of a quarrelsome startup that in the late 1990s was eager to pick public fights with big rivals. Instead, Sun is becoming a more restrained and inclusive company willing to forge alliances, including the announcement last month of a partnership with longtime rival IBM Corp. that will allow Sun's Solaris operating system to run on IBM servers.

It's a crucial element of Sun's turnaround strategy, and a formula that Sun management said is necessary to ensure the company's long-term financial success.

A darling during the dotcom heyday that has lost more than $5 billion since the crash, Sun is now broadening its product portfolio as it moves away from selling only proprietary software and servers.

Since then, the company has made its Solaris operating system and Java technology available for free on the Internet.

Sun is hitching its rebound strategy in part to the growing open-source movement in hopes that it will sell more hardware and services as more companies and programmers start using Sun's free technologies.

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