Sun Plans to Offer Hourly Rates on CPUs

Vendor to sell access to systems on utility basis

Arguing that computing power is no different than electric power, Sun Microsystems Inc. last week said it will allow users to buy CPU cycles on an hourly basis, either directly from Sun or through an electronic trading market.

Corporate users in search of computing time, as well as speculators, will be able to bid on available CPU hours through Archipelago Holdings Inc., a Chicago-based electronic stock exchange. For example, a company that buys 10,000 CPU hours through the new Sun Grid compute utility plan and then discovers that it needs just 8,000 could sell the unused CPU hours on the exchange.

Trading won't begin for another three to six months, a Sun official said, adding that the company may also offer CPU cycles on the exchange.

Sun said it is in a "proof of concept" phase on Sun Grid with some users and has about 10,000 CPUs available at multiple data centers. The base price for CPU time is $1 per hour, and Sun is also offering storage at a monthly cost of $1 per gigabyte. But volume users will likely pay a lower rate, the company said.

Subscription Interest

One user who plans to evaluate the Sun Grid model is Joe Euteneur, chief financial officer at XM Satellite Radio Holdings Inc. in Washington. XM last week said it has made Sun the sole Unix server and storage supplier for its back-office data center, which supports business operations, marketing and customer service. The company's broadcast operations use a variety of vendors, including Sun.

Jonathan Schwartz, Sun's president and chief operating officer
Jonathan Schwartz, Sun's president and chief operating officer
"They clearly have my interest," Euteneur said. "The computer industry is trying to move toward a subscription-based business, and obviously we are a subscription-based business."

He added that he sees potential cost advantages to using Sun Grid, but it depends on the service delivery and the actual pricing that XM could get from Sun.

Sun expects the early adopters of Sun Grid to be high-performance computing users in industries such as financial services, oil and gas exploration, and the life sciences.

Jonathan Schwartz, Sun's president and chief operating officer, said at the company's quarterly product rollout in Santa Clara, Calif., that large software development organizations also may find Sun Grid appealing.

The new approach "will offer standardized software infrastructure in a grid that all their developers can get access to worldwide, without that business having to maintain and operate the infrastructure," Schwartz said.

Other vendors, such as IBM, already offer pay-per-use utility computing. But Sun's fixed price and its marketplace approach illustrate the increasing commoditization of IT, said Nicholas Carr, author of Does IT Matter? Information Technology and the Corrosion of Competitive Advantage (Harvard Business School Press, 2004).

Carr said that upward of 90% of a company's IT spending goes to basic infrastructure. "That's a large percent of expenditures that, in fact, can move to a utility model," he said. "I think [Sun Chairman and CEO] Scott McNealy has seen the future. The question now is, Have Scott McNealy's customers seen the future?"

Christopher Willard, an analyst at Framingham, Mass.-based IDC, said the technical users that Sun sees as likely Sun Grid customers have "an insatiable appetite" for compute cycles. But they will have to be convinced that security is tight and that data can be processed swiftly on the grid, he said.

Copyright © 2005 IDG Communications, Inc.

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