AMD revenue begets Sun profits?
AMD has posted a 45% increase in revenue to $1.84 billion (an increase of $570 million). How much of this can we attribute to Sun's Galaxy servers (X2100, X4100 and X4200 SunFire servers)?
Let's take a low, medium and high estimate to guess the impact to Sun's results due out on January 24th.
Assuming 50% of the AMD revenue increase was due to Sun servers, that means Sun spent $280 million MORE on AMD Opteron chips. Now assume that this accounts for half the unit cost of a typical server, which means Sun shipped an extra $1 billion in Galaxy servers, of which half is profit (if Sun maintains its margins). Tasty!
Let's say 25% of the AMD revenue increase was due to Sun servers, meaning Sun spent $140 million extra on AMD Opteron silicon. Assuming it accounts for half the unit cost of a typical server, Sun shipped $500 million or so in its Galaxy line (assuming 50% margins).
If only 10% of the AMD revenue jump came from Sun purchases, then we're looking at just $50 million of extra chip spend, equalling say $200 million in Sun revenue incease.
Whichever way you look at it, Galaxy is driving profits at Sun unless Sparc revenue is losing ground to Power and Itanium. Today, news.com say that Itanium is losing backwards compatibility with X86, except via emulation software which takes it down to current Xeon speeds. And with the new T2000 Sparc servers looking so tasty, Sun may finally be IN THE BLACK. Buy SUNW before 24th!