H-P seeks to steal Sun Micro's shineCustomers are offered $25,000 in incentives if they defect By Rex Crum, CBS.MarketWatch.comLast Update: 5:00 PM ET Oct. 3, 2003SAN FRANCISCO (CBS.MW) -- Hewlett-Packard turned up the heat against struggling Sun Microsystems on Friday by offering $25,000 worth of technology support to lure computing customers away from its Silicon Valley rival. CBS MARKETWATCH TOP NEWSU.S. stocks surge as economy starts to add jobsU.S. economy finally creates jobs in Sept.H-P offers incentives to Sun Micro customers who defectGold prices end lower after as much as a $17 dropFunds engage in end-of-quarter illegal activitiesFree! Sign up here to receive our Internet Daily e-Newsletter!TRACK THESE TOPICSMy PortfolioAlertsCompany: Hewlett-Packard Co.AddCreateCompany: Sun Microsystems IncAddCreateGet Breaking News sent directly to your inbox Create A Portfolio | Create An AlertH-P (HPQ: news, chart, profile) said it would give customers of Sun Micro (SUNW: news, chart, profile) free estimates for switching their servers to H-P's product line, which runs on the Linux operating system. The offer also covers related services such as free use of H-P's Proliant server for 30 days in order for customers to evaluate the performance of applications on H-P's products. "Sun's platform is at a dead end," said Marc Jourlait, H-P vice president of enterprise marketing. "Customers want to move over to standards-based platforms and know that we've been doing Linux for years."H-P routinely offers similar incentive deals to attract customers. But this pitch is intended to highlight what H-P regards as Sun's vulnerability: its customers are tied up with Sun's independent Solaris operating systems, rather than the industry standard incorporating Linux.Some critics have attacked Sun for its steadfast support of Solaris, saying the company has been late in putting its weight behind Linux, the open-source code operating system.Sun officials were not immediately available for comment.Some analysts said H-P's offer, which is valid until Dec. 31, was little more than a public relations ploy by kicking a weakened competitor that's already down."This is just par for the course. It's part of an ongoing battle between these guys," said Brent Bracelin, a computer hardware analyst with Pacific Crest Securities, in Portland, Ore. Late Monday, Sun said it would take a $1.05 billion charge against its previously reported fourth-quarter results, and turn its slight profit into a loss of more than $1 billion. Sun also said it expects to report a loss between 7 cents and 10 cents a share when it reports first-quarter results this month. The recently ended third quarter wasn't very good for Sun's investors, either. The company's stock fell almost 29 percent between June and September.On Thursday, a Merrill Lynch analyst hammered Sun in an open letter to the company, saying the company needs to take drastic measures such as cutting between 5,000 and 7,000 jobs and spinning off its Java business in order to get back to a size where it can focus on specific technologies and profitability.In afternoon trading, H-P shares rose 78 cents to close Friday at $20.30, while Sun added 8 cents to close at $3.31.Rex Crum is a reporter for CBS.MarketWatch.com in San Francisco.
