Sun Microsystems got more serious on Monday about its effort to sell cheap servers, rolling out two new machines and announcing deeper ties with Oracle and Red Hat.

The two new servers--the Sun Fire V60x and V65x--run Intel Xeon processors but, by starting at US$2,450, are far cheaper than machines from Dell Computer or IBM, said Scott McNealy, Sun CEO.

As part of the deal, Oracle has agreed to port its software to Solaris x86, the version of Sun's OS that runs on chips like Xeon that are based on the so-called x86 architecture. Sun will also begin to distribute Red Hat's version of Linux while Red Hat will incorporate Sun's Java virtual machine into its version of Linux.

Through these deals, Sun can now tout that its cheap servers can run the same basic software that comes on Windows-based machines from Dell Computer. Oracle has made software for Sun servers running the company's Sparc chip, but this is the first time the database developer has committed to products for Solaris x86.

"We didn't have an x86 capability or the Linux support for the products Oracle is pushing before," said McNealy in a press conference in the San Francisco Museum of Modern Art. "We didn't necessarily deliver on the promise of Solaris x86 over the last four to five years."

Although Mountain View, Calif.-based Sun is often associated with complex servers costing US$10,000 or more, in recent months it has touted its ability to compete in the growing market for relatively inexpensive one-and two- processor servers based around silicon from Intel or Advanced Micro Devices.

And for good reason. The low-end server market is growing at a much faster clip and in many places displacing the ornate machines Sun traditionally specialises in.

Oracle chairman Larry Ellison, who shared the stage with McNealy, declared that small machines woven together in clusters would phase out big machines.

"The future of computing is low-cost components being assembled into larger computers. You get higher performance and reliability," Ellison said.

Hardwarewise, Sun's low-end servers are virtually identical from the sort of thing the Dells of the world sell. The systems, in fact, come from the same contract manufacturers in Asia, McNealy noted.

Sun's servers differ in that they come with Solaris x86 or Linux, but not Windows, which is the predominant OS for traditional Intel manufacturers.

The difference isn't there for novelty value, Sun executives assert. Most large corporate customers already own some sort of Sun servers running the standard version of Solaris. The new, inexpensive Sun servers can run the same applications, the same functional OS and take advantage of the same management tools.

As a result, buying Sun's Intel servers can lower overall costs because the same software can run across a gamut of servers.

"Not a lot of people want to put a new OS into their data center," said McNealy.

Sun is also certifying that Solaris x86 will run on servers from HP and Dell, added Jonathan Schwartz, executive vice president of software for Sun.

Sun execs have said that an increasing portion of their profit will come from software. Under a new pricing program called Orion, Sun is expected to charge corporations a fee of US$100 to US$200 per employee a year, according to a recent report from Merrill Lynch analyst Steve Milunovich. Orion includes a Web server to house Web sites, an application server to run server programs, a portal server to run customised Web sites for specific groups of computer users, a directory server to record username-password pairs, and packages for handling e-mail, calendars and contact lists.

Competitors, though, claim that Sun has yet to prove its commitment to selling cheap servers. "We've certainly seem them blow hot and cold in this area," said Hugh Jenkins, vice president of marketing for industry standard servers at Hewlett-Packard, adding that few HP customers have ever asked to have Sun's x86 OS installed on one of their servers.

Mark Tolliver, executive vice president of marketing and strategy, discounted assertions that Sun was ambivalent about its strategy.

"This is a full and equal peer of Solaris on Sparc," he said. "You are going to see a lot of x86 on Solaris on a lot of other systems out there."

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