SYSTEMS

SAN FRANCISCO -- Speaking to an audience of industry and financial analysts at Sun's annual Worldwide Analyst Conference, Scott McNealy, Chairman, president and CEO, Sun Microsystems (NASDAQ:SUNW) , emphasized the need for continued innovation in order to reduce the cost and complexity of technology customers face today. "Sun has become an enduring force by zigging when others zag. If you don't distinguish yourself from competition, you stand little chance of winning," said McNealy. "Our approach is controversial but deliberate. We are focused on the end result of creating long-term value for our shareholders and customers through customer-centric R&D that creates savings and simplification." Over the next two days, Sun will preview its strategies, roadmaps and innovations that will redefine the network computing landscape, including a new approach to radically simplify the acquisition, deployment and operation of Sun's award-winning enterprise infrastructure software. "Since our analyst conference 12 months ago, we have continued to focus on creating customer-centric, innovative solutions, including a new software approach that is completely focused on reducing costs and eliminating complexity. We have also increased our commitment to the entry-level market and are expanding our 32-bit offerings. While others have beefed up their marketing messages, we're out there solving real customer problems with real technology," added McNealy. "Our customers know that innovation pays." On February 10, Sun unveiled the results of a nearly $500 million per quarter R&D investment in network computing with its NC03Q1 launch. Sun also delivered on its promise to broaden its commitment to 32-bit computing over the past year, with the arrival of Solaris(TM) on x86 and with support for Linux-based products, including the Sun(TM) LX50 server, seven Sun(TM) Open Net Environment (ONE) products now available on Linux, and ongoing work on Project Mad Hatter -- a low-cost Linux-based desktop offering. The company has also increased backing for its industry-leading UNIX, Solaris OS, both with the introduction of Solaris on x86 as well as with the release of Solaris 9 in May of 2002. Sun Maintains Server Lead Independent numbers released by industry research and advisory firm Gartner Dataquest show Sun increasing its UNIX server revenue market share and shipments in 2002. In 2002, Sun maintained its annual shipment and revenue leadership positions, with 56% and 38% of the market respectively. Sun's UNIX revenue for CY02 was 26% greater than its closest competitor; Sun ships more UNIX servers than all other vendors combined. "Sun's continued leadership is evidence that customers value innovation and choice," said Shahin Khan, Sun's chief competitive officer. "SPARC(R) and Solaris remain the standards for 64-bit computing. As the UNIX market continues to grow, buoyed by Solaris, Linux and Solaris x86, and with the new products introduced on February 10 -- which are designed to reduce cost and complexity for customers." Connecting Everything With A Digital Heartbeat Sun remains committed to unleashing mobility with security, harnessing its technology like Java Card(TM), J2ME(TM), Sun Ray(TM) and its Solaris operating environment. "Sun's technologies will make it possible for everything with a digital, electrical or biological heartbeat to connect to the Network," said McNealy. "With Auto-ID like technologies, any asset of value will also be connected in this untethered, secure environment. This will create profound potential and challenges for enterprises, service providers and consumers. Technology, habits, and governance will all need to evolve and adapt to this new connected reality." CIOs Seek Reliability, Integration, Security and Innovation During the first day of its analyst conference, Sun provided snapshots of the results from an independent CIO study, conducted by New York-based research firm Penn Schoen & Berland. More than 200 global chief information officers participated in the survey. Among the study's findings: -- 90 percent of global CIOs believe that a company's ability to innovate is important when making decisions about IT vendors. -- Nearly half of the CIOs surveyed agree their top three Internet technology priorities are: integrating systems and databases, ensuring reliability of core infrastructure, and upgrading security. -- Security is the number-one issue preventing companies from rolling out mobility solutions. More than one-third of global CIOs say that security is an issue getting in the way of mobility. -- 25 percent of global CIOs are considering deploying alternatives to Microsoft Office. Of those that are considering alternatives, 35 percent are considering StarOffice(TM) -- Sun's business productivity suite. Archipelago Uses Sun To Power Next Generation Exchange Sun will announce several key customer wins at its analyst conference including Archipelago, the nation's first totally open all-electronic stock exchange. Archipelago will replace hundreds of servers with a few Sun Fire(TM) systems. This move is expected to result in substantial savings for Archipelago, while improving speed and reliability in the process. Each enhanced Sun system is designed to accept and book orders at 5,000 orders per second, and provide up to 500 simultaneous customer connections. This technological scalability and efficiency is crucial for Archipelago, which currently interacts with approximately 1 in 4 Nasdaq shares traded and has seen share volume grow from 30 million shares per day in 1999 to approximately 400 million shares per day in 2003.