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Sun Microsystems Starts Pay-Per-Use Computing Sales (Update2)

By Connie Guglielmo

March 22 (Bloomberg) -- Sun Microsystems Inc., working to develop new services around its server computers, began selling computing power online to U.S. customers today and said it delayed offering the pay-per-use service globally.

The Sun Grid service lets customer buy computing power for $1 per computer per hour, Santa Clara, California-based Sun Microsystems Inc. said in a statement. The company has 5,000 computers running in data centers in New Jersey and Virginia.

Sun announced the Grid service in February 2005 and spent the past year developing an Internet site where customers can load jobs on the Internet and pay for computing with a credit card, said Aisling MacRunnels, senior director of utility computing. Sun plans to expand to the U.K. in six months and hopes computer-services companies will be customers, she said.

``We want to be able to do this with partners,'' MacRunnels said. ``Five thousand computers is a conservative start.''

The company expects the service to be profitable within a year, MacRunnels said. Sun said it expects 70 percent of the computers to be used on a daily basis in the near term, which translates into sales of as much as $84,000 a day.

Shares of Sun rose 9 cents to $4.81 at 4 p.m. New York time in Nasdaq Stock Market composite trading. They have gained 15 percent this year.

Sun has worked on providing a utility service for the past five years to convince customers that buying computing power is less expensive than purchasing and installing machinery.

New Services

Customers will be charged only for the computing time they use, MacRunnels said. Companies that want to tap into 1,000 computers for one minute to run a complex financial simulation or test software, for instance, would be charged $17, she said.

To stem four years of losses, Sun has been adding services to its servers, the computers used to run networks and Web sites.

Sun wants to see how the U.S. pay-per-use effort fares and line up service providers before expanding overseas, MacRunnels said.

The company is the world's fourth-largest maker of servers behind International Business Machines Corp., Hewlett-Packard Co. and Dell Inc. Sun's share of the $14.5 billion server market declined in the past year to 8.2 percent in the fourth quarter from 9.2 percent a year earlier, researcher IDC said last month.

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net

Last Updated: March 22, 2006 16:08 EST