June 27 (Bloomberg) -- Sun Microsystems Inc., whose servers run corporate networks, slashed computer workstation prices by as much as 40 percent and will sell its first notebook models to tap faster-growing markets and compete with Dell Inc. and others.

Sun is selling the Ultra 3 Mobile Workstation starting at $3,400, the company said today in a statement. The Ultra 20 Workstation, a desktop model, was cut to $895 from $1,495, based on prices at Sun's Web site.

Chief Executive Officer Scott McNealy, who has seen sales drop for almost four years, is entering a notebook computer market that's growing three times faster than desktop personal computers. Sun's notebook machines are powerful enough for engineers to perform technical work while on the road, said John Fowler, Sun's executive vice president of network systems.

``Four or five years ago, they were pokey and slow with small screens,'' Fowler said in an interview. ``Now everybody wants to use them.''

Workstations are personal computers geared toward more- demanding professional uses, such as scientific applications. A new version of the Opteron processor made by Advanced Micro Devices Inc. will let Sun slash prices, Fowler said.

Dell Inc. is the world's largest personal-computer maker.

The $895 Sun desktop workstation with the Opteron processor has 512 megabytes of DDR-400 memory, an 80-gigabyte hard-disk drive and a DVD-ROM optical drive.

The notebook includes Sun's own Ultrasparc processor, the Solaris 10 operating system, 512 megabytes of memory, a 40- gigabyte hard drive and Wireless Fidelity, or Wi-Fi access.

`Lowest Prices'

``We are at or below the lowest prices,'' Fowler said. ``Dell doesn't carry AMD chips so they are at a disadvantage.''

Shares of Santa Clara, California-based Sun dropped 5 cents to $3.90 on June 24 in Nasdaq Stock Market composite trading. The shares have lost 31 percent this year.

Sun announced the price cuts to coincide with the JavaOne conference that opens today in San Francisco. Sun invented Java more than 10 years ago as a programming language to help different computers speak with each other. About 15,000 people are expected.

Sun includes in its newest workstations software it values at thousands of dollars, such as Java Studio Enterprise 7 and Sun Java Studio Creator. The goal is to coax developers to create applications that run on Sun machines, Fowler said.

Sun is also giving away the source code for its application server software, which helps corporate databases work together, to spur development of new programs, the company said.

Consumers in the U.S., Europe and Japan are opting not to be tied to their desks as laptop PCs become less expensive and closer to desktops in performance, said Roger Kay, an analyst at researcher IDC. He forecasts notebook sales will jump 22 percent this year, compared with a 7 percent gain by desktop PCs.

To contact the reporter on this story: Peter J. Brennan in Los Angeles at Pbrennan3@bloomberg.net

Last Updated: June 27, 2005 00:03 EDT