Fujitsu commits to servers despite potential Sun deal

SAN FRANCISCO (Reuters) - Fujitsu Ltd reaffirmed the company's commitment to its high-end computer server franchise, even though its partner in that business faces an uncertain future.

Fujitsu teams with Sun Microsystems Inc on the "SPARC" line of servers, a business worth hundreds of millions of dollars in annual sales for Fujitsu.

But Sun is now in talks to be acquired by IBM, sources say. SPARC products compete with IBM's Power-class servers, mainframes and supercomputers, and an IBM-Sun tie-up could complicate the partnership for Fujitsu, analysts say.

Fujitsu America Chief Executive Farhat Ali declined in an interview to comment on a possible deal.

"We continue to sell server-based products, we want to assure all our customers ... that product we sell in the SPARC line of products we will continue selling and maintaining them," he said. "And then if they have bought the products from us ... they should rest assured that we will fulfill all our commitments to this business. From a customer perspective we don't see any issues whatsoever."

Fujitsu holds roughly 5 percent of the global server market, according to IT research house IDC, behind IBM, Hewlett-Packard, Dell and Sun. It is Japan's top computer server vendor, holding a quarter of that market.

Ali was named CEO for the company's North American operations last September when Fujitsu consolidated operations in the region. Fujitsu America, the new business unit, formally begins operations Tuesday.

The Japanese tech conglomerate is the world's fourth-largest IT services firm. Ali emphasized the company's focus on the segment while downplaying the hardware side. In February, Toshiba Corp agreed to buy Fujitsu's money-losing hard disk drive business.

"We are a services-led company," he said, that supplies both its own products and others to clients.

"If you're just talking about a product sell where you have to compare features, in that area it's just a complete commodity. I think it's a very hard sell to be in the hardware business."

With the recent entry of Cisco Systems into the server market and the possibility of an IBM-Sun merger, Ali said he sees the shifting enterprise landscape providing new opportunities for Fujitsu as customers focus on cutting costs.

"Especially in the North America marketplace, there is good opportunity when there's uncertainty and customers are unfrozen in terms of decision-making and loyalties or relationships."

Only about 10 percent of Fujitsu's more than $50 billion of annual sales comes from North America, but senior vice president of corporate marketing Ron Mitchell said the parent company is looking for accelerated growth in the region with growth in Japan limited.

Mitchell said the economic turmoil was "invigorating" and provided Fujitsu with an opening in the market.

"If all was bearing along at the kind of pace that it did two, three years ago, it would be more difficult for us to get traction in those conditions than it is in these conditions."

Fujitsu's other businesses include mobile phones, semiconductors and personal computers. Ali said the company plans to introduce its first netbook this year.

(Reporting by Gabriel Madway; Editing by Gary Hill)