Sun buys server company, rehires cofounder

Sun Microsystems Inc. has agreed to acquire Kealia Inc., a privately held server design company based in California, and in the process is rehiring one of Sun’s cofounders to help design the company’s high-volume servers, Sun announced Tuesday.

Andy Bechtolsheim, Kealia’s cofounder and chief executive, helped found Sun two decades ago while studying at Stanford University with Scott McNealy, Sun’s chairman, president and chief executive officer. He led a team that designed Sun’s workstations, which was its mainstay business at the time.

He will return to Sun as chief architect of its Volume Systems Products Group, where he will help design Sun’s emerging family of servers based on Advanced Micro Devices Inc.’s Opteron processor and Intel Corp.’s Xeon chip, McNealy said.

McNealy made the announcement at a press conference in San Francisco Tuesday where Sun unveiled several new products, including its first Opteron-based server. Kealia also had been designing servers based on Opteron chips, Bechtolsheim said.

“We have been working on a bunch of next-generation Opteron servers that seemed like good fit for Sun,” he said. The Sun Opteron server announced Tuesday does not use any Kealia technology, McNealy said.

The acquisition came about as a result of a recent reunion dinner for Sun’s four cofounders in Portola Valley, Calif., McNealy said.

“Andy and I started talking, one thing led to another and suddenly Sun bought Kealia,” McNealy said. He described Bechtolsheim as “the most talented workstation and single-board computer designer on the planet.”

Sun plans to acquire the Palo Alto-based company in a stock-for-stock merger expected to close in the third or fourth quarter of Sun’s 2004 fiscal year — or by the end of June — subject to standard closing conditions. Financial terms were not released.

If the merger goes through, Kealia will become the Advanced Systems Technology group within Sun’s Volume Systems Products Group. Bechtolsheim, who is 48, will become a senior vice-president and chief architect within the Volume Systems Products group. He will also join Sun’s executive management group, led by McNealy.

He left Sun to work at Granite Systems Inc., McNealy said, which was later acquired by Cisco Systems Inc. in the mid-1990s. He left Cisco to start Kealia, which began life developing media server technologies, McNealy said. “Then he went back to doing what he does naturally, which is building the coolest computers in the world,” he said.

Bechtolsheim earned a master’s degree in computer engineering from Carnegie Mellon University in 1976. He was a doctoral student in computer science and electrical engineering at Stanford University from 1977 to 1982.

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