SUN MICROSYSTEMS Q107 QUARTERLY RESULTS RELEASE

Investor Relations http://www.sun.com/investors

1

Speakers
Bret Schaefer VP, Investor Relations Jonathan Schwartz CEO & President Mike Lehman CFO & Executive VP, Corporate Resources

Slide 2

Top Level P&L

Q106 Actuals Revenue Gross Margin Gross Margin % Operating Expenses * Operating Income (Loss) Operating Margin % EPS GAAP 2,726 1,202 44.1% 1,339 (137) (5.0%) ($0.04) Q406 Actuals 3,828 1,639 42.8% 1,974 (335) (8.8%) ($0.09) Q107 Actuals 3,189 1,388 43.5% 1,452 (64) (2.0%) ($0.02) Q-Q Change (639) (251) 0.7% Pts (522) 271 6.8% Pts $0.07 Y-Y Change 463 186 (0.6%) Pts 113 73 3.0% Pts $0.02

* Total Operating Expenses includes SG&A, R&D, Purchase IPRD, Restructuring, & Intangible Impairment charges.

Slide 3

Software Highlights Q107

Software revenues grew approximately 17% Y/Y Growth driven by Solaris strength, identity Solaris downloads surpassed 6 million Java ES (JES) subscribers grew 25% Y/Y Key Solaris wins include Verizon Wireless, SEI, US Library of Congress Product innovation - DTrace wins WSJ Technology Innovation Award
Slide 4

Systems Highlights Q107

Total systems revenue grew 15% Y/Y. Sun Fire T1000/T2000 Systems (Niagara) performed well reaching $100 million. SPARC server revenues grew over 10% Y/Y. Sun Fire x64 servers (Galaxy) had Y/Y unit growth of 54%. Sun Fire x64 server annual run-rate now in excess of $600M. Customer momentum with TACC, MasterCard, Time Warner Cable, Alcatel, Verizon Wireless. Marketing programs gained traction: Try and Buy yields 252 deals in Q1. IDC data from August reaffirmed our progress. Product innovation: Sun Fire x4600, the world's first 16-way x64 Slide 5 server in a single 4U chassis.

Storage Highlights Q107

Total storage revenue grew 14% Y/Y Growth driven by mid range disc Sun StorEdge 5000, 6000 series and high-end Sun StorageTek tape each had over 75% unit growth Y/Y Key customer wins included US Library of Congress, Rhythm and Hues animation, Research In Motion (RIM) Sun StorageTek SL8500 had 1000th customer shipment Innovation: Sun Fire x4500 (Thumper)
Slide 6

Services Highlights Q107

Total services revenue increased 20% Y/Y Client Solutions and Educational Services revenue increased 39% Y/Y Services growth beginning to reflect an improved product set and positive customer outlook on SUNW innovation.

Slide 7

Our Strategy
Software Servers

Network.com

Services

Storage
Slide 8

Revenue
PRODUCTS/SERVICES
Year/Year Growth % $4,000

Products Revenue up 15% Y/Y Services Revenue up 20% Y/Y

29% 17% 4% (4)% (1)% 36% 35% 21% 36% 34% 17% 39%

Revenue (millions)

$3,000 34% $2,000

4% 36%

(2)% 35%

4% 37%

37%

$1,000

66%

64%

65%

64%

65%

63%

63%

64%

66%

61%

$0

Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107

Fiscal Quarter
Products Revenue (% of Total) Services Revenue (% of Total)

Slide 9

Revenue
P ROD UC TS /S E RV IC ES
Year/Year Growth %
70% 60%
63%

Revenue Y/Y % Growth

50%
43% 42% 39% 41% 40% 40% 35%

47%

44% 45% 43% 31% 23% 21% 15% 6% 1% 1% -5% -19% -29% -30% -9% -11% 8% 6% 7% 7% 7% 6% 6% 7% 4% 5% 5% 3% 3% 2% 0% -2% 0% -3% -5% -7% -10% -13% 15% 31% 25% 20% 15%

30% 20% 10% 0% -10% -20% -30% -40% -50% -60%

25% 23%

-16% -20%

Products Revenue Services Revenue

-48% -53%

Q100 Q200 Q300 Q400 Q101 Q201 Q301 Q401 Q102 Q202 Q302 Q402 Q103 Q203 Q303 Q403 Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107

Fiscal Quarter

Slide 10

Services Revenue
TOTAL SERVICES REVENUE
Year/Year Growth % of Total Revenue $1,500

Support Services up 16% Y/Y Client Solutions/Edu Services up 39% Y/Y

23%

25% 21% 21% 24%

Revenue (millions)

20% 21%

7% $1,000 6% 24% 22%

6% 23%

0% 22%

0% 26%

7% 18%

22%

$500 76% 78% 77% 78% 74% 82% 78% 79% 76% 79%

$0

Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107

Fiscal Quarter
Support Services Revenue (% of Total Services) Client Solutions/Edu Services Revenue (% of Total Services)

Slide 11

Gross Margin
PRODUCTS/SERVICES
42.9% 42.2%

Products Margin up 1.6 pts Q/Q Services Margin down 1.2 pts Q/Q Total Margin up 0.7 pts Q/Q
42.6% 43.0% 42.8% 43.5%

44.1% 41.4% 41.4%

$2,000 39.4%

1,639

Gross Margin (millions)

$1,500

1,421 1,224
37.9%

1,128
42.1%

1,198
42.3%

1,087
40.1%

1,231 1,202
41.5% 45.4%

1,367

1,388
46.1% 44.9%

43.6% 42.4%

$1,000

$500 40.1% 43.4% 42.1% 42.1% 41.4% 43.3% 42.0% 43.4% 41.1% 42.7%

$0

Q404

Q105 * Q205

Q305

Q405

Q106

Q206

Q306

Q406

Q107

Gross Margin %

Gross Margin %-Products Slide 12

Fiscal Quarter

R&D / SG&A Expense*

Year/Year Growth %
$1,800 $1,500 $1,200 $900 $849 $600

(15)% Qtr over Qtr decrease

36% 5% (14)% (10)% (10)% (8)% 17%

33% 30% 13%

($ millions)

$1,056 $1,020 $1,133

$788 $828 $726 $735 $670

$958

$300 $518 $541 $523 $543 $473 $416 $447 $450 $472 $439 $0 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107

Fiscal Quarter
R&D SG&A Slide 13
* Total Operating Expenses differ from SG&A and R&D Expenses because Total Operating Expenses includes IPRD, Restructuring, & Intangible Impairment charges.

Q107 Gross Margin Q/Q Bridge

Slide 14

Demand Metrics
Book to Bill Ratio & Backlog
Balance (millions)

Deferred Revenue at $2.25B

Ye a r / Ye a r G r o w t h %
3,000 2,500 2,000 1,500 1,000 500 0 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107

Book to Bill Ratio** Product & Services Backlog ($M) ***

Q106* 0.97

Q406* 1.04

Q107 0.96

14%

12% 10% 2%

1% 10% 10% 12%

14%

10%

$1,408

$1,851

$1,869

Fiscal Quarter
Includes STK & SBYN balance commencing in Q106

* Q106/Q406 Book to Bill & Backlog is based on Sun Standalone only (excludes restatement for STK & SBYN) ** Book to Bill Ratio assumes Services ratio 1:1. *** Services Backlog based on 3 month backlog horizon

Slide 15

Deferred Revenue
PRODUCTS/SERVICES
Year/Year Growth % $2,500 14% 1% 12% 10% 2%

Products Deferred Revenue up 19% Y/Y Services Deferred Revenue up 7% Y/Y

14% 10% 10% 12% 10%

Revenue (millions)

$2,000 $1,500 $1,000 $500 26% $0

74% 78% 76%

79%

75%

78%

74%

75%

74%

75%

22%

24%

21%

25%

22%

26%

25%

26%

25%

Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107

Fiscal Quarter
Products Deferred Revenue (% of Total) Services Deferred Revenue (% of Total)

Slide 16

Revenue - Geo
U.S./In t'l Americas/EMEA/ APAC
$4,000

U.S. up 12% Y/Y Int'l Americas up 54% Y/Y EMEA up 17% Y/Y APAC up 20% Y/Y 3,828

Revenue Geo (millions)

3,110
$3,000
16% 35% 5% 37% 4% 44% 42%

3,337 2,628
17%

2,841 2,627
18% 37% 6% 40% 19% 38% 5% 37%

2,974
17%

3,177
17%

17%

3,189
17%

2,726
17%

16%

36% 37% 35% 6% 42% 7% 35% 7% 41%

$2,000

38% 6% 40%

36% 5% 43% 6% 41%

$1,000

40%

$0

Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107

Fiscal Quarter
Slide 17

Appendix

18

Metrics

Total Server Units

Year/Year Growth %
120 100

Server Units (thousands)

80 60 40 20 0

46%

16% (3)%

8%

9% 2%

14% (6)% 6% 7%

Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107

Fiscal Quarter

x64* Server Units Grew 54% Y/Y

Year/Year Growth %
30 25 20 15 10 5 0 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107
* x64 servers include x86 32-bit and x64 64-bit

53% 105% 327% 36% 160% 197% 109% 93% 81% 54%

x64* Server Units (thousands)

Fiscal Quarter Slide 19

Q105 Total Gross Margin Bridge

$M GAAP Total Gross Margin Kodak Settlement Impact Total Gross Margin w/o Kodak Settlement Impact $1,073 $55 $1,128 % of Rev 40.8% 2.1% 42.9%

Slide 20

Major News from Sun's Q1 FY07

Focused on Returning Sun to Growth & Profitability
> Revenues for the first quarter of fiscal 2007 were $3.189 billion, an increase of 17% over the first

> >

> >

quarter of fiscal 2006, and our gross margin remained strong, affirming Sun's business strategy and focus on innovation. Announced agreement to acquire identity management implementation specialist Neogent Rose to #3 in the IDC worldwide server report and grew server market share and server factory revenue versus competitors; maintained #1 position in worldwide UNIX server revenue and shipments (Q2CY06) Grew faster than HP, IBM, EMC and Dell in the disk storage market and extended our lead in the tape storage market, according to IDC (Q2CY06) 51% of purchasers from the Try and Buy evaluation program self identified as new customers to Sun

Expanded Sun's Reputation as Thought Leader and Innovator

> Announced commercial server rebate program with PG&E for the Sun FireTM T1000 and T2000 servers > Announced an agreement with Accenture to jointly develop Identity-enabled Service-Oriented

Architecture and composite applications and create the Accenture Innovation Center for Sun Solutions > Honored with the top prize in The Wall Street Journal 2006 Technology Innovation Awards for Dynamic Tracing (DTrace) technology, a key feature in the SolarisTM 10 Operating System (OS) > Ranked sixth in the 2006 InformationWeek 500 and won the InformationWeek Supply Chain Innovation award; Also recognized by Procuri for "Excellence in Strategic Sourcing" > Recognized at the the International SuperComputing Conference for the 7th largest supercomputer in the world, located at the Tokyo Institute of Technology

Slide 21

Major News from Sun's Q1 FY07 cont'd

Expanded Sun's Reputation as Thought Leader and Innovator - cont'd
> Sun Fire servers with UltraSPARC IV+ processors were ranked by Gartner in the leader quadrant. The

Sun Fire x64 and CoolThreadsTM server line were each placed in the visionary quadrant in Gartner's latest Magic Quadrant reports for both Application Servers and Online Transaction Processing DBMS Servers > JavaTM technology listed as number 5 in an InformationWeek cover story titled "What's The Greatest Software Ever Written?"

Delivered Steady Stream of Ground-Breaking Innovations to the Market

> Introduced breakthrough x64 products, including the Sun FireTM X4600, the world's first 16-way x64 >

>

>

>

server in a single 4U chassis Introduced the Sun BladeTM 8000 Modular system, which allows customers to cut server and service costs by up to 60%, power and cooling costs by up to 62%, and footprint in half versus competing rackmount servers Introduced the Sun Fire X4500 Server, new hybrid storage and server offering optimized for Web 2.0 environments, that delivers the remarkable performance of a four-way x64 server and ultra-high storage density with up to 24 TB in 4U of rack space Announced systems, storage and software products for Solaris 10 Operating System that demonstrate Sun's ability to help customers improve efficiency and reduce costs, while protecting their data, including Solaris Trusted Extensions Added 16,000 new Java Enterprise System infrastructure software subscribers, a 25% increase from Q1FY06, to approach 1.2 million subscribers.

Slide 22

Product Reviews Talk Innovation

Set Many World Record Benchmarks*: Set Many World Record Benchmarks*: Sun Fire E25K
Best LHS BSCS iX Wireless Billing Benchmarck Sun Beat E25K 26% Fire HP by Best LHS BSCS iX Wireless Sun Billing Benchmarck Blade 8000 Beat SPECjAppServer2004 Best HP by 26% Beat HP by 36% Sun Beat IBM by 53% Blade 8000 Best SPECjAppServer2004 SunBeat HP by 36% Fire X2200 M2 Beat SPECfp_rate2000 Best IBM by 53%

(x86, 2 chip) Tops Woodcrest by 38% Sun Fire X2200 M2 Sun Best x4600 Fire SPECfp_rate2000 (x86, single-node SPECjAppServer2004 Best 2 chip) Tops Woodcrest by 38%

Sun Fire V890 Sun Tops x4600 Fire on Domino 7 R6iNotes Notesbench Best single-node SPECjAppServer2004 * See Benchmark Disclosures at the end of this presentation Sun Fire V890 Tops on Domino 7 R6iNotes Notesbench

* See Benchmark Disclosures at the end of this presentation

Slide 23

Industry Analyst Recognition

Gartner Dataquest released Worldwide Server Market Share numbers for Q2CY06. Sun saw its yearover-year server market revenue share grow by 1.3 points according to the Gartner Q2CY06 Worldwide Server Quarterly Statistics, which was released in August 2006. Out of the top 4 WW Server vendors in Q206, Sun was the only vendor to achieve year-over-year server factory revenue growth, posting a 13.7% gain. --Gartner, Market Trends: Servers, Worldwide, 2Q06, September 2006* [Sun] is among the first industry leaders to add audit policy to the provisioning process in an easy to use fashion for both preventive and detective compliance. In addition to reduced costs for provisioning and identity auditing, the implementation of a repeatable, sustainable compliance process should not only aid in meeting ongoing compliance requirements, but in reducing security risks as well. --IDC, Sun Underscores Compliance with Identity Manager 7.0: Automating Identity Lifecycle Management and Identity Auditing Processes, Doc # 203681, September 2006 On August 31, Sun Microsystems announced the integration of the Sun StorageTekTM TekCare support programs into the SunSpectrumSM portfolio. This represents the latest milestone in the integration of StorageTek into Sun. By integrating the offerings, Sun is simplifying its support offerings and providing consistency across systems and storage. This should be appealing to customers that have both StorageTek and Sun equipment, as the terms and conditions of the support agreements will now be consistent across the product line. Additionally, it should eliminate confusion for new Sun customers as there is now one portfolio of support services for storage and systems. IDC believes that this is a positive step for Sun. --IDC Link, Sun Integrates StorageTek Support Offerings, Doc # lcUS20337006, August, 2006
*Q2CY06 corresponds to Sun's Q4FY06 as market share data lags one quarter

Slide 24

Industry Analyst Recognition cont'd

Sun Preventive Services and Sun Grid utility services offerings specifically are the focal points for the company's effort to transform its revenue model from one based on one-time product and license sales, to a model based on recurring annuity revenues. Meanwhile, look to the company's professional services arm to play an increasingly consultative role in selling and architecting storage management solutions. At the same time, its Managed Services team will serve as a vehicle for insinuating Sun as a trusted architectural adviser to its systems, and increasingly, its storage customers. -Ovum-Summit, System Vendor Report Card, August 6, 2006 I talked with Sun recently about the status of open sourcing Java. Overall, I felt positive about their efforts, esp. since their general direction is to be more and more transparent as time goes on. In this whole process, being transparent is key, and I'm hoping Sun has gotten to the point where most everything can be in the open, esp. with the new portal on the topic. --Cote, RedMonk, "More on Open Sourcing Java", August 15, 2006 http://www.redmonk.com/cote/archives/java With this launch, Sun is leveraging its datacenter expertise and its multilayered technology stack (servers, software, storage, and services) in a bid to show IT customers that it can bring more RAS, scalability, and manageability to x86 computing than many of its competitors. With this announcement, Sun is offering a broader portfolio of systems in the x64 space to complement the choice of RISC-based systems for which it is best known. In addition, we see new dimensions of choice in the way Sun is talking about the range of operating systems and virtualization technologies it provides to customers making Suns 64-bit technology and network-centric value proposition more accessible to the middle-ofthe-road x86 server marketplace. --IDC, Sun Deepens Its Investments in Next -Generation x64 Products, Doc #202704, July 2006
Slide 25

Sample Q1 Customer Momentum

U.S. General Services Administration Sun Microsystems Federal, Inc., renewed its Multiple Award Schedule, Indefinite Delivery Indefinite Quantity (IDIQ) contract with the General Services Administration (GSA) to continue to supply its full array of products and services to the U.S. Government through August 2009, continuing a long term business to business relationship between Sun and GSA. SEI In order to create a robust, scalable infrastructure for its Global Wealth Management platform SEI, a Pennsylvania firm providing outsourced asset management, investment processing and operations solutions, developed major components of its application in Java and chose to operate them on an array of Sun Fire servers running the Solaris Operating System. Alcatel Alcatel selected Sun's Customer Ready Systems (CRS) to build a pre-validated, pre-integrated and pre-tested solution for High-SpeedLink (HSL) deployments with customers in Asia, Africa and Europe. The Sun solution, incorporating UltraSPARC-based Sun Fire servers, Sun storage and various third-party products running on the Solaris Operating System, offered better Total Cost of Ownership (TCO). Alcatel selected Sun to further strengthen the reliability and robustness of its products. Alcatel also expects cost savings, and will leverage Sun's well-known reliability in the telco sector. Verizon Wireless Continuing to improve the scalability, reliability, availability and security of a critical data mediation application, Verizon Wireless selected Sun systems comprised of Solaris OS; UltraSPARC-based Sun Fire servers and Sun Services. The capabilities of Solaris and the price performance of Sun servers allow Verizon Wireless to continue to grow this critical application. Research In Motion (RIM) Research In Motion (RIM) recently selected a Sun StorEdge and Sun Services package to replace a mid-tier storage system in order to support the company's rapid growth. Central to RIM's choice was Sun's strong support and innovative configuration, which delivered more storage disk and cache at an attractive cost. The deal represents an expansion of Sun technology in use by the Waterloo, Ontario-based creator of BlackBerry.

Slide 26

Sample Q1 Customer Momentum cont'd

Rhythm & Hues A new digital archive storage system from Sun Microsystems helped computer generated imagery (CGI) leader Rhythm & Hues achieve dramatic five-fold performance gains, improve ease of archive management, reduce its hardware footprint, and prepare for continuing data growth. Utilizing Sun's StorageTek solutions as well as the Solaris Operating System running on Sun servers helped Rhythm & Hues to create an efficient and cost-effective high-performing digital archive system capable of holding all its precious archives, including its early work on such films as Babe and Titanic and recent projects such as the creation of the Fortress of Solitude for Superman Returns and the animation for Garfield: A Tale of Two Kitties. Diesel International fashion design company Diesel selected a solution comprised of Sun StorageTek systems and UltraSPARC IV+ processor-based Sun Fire server (E20K) running the Solaris 10 Operating System to transition away from a competitive system IT infrastructure. Having chosen an application software natively developed on Solaris and finding that Solaris 10 provided the ideal operating environment for application integration, the company opted to move to Sun's technological infrastructure for added reliability and scalability to meet the company's evolving business needs at an international level. Library of Congress (NAVCC) When the Library of Congress went seeking to create an IT infrastructure for its National Audio-Visual Conservation Center (NAVCC) preservation storage project, it selected a multi-tiered system solution comprised of Sun Fire x64 servers and Sun storage running the Solaris 10 Operating System bid by our federal partner GMRi. The LoC has opted for the Sun solution to house audio and video artifacts collected over the last 100 years currently being digitized. In part due to the strength of Sun's long-term storage commitment and technology roadmap, the LoC has entrusted Sun technology to be the foundation of its multiyear, multiple Petabyte project to preserve an important portion of our National Treasure . While the tape-based storage system will offer online access to the massive archive and boasts the ability to manage an immense workload of data in large bursts, it is also architected for efficient disaster recovery. Additional benefits of Sun's tape solution were its comparative advantages on scalability, power consumption, space, cooling and cost.

Slide 27

Took Share from Server Competitors

Market Share % Point Change
Q2CY06/Q2CY05

Revenue % Growth Rate 1.7

Q2CY06/Q2CY05

15.5%

-0.2 -0.6 -1.7% -0.9 -2.2% -1.3%

Based on worldwide total server revenue market share and revenue. Source: IDC's Worldwide Quarterly Server Tracker, August 2006 (Q2CY06 corresponds to Sun's Q4FY06 as market share data lags one quarter)

Slide 28

Grew Our Storage Business

Market Share % Point Change
Q2CY06/Q2CY05

Revenue % Growth Rate

Q2CY06/Q2CY05

0.7

13.4%

0.4 9.2% -0.2 3.8% 3.0% -1.0% -1.3

-0.4

Based on worldwide total disk storage revenue market share and revenue. Source: IDC's Worldwide Quarterly Disk Storage Systems Tracker, August 2006 (Q2CY06 corresponds to Sun's Q4FY06 as market share data lags one quarter)

Slide 29

Grew Our x86 Server Business

Market Share % Point Change
Q2CY06/Q2CY05

Revenue % Growth Rate

Q2CY06/Q2CY05

48.4%

0.7 0.1 -0.3 -0.9 3.6% 1.8% -0.9%

Based on worldwide x86 server revenue market share and revenue. Source: IDC's Worldwide Quarterly Server Tracker, August 2006 (Q2CY06 corresponds to Sun's Q4FY06 as market share data lags one quarter)

Slide 30

Sun Led in Identity Management

Market Share % Point Change
CY2005/CY2004

3.7

Revenue % Growth Rate

CY2005/CY2004

43.2%

17.1% 11.8% 11.7% -0.4 -1.1 -0.8 -1.0 8.7%

Based on worldwide user provisioning revenue market share and revenue. Source: August 2006 Gartner Dataquest Worldwide Market Share: User Provisioning, CY 2005; Slide To read Gartner market share information, visit: http://www.gartner.com. Sun calculated Y/Y Revenue Growth % and Market Share Point Change.

31

Solaris OS Continued to Lead in Worldwide UNIX Server OS Shipments

100,000 80,000 60,000
52,111 44,398

IBM UNIX (AIX, Other UNIX)

87,136 88,378

HP UNIX (HP_UX, True-64, Other UNIX)

Sun Solaris

83,868 78,150 73,655 72,590 66,321 68,840 69,054

40,000 20,000 0

37,322 32,289 30,536 32,15633,307 32,252 29,681 32,635 29,080 33,228 27,10427,692 29,233 26,071 28,777 24,113

Q204

Q304

Q404

Q105

Q205

Q305

Q405

Q106

Q206

Calendar Quarter
Source: IDCs Worldwide Quarterly Server Tracker, August 2006 (Q2CY06 corresponds to Sun's Q4FY06 as market share data lags one quarter)

Slide 32

Sun's Worldwide Total Server Shipments Continued to Grow Y/Y and Q/Q
110,000 100,000 90,000 80,000 70,000 60,000 50,000
81,050 83,911 76,579 95,512 95,415 107,064

92,970 85,466 88,540

Q2 CY04

Q3 CY04

Q4 CY04

Q1CY05

Q2CY05

Q3CY05

Q4CY05

Q1CY06

Q2CY06

Calendar Quarter
Source: IDCs Worldwide Quarterly Server Tracker, August 2006 (Q2CY06 corresponds to Sun's Q4FY06 as market share data lags one quarter)

Sun Server Shipments

Slide 33

Sun Gained #3 Market Share Position in Total Server Revenue

45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206

Factory Revenue Market Share (%)

35% 30% 25% 20% 15% 10% 5% 0% Q204

Unit Shipment Market Share (%)

Q304

Q404

Q105

Q205

Q305

Q405

Q106

Q206

Calendar Quarter
IBM Dell HP Fujitsu/Fujitsu Siemens Sun

Calendar Quarter

Source: IDCs Worldwide Quarterly Server Tracker, August 2006 (Q2CY06 corresponds to Sun's Q4FY06 as market share data lags one quarter)

Slide 34

Sun Held #1 Position in UNIX Server Revenue and Unit Shipments

Factory Revenue Market Share (%)
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Q204
60% 50% 40% 30% 20% 10%

Unit Shipment Market Share (%)

Q304

Q404

Q105

Q205

Q305

Q405

Q106

Q206

Calendar Quarter
Sun NCR IBM HP Fujitsu/Fujitsu Siemens

0% Q204

Q304

Q404

Q105

Q205

Q305

Q405

Q106

Q206

Calendar Quarter
Sun HP IBM Dell Apple

Source: IDCs Worldwide Quarterly Server Tracker, August 2006 (Q2CY06 corresponds to Sun's Q4FY06 as market share data lags one quarter)

Slide 35

Sun Success Metrics Solaris OS Grew

Reached >6 Million Registered Licenses for Solaris 10
21% Increase from Q4 FY06
6,000,000 5,400,000 4,800,000 4,200,000 3,600,000 3,000,000 2,400,000 1,800,000 1,200,000 600,000 0 Q305 Q405 Q106 Q206 Q306 Q406 Q107
4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0
06/01/04 09/01/04 11/01/04 01/21/05 03/15/05 06/30/05 09/30/05 12/14/05 3/30/06 6/30/06 9/30/06

Solaris 10 ISV Adoption as of September 30, 2006

Applications on Solaris 10
Apps committed to Solaris 10 Apps committed to Solaris 10 on x86

Fiscal Quarter

Source: Sun Microsystems, Inc., September 2006

Source: Sun Microsystems, Inc., September 2006

>750 Systems Supported by Solaris 10

StarOffice Software & OpenOffice.org Downloads Reached 78 Million

TM

8% Increase from Q4 FY06, 43% Increase from Q1 FY06

80,000,000

Cumulative Downloads

70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0

Q103 Q203 Q303 Q403 Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107

Source: Sun Microsystems, Inc., September 2006

Source: Sun Microsystems, Inc., September 2006

Slide 36

Sun Success Metrics Sun Continued to Power Network Services; Drove System Infrastructure Needs
2 Billion Java Card Technology Cumulative Deployments
TM

Sun Java Enterprise System Cumulative Subscribers

Cumulative Subscriber Counts (thousands)
1,200 1,050 900 750 600 450 300 150 0
957 +338 619 303 345 418 +73 433 +15 +186 1,176 1,192 1,105 1,119 +16 +148 +14 +57

Cumulative Deployments (Millions/Q107 Billions)

2,000 1,750 1,500 1,250 1,000 750 500 250 0 Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107

+129 +42

Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107
Fiscal Quarter * Q107 Total includes 628K Java ES (Suites); 564K Core JES
TM

Fiscal Quarter Source: Sun Microsystems, Inc. September 2006

344+ Million Downloads from java.com

Cumulative Downloads
360 320 280 240 200 160 120 80 40 0
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

9% Increase in java.net Membership Between Q4 FY06 and Q1 FY07

Total Membership
300,000 250,000 200,000 150,000 100,000 50,000 0 Q403 Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107

2004

2005

2006

Fiscal Quarter Source: Java.net, September 2006

Source: Java.com statistics on webapps # of users who initiated downloads September 2006

Slide 37

Product Benchmark Disclosures

> >

>

>

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LHS BSCS iX Wireless Billing E25K 1,264,490 invoices/hr, 72 1.8 GHz US-IV+,578 GB, StoreEdge 3510FC, Solaris 10; HP Integrity Superdome 1,000,000 invoices/hr. See www.lhsgroup.com. SPEC, SPECjAppServer reg tm of Standard Performance Evaluation Corporation. See www.spec.org as of 09/13/06. Sun Blade 8000 (10 Sun Blade X8400, 80 cores, 40chips) and 1 Sun Fire E6900 (48 cores, 24 chips) 6662.98 SPECjAppServer2004 JOPS@Standard. 20 IBM HS20 (40 cores, 40 chips) and IBM p5 570 (16 cores, 8chips) 4368.02 SPECjAppServer2004 JOPS@Standard. 4 HP rx6600 (32 cores, 16 chips) and HP 9000 Superdome (64 cores, 32 chips) 4915.49 SPECjAppServer2004 JOPS@Standard. SPEC, SPECfp reg tm of Standard Performance Evaluation Corporation. See www.spec.org as of 8/15/06. Sun Fire X2200 (4 cores, 2 chips, Solaris 10), 117 SPECfp_rate2000. HP DL360 G5 (4 cores, 2 chips, RHEL), 84.7 SPECfp_rate2000. SPEC, SPECjAppServer reg tm of Standard Performance Evaluation Corporation. See www.spec.org as of 8/16/06. One Sun Fire X4600 (16 cores, 8 chips) 1000.86 SPECjAppServer2004 JOPS@Standard. NotesBench R6iNotes Sun Fire V890 (8 chips, 2 cores/[email protected] USIV+, 64GB), 4 Partitions, Solaris 10, Lotus Domino 7.0, 40000 users, $7.19 per user, 33862NotesMark tpm, 324ms avg rt. See www.notesbench.org as of 8/11/06.

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SUN MICROSYSTEMS Q107 QUARTERLY RESULTS RELEASE

Investor Relations http://www.sun.com/investors
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