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1

Investor Relationshttp://www.sun.com/investors

SUN MICROSYSTEMSQ107 QUARTERLYRESULTS RELEASE

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Slide 2

Bret Schaefer VP, Investor Relations

Jonathan Schwartz CEO & President

Mike Lehman CFO & Executive VP,Corporate Resources

Speakers

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Slide 3

Top Level P&L

Revenue 2,726 3,828 3,189 (639) 463

Gross Margin 1,202 1,639 1,388 (251) 186

Gross Margin % 44.1% 42.8% 43.5% 0.7% Pts (0.6%) Pts

Operating Expenses * 1,339 1,974 1,452 (522) 113

Operating Income (Loss) (137) (335) (64) 271 73

Operating Margin % (5.0%) (8.8%) (2.0%) 6.8% Pts 3.0% Pts

EPS GAAP ($0.04) ($0.09) ($0.02) $0.07 $0.02

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

Q106Actuals

Q406Actuals

Q107Actuals

Q-QChange

Y-YChange

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Slide 4

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, USLibrary of Congress

Product innovation - DTrace wins WSJ TechnologyInnovation Award

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Slide 5

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 inQ1.

IDC data from August reaffirmed our progress.

Product innovation: Sun Fire x4600, the world's first 16-way x64

server in a single 4U chassis.

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Slide 6

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 StorageTektape each had over 75% unit growth Y/Y

Key customer wins included US Library ofCongress, Rhythm and Hues animation, ResearchIn Motion (RIM)

Sun StorageTek SL8500 had 1000th customershipment

Innovation: Sun Fire x4500 (Thumper)

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Slide 7

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 improvedproduct set and positive customer outlook onSUNW innovation.

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Slide 8

Our Strategy

Software

Services Storage

Servers

Network.com

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Slide 9Services Revenue (% of Total)Products Revenue (% of Total)

Products Revenue up 15% Y/Y

Services Revenue up 20% Y/Y

Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107$0

$1,000

$2,000

$3,000

$4,000

PRODUCTS/SERVICES

Revenue(millions)

Fiscal Quarter

Year /Year G rowth %

65%65%

35%

64%64%

36%

65%65%

35%

64%64%

36%

66%66%

34%

63%63%

37%

(4)%

(1)%(2)%

4%

4%

4%

37%

63%63%

17%

36%

64%64%

21% 34%

66%66%

29%

39%

61%61%

17%

Revenue

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Slide 10

Revenue

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

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

23%25%

35%

42%

63%

44%

-5%

-29%

-53%-48%

-30%

-19%

-9%-11%

-16%-20%

-13%

-3%

-10%

3% 3%

-5%-2%

-7%

2%

15%21%

31%

15%

43%39% 41% 40%

47%43% 45%

31%

15%

6%1% 1%

8% 6% 7% 7%4% 5% 5%

7% 6% 6%

0% 0%

7%

23% 21%25%

20%

Products Revenue

Services Revenue

Fiscal Quarter

R

evenueY/Y%Growth

PRODUCTS/SERVICES Year /Year Growth %

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Slide 11

Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107$0

$500

$1,000

$1,500

TOTAL SERVICES REVENUE

Revenue(millions)

Fiscal Quarter

Year /Year Gro wth % of Tota l Rev enue

74%74%

26%

78%78%

22%

77%77%

23%

78%78%

22%

76%76%

24%

82%82%

18%

0%

0%

6%

6%

7% 7%

Client Solutions/Edu Services

Revenue (% of Total Services)

Support Services Revenue (% of Total

Services)

22%

78%78%

23%

21%

79%79%

21%24%

76%76%

25%

21%

79%79%

20%

Support Services up 16% Y/Y

Client Solutions/Edu Services up 39% Y/Y

Support Services up 16% Y/Y

Client Solutions/Edu Services up 39% Y/YServices Revenue

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Slide 12

Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107$0

$500

$1,000

$1,500

$2,000

Fiscal Quarter

PRODUCTS/SERVICES

Gross Margin %-ProductsGross Margin %

GrossMargin(mil

lions)

43.3%43.3%

45.4%

1,202

41.4%41.4%

41.5%

1,231

42.1%42.1%

40.1%

1,087

42.3%

42.1%42.1%

1,198

43.4%43.4%

42.1%

1,128

40.1%40.1%

37.9%

1,224

Products Margin up 1.6 pts Q/Q

Services Margin down 1.2 pts Q/Q

Total Margin up 0.7 pts Q/Q

43.6%

42.0%42.0%

1,421

42.4%

43.4%43.4%

1,367

43.0%44.1%

41.4%41.4%42.2%42.9%

39.4%

42.6%

46.1%

41.1%41.1%

42.8%

1,639

44.9%

42.7%42.7%

1,388

43.5%

*

Gross Margin

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Slide 13

Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107$0

$300

$600

$900

$1,200

$1,500

$1,800

$518$518 $416$416 $447$447 $450$450 $472$472 $439$439$541$541 $523$523 $543$543 $473$473

$849$849

$670$670$726$726 $735$735

$788$788 $828$828$1,056$1,056 $1,020$1,020

$1,133$1,133

$958$958

Fiscal Quarter

($million

s)

* Total Operating Expenses differ from SG&A and R&D Expenses because Total Operating Expenses includes IPRD, Restructuring, &

Intangible Impairment charges.

Year /Year Growth %

17%(8)%(10)%(10)%

(14)%

5%

SG&AR&D

36% 30%33%

13%

R&D / SG&A Expense* (15)% Qtr over Qtr decrease

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Slide 14

Q107 Gross Margin Q/Q Bridge

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Slide 15

Year /Year Growth %

Balance(milli

ons)

Fiscal Quarter

Deferred Revenue at $2.25B

1%

10%

14%

12%2%

Demand Metrics

10% 10% 12%

14%10%

Q106* Q406* Q107

Book to Bill Ratio** 0.97 1.04 0.96

$1,408 $1,851 $1,869Product & ServicesBacklog ($M) ***

* 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

Book to Bill Ratio & Backlog

Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107

0

500

1,000

1,500

2,000

2,500

3,000

Includes STK & SBYN balance commencing in Q106

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Slide 16

PRODUCTS/SERVICES

Year /Year G rowth %

Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107$0

$500

$1,000

$1,500

$2,000

$2,500

Revenue(millions)

Fiscal QuarterServices Deferred Revenue

(% of Total)

Products Deferred Revenue

(% of Total)

25%25%

75%

21%21%

79%

24%24%

76%

22%22%

78%

26%26%

74%

22%22%

78%

1%

2%10%12%

14%10%

74%

26%26%

10%

75%

25%25%

12%

74%

26%26%

14%

75%

25%25%

10%

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

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Slide 17

Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107$0

$1,000

$2,000

$3,000

$4,000

Fiscal Quarter

U.S./Int' l Americas/EMEA/

APAC

RevenueGeo(m

illions)

2,974

40%40%

38%

6%

17%17%2,627

37%37%

38%

5%

19%19%

2,841

40%40%

37%

6%

18%18%

2,628

42%42%

37%

4%

17%17%

3,110

44%44%

35%

5%

16%16%2,726

43%43%

36%

5%

17%17%

3,337

16%16%

6%

37%

41%41%

U.S. up 12% Y/Y

Int'l Americas up 54% Y/Y

EMEA up 17% Y/Y

APAC up 20% Y/Y

3,177

17%17%

6%

35%

42%42%

3,828

17%17%

7%

36%

40%40%

3,189

17%17%

7%

35%

41%41%

Revenue - Geo

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18

Appendix

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Slide 19

Metrics

Fiscal Quarter

Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107

0

20

40

60

80

100

120

Total Server Units

ServerUnits

(thousands)

Year /Year Growth %

2%

9%8%

46%(3)%

16%

Fiscal Quarter

(6)% 6%

14%

7%

Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107

0

5

10

15

20

25

30

x64* Server Units Grew 54% Y/Y

x64*ServerUnits

(thousands

)

Year /Year Gr owth %

327%36%

160%197%

105%109%

* x64 servers include x86 32-bit and x64 64-bit

93%81%

53%

54%

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Slide 20

$M % of Rev

GAAP Total Gross Margin $1,073 40.8%

Kodak Settlement Impact $55 2.1%

$1,128 42.9%Total Gross Margin w/o Kodak

Settlement Impact

Q105 Total Gross Margin Bridge

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Slide 21

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 firstquarter of fiscal 2006, and our gross margin remained strong, affirming Sun's business strategy andfocus 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 factoryrevenue 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 tapestorage 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-OrientedArchitecture 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 DynamicTracing (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 Innovationaward; 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

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Slide 22

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. TheSun Fire x64 and CoolThreadsTM server line were each placed in the visionary quadrant in Gartner'slatest Magic Quadrant reports for both Application Servers and Online Transaction Processing DBMSServers

> JavaTM technology listed as number 5 in an InformationWeek cover story titled "What's The GreatestSoftware 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 servicecosts by up to 60%, power and cooling costs by up to 62%, and footprint in half versus competingrackmount servers

> Introduced the Sun Fire X4500 Server, new hybrid storage and server offering optimized for Web 2.0environments, that delivers the remarkable performance of a four-way x64 server and ultra-high storagedensity with up to 24 TB in 4U of rack space

> Announced systems, storage and software products for Solaris 10 Operating System that demonstrateSun'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 fromQ1FY06, to approach 1.2 million subscribers.

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Slide 23

Product Reviews Talk Innovation

Set Many World Record Benchmarks*:

Sun Fire E25K Best LHS BSCS iX Wireless Billing Benchmarck Beat HP by 26%

Sun Blade 8000 Best SPECjAppServer2004 Beat HP by 36% Beat IBM by 53%

Sun Fire X2200 M2 Best SPECfp_rate2000 (x86, 2 chip) Tops Woodcrest by 38%

Sun Fire x4600 Best single-node SPECjAppServer2004

Sun Fire V890

Tops on Domino 7 R6iNotes Notesbench

* See Benchmark Disclosures at the end of this presentation

Set Many World RecordBenchmarks*:

Sun Fire E25K Best LHS BSCS iX Wireless

Billing Benchmarck Beat HP by 26%

Sun Blade 8000 Best SPECjAppServer2004 Beat HP by 36% Beat IBM by 53%

Sun Fire X2200 M2 Best SPECfp_rate2000

(x86, 2 chip) Tops Woodcrest by 38%

Sun Fire x4600 Best single-node

SPECjAppServer2004

Sun Fire V890 Tops on Domino 7 R6iNotes

Notesbench

* See Benchmark Disclosures

at the end of this presentation

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Slide 24

Industry Analyst Recognition

Gartner Dataquest released Worldwide Server Market Share numbers for Q2CY06. Sun saw its year-over-year server market revenue share grow by 1.3 points according to the Gartner Q2CY06 WorldwideServer Quarterly Statistics, which was released in August 2006. Out of the top 4 WW Server vendors inQ206, Sun was the only vendor to achieve year-over-year server factory revenue growth, posting a13.7% 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 usefashion 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 aidin meeting ongoing compliance requirements, but in reducing security risks as well. --IDC, SunUnderscores Compliance with Identity Manager 7.0: Automating Identity Lifecycle Management andIdentity Auditing Processes, Doc # 203681, September 2006

On August 31, Sun Microsystems announced the integration of the SunStorageTekTM TekCare supportprograms into the SunSpectrumSM portfolio. This represents the latest milestone in the integration ofStorageTek 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 bothStorageTek and Sun equipment, as the terms and conditions of the support agreements will now beconsistent across the product line. Additionally, it should eliminate confusion for new Sun customers asthere is now one portfolio of support services for storage and systems. IDC believes that this is a positivestep 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

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Slide 25

Sun Preventive Services and Sun Grid utility services offerings specifically are the focal points for thecompany'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 professionalservices arm to play an increasingly consultative role in selling and architecting storage managementsolutions. At the same time, its Managed Services team will serve as a vehicle for insinuating Sun as atrusted architectural adviserto its systems, and increasingly, its storage customers. --Ovum-Summit, System Vendor Report Card, August 6, 2006

I talked with Sun recently about the status ofopen sourcing Java. Overall, I felt positive about theirefforts, esp. since their general direction is to be more and more transparent as time goes on. In thiswhole process, being transparent is key, and I'm hoping Sun has gotten to the point where most everythingcan be in the open, esp. with the new portal on the topic. --Cote, RedMonk, "More on Open SourcingJava", 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-basedsystems for which it is best known. In addition, we see new dimensions of choice in the way Sun istalking 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-of-the-road x86 server marketplace. --IDC, Sun Deepens Its Investments in Next -Generation x64Products, Doc #202704, July 2006

Industry Analyst Recognition cont'd

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Slide 26

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 August2009, 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, aPennsylvania firm providing outsourced asset management, investment processing and operationssolutions, developed major components of its application in Java and chose to operate them on an array ofSun Fire servers running the Solaris Operating System.

Alcatel Alcatel selected Sun's Customer Ready Systems (CRS) to build a pre-validated, pre-integratedand 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-partyproducts running on the Solaris Operating System, offered better Total Cost of Ownership (TCO). Alcatelselected Sun to further strengthen the reliability and robustness of its products. Alcatel also expects costsavings, 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-basedSun Fire servers and Sun Services. The capabilities of Solaris and the price performance of Sun serversallow Verizon Wireless to continue to grow this critical application.

Research In Motion (RIM) Research In Motion (RIM) recently selected a Sun StorEdge and Sun Servicespackage to replace a mid-tier storage system in order to support the company's rapid growth. Central toRIM's choice was Sun's strong support and innovative configuration, which delivered more storage disk andcache at an attractive cost. The deal represents an expansion of Sun technology in use by the Waterloo,Ontario-based creator of BlackBerry.

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Slide 27

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 StorageTeksolutions as well as the Solaris Operating System running on Sun servers helped Rhythm & Hues to create anefficient 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 theFortress 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 StorageTeksystems and UltraSPARC IV+ processor-based Sun Fire server (E20K) running the Solaris 10 OperatingSystem to transition away from a competitive system IT infrastructure. Having chosen an application softwarenatively developed on Solaris and finding that Solaris 10 provided the ideal operating environment forapplication integration, the company opted to move to Sun's technological infrastructure for added reliabilityand 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 forits National Audio-Visual Conservation Center (NAVCC) preservation storage project, it selected a multi-tieredsystem solution comprised of Sun Fire x64 servers and Sun storage running the Solaris 10 Operating Systembid 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 storagecommitment and technology roadmap, the LoC has entrusted Sun technology to be the foundation of its multi-year, multiple Petabyte project to preserve an important portion of our National Treasure . While the tape-basedstorage system will offer online access to the massive archive and boasts the ability to manage an immenseworkload of data in large bursts, it is also architected for efficient disaster recovery. Additional benefits of Sun'stape solution were its comparative advantages on scalability, power consumption, space, cooling and cost.

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Slide 28

Took Share from Server Competitors

-1.3%

-0.2

-0.6 -1.7%

1.7 15.5%

-0.9

-2.2%

Market Share% Point Change

Q2CY06/Q2CY05

Revenue% Growth Rate

Q2CY06/Q2CY05

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)

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Slide 29

Grew Our Storage Business

-0.2

0.70.4

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)

-1.3

-0.4

13.4%

3.0%3.8%

-1.0%

9.2%

Market Share% Point ChangeQ2CY06/Q2CY05

Revenue% Growth RateQ2CY06/Q2CY05

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Slide 30

Grew Our x86 Server Business

-0.9%-0.9

0.1

3.6%

0.7

48.4%

-0.3 1.8%

Market Share% Point Change

Q2CY06/Q2CY05

Revenue% Growth Rate

Q2CY06/Q2CY05

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)

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Slide 31

-0.8-0.4

3.7 43.2%

-1.1

Revenue% Growth Rate

CY2005/CY2004

-1.0

11.7%

17.1%

11.8%8.7%

Sun Led in Identity Management

Based on worldwide user provisioning revenue market share and revenue.

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

Market Share% Point Change

CY2005/CY2004

http://users/tmp/ttp://www.gartner.cohttp://users/tmp/ttp://www.gartner.cohttp://users/tmp/ttp://www.gartner.co

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Slide 32

Solaris OS Continued to Lead in

Worldwide UNIX

Server OS Shipments

Calendar Quarter

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

Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206

0

20,000

40,000

60,000

80,000

100,000

30,536 32,156

52,111

37,322

32,635

27,104

44,398

26,07124,113

32,289 33,307 32,25229,681 29,080 27,692

33,22829,233 28,777

87,136

73,655

88,378

72,590

78,150

66,32168,840 69,054

83,868

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

UNIX)

Sun Solaris

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Slide 33

Sun's Worldwide Total Server ShipmentsContinued to Grow Y/Y and Q/Q

Calendar Quarter

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

Q2 CY04 Q3 CY04 Q4 CY04 Q1CY05 Q2CY05 Q3CY05 Q4CY05 Q1CY06 Q2CY0650,000

60,000

70,000

80,000

90,000

100,000

110,000

95,512

81,050

95,415

83,911

92,970

76,579

85,46688,540

107,064

Sun Server Shipments

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Slide 34

Sun Gained #3 Market Share Position inTotal Server Revenue

Calendar QuarterCalendar Quarter

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

Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206

0%

5%

10%

15%

20%

25%

30%

35%Unit Shipment Market Share (%)

Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%Factory Revenue Market Share (%)

IBM HP Sun

Dell Fujitsu/FujitsuSiemens

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Slide 35

Sun Held #1 Position in UNIX Server

Revenue and Unit Shipments

Calendar QuarterCalendar Quarter

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

Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206

0%

5%

10%

15%

20%

25%30%

35%

40%

45%

50%

Factory Revenue Market Share (%)

Sun IBM HP Fujitsu/FujitsuSiemens

NCR

Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206

0%

10%

20%

30%

40%

50%

60%

Unit Shipment Market Share (%)

Sun HP IBM Dell Apple

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Slide 36

Sun Success Metrics Solaris OS Grew

Source: Sun Microsystems, Inc., September 2006

Source: Sun Microsystems, Inc., September 2006

Source: Sun Microsystems, Inc., September 2006

Source: Sun Microsystems, Inc., September 2006

Q103Q203

Q303Q403

Q104Q204

Q304Q404

Q105Q205

Q305Q405

Q106Q206

Q306Q406

Q107

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

CumulativeDownloads

Reached >6 Million Registered Licenses

for Solaris 1021% Increase from Q4 FY06

Q305 Q405 Q106 Q206 Q306 Q406 Q107

0

600,000

1,200,000

1,800,000

2,400,000

3,000,000

3,600,000

4,200,000

4,800,000

5,400,000

6,000,000

Fiscal Quarter

>750 Systems Supported by Solaris 10 StarOfficeTM Software & OpenOffice.org

Downloads Reached 78 Million8% Increase from Q4 FY06, 43% Increase from Q1 FY06

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

0

500

1,000

1,500

,000

,500

,000

,500

,000

Applications on Solaris 10

Apps committed toSolaris 10

Apps committed toSolaris 10 on x86

Solaris 10 ISV Adoption as of

September 30, 2006

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Slide 37

Sun Success Metrics Sun Continued to PowerNetwork Services; Drove System Infrastructure Needs

Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107

0

250

500

750

1,000

1,250

1,500

1,750

,000

Cum

ulativeDeployments

(Millions/Q107Billions)

Fiscal Quarter

Source: Sun Microsystems, Inc. September 2006

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

0

50,000

100,000

150,000

200,000

250,000

300,000

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

TotalMembersh

ip

Source: Java.net, September 2006

Fiscal Quarter

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

0

40

80

120

160

200

240

280

320

360

344+ Million Downloads from java.com

CumulativeDown

loads

Source: Java.com statistics on webapps

# of users who initiated downloads September 2006

2004

2 Billion Java CardTM Technology

Cumulative Deployments

2005 2006

Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q1070

150

300

450

600

750

900

1,050

1,200

+129

303 345

+42

418

+73

433

619

+186

957

+338

1,105

+148

1,119

+14

+15

+57

1,176

+16

1,192 *

CumulativeSubscriber

Counts(thousands)

* Q107 Total includes 628K JavaTM ES (Suites); 564K Core JES

Fiscal Quarter

Sun Java Enterprise System Cumulative

Subscribers

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Slide 38

Product Benchmark Disclosures> 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) and1 Sun Fire E6900 (48 cores, 24 chips) 6662.98 SPECjAppServer2004 JOPS@Standard. 20IBM HS20 (40 cores, 40 chips) and IBM p5 570 (16 cores, 8chips) 4368.02SPECjAppServer2004 JOPS@Standard. 4 HP rx6600 (32 cores, 16 chips) and HP 9000Superdome (64 cores, 32 chips) 4915.49 SPECjAppServer2004 JOPS@Standard.

> SPEC, SPECfp reg tm of Standard Performance Evaluation Corporation. See www.spec.org asof 8/15/06. Sun Fire X2200 (4 cores, 2 chips, Solaris 10), 117 SPECfp_rate2000. HP DL360G5 (4 cores, 2 chips, RHEL), 84.7 SPECfp_rate2000.

> SPEC, SPECjAppServer reg tm of Standard Performance Evaluation Corporation. Seewww.spec.org as of 8/16/06. One Sun Fire X4600 (16 cores, 8 chips) 1000.86SPECjAppServer2004 JOPS@Standard.

> NotesBench R6iNotes Sun Fire V890 (8 chips, 2 cores/chip@1.8GHz USIV+, 64GB), 4Partitions, 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.

http://users/msarkar/Local%20Settings/Temporary%20Internet%20Files/OLK1/ww.lhsgroup.cohttp://users/msarkar/Local%20Settings/Temporary%20Internet%20Files/OLK1/ww.spec.ormailto:JOPS@Standardhttp://users/msarkar/Local%20Settings/Temporary%20Internet%20Files/OLK1/ww.spec.orhttp://users/msarkar/Local%20Settings/Temporary%20Internet%20Files/OLK1/ww.spec.ormailto:JOPS@Standardhttp://users/msarkar/Local%20Settings/Temporary%20Internet%20Files/OLK1/ww.notesbench.orhttp://users/msarkar/Local%20Settings/Temporary%20Internet%20Files/OLK1/ww.notesbench.ormailto:JOPS@Standardhttp://users/msarkar/Local%20Settings/Temporary%20Internet%20Files/OLK1/ww.spec.orhttp://users/msarkar/Local%20Settings/Temporary%20Internet%20Files/OLK1/ww.spec.ormailto:JOPS@Standardhttp://users/msarkar/Local%20Settings/Temporary%20Internet%20Files/OLK1/ww.spec.orhttp://users/msarkar/Local%20Settings/Temporary%20Internet%20Files/OLK1/ww.lhsgroup.co

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39

Investor Relationshttp://www.sun.com/investors

SUN MICROSYSTEMSQ107 QUARTERLYRESULTS RELEASE