Calling it "the biggest thing we"ve done" in nearly a decade, Sun Microsystems Inc. Chairman and CEO Scott McNealy Monday officially launched the Solaris 10 operating system.

The company said Solaris 10 will help increase system utilization for customers up to 80 percent, and officials spent much of the day detailing the new system"s features. The operating system,will be generally available at the end of January.

"I think this is a watershed event for them," said Jean Bozman, an analyst at IDC. "This is the one that recognizes how important the volume server portion of the market has become," she said, referring to low-cost servers that have been taking market share away from UNIX operating systems.

But Sun isn"t retreating from its UltraSparc, RISC-based chips. McNealy, holding a chip on stage, dismissed critics who said "give it up, it"s all going to commodity x86" systems, and pointed to the processor, code-named Niagara, with its 32 threads. "This little baby is going to put some more dough in the bank for us," he said.

While Sun was holding its official launch on the West Coast, the future of the operating system, and perhaps Sun itself, was being decided many miles away, at organizations such as the Philadelphia Stock Exchange and FedEx Corp.

Those companies, longtime Sun shops, have been testing the new operating system and are pleased with what it has delivered so far.

Prior to Solaris 10, interest in Sun ?was somewhat dwindling,? said Don Fike, the technical director at Memphis-based FedEx. But since then, he said, ?we?ve seen Solaris 10 interest is extremely high ? a major shift here.?

As a result of Solaris 10, Fike said, FedEx?s use of Sun systems, which run many of its mission-critical systems, would at least stay the same -- and might even expand.

The major features of Solaris 10 have been available for some time. Over the past 18 months, Sun has gradually released large parts of the Solaris 10 operating system, and the full version is available to users who belong to Sun?s Express program.

At Monday?s event, Sun officials were planning to discuss pricing, ranging from free use of Solaris 10 for customers who forgo service and support, to a subscription pricing plan with variable rates depending on the level of service and support that customers seek. Sun will continue to offer its per-CPU operating system pricing for customers who want to capitalize their assets upfront, said John Loiacono, executive vice president of Sun?s Software Group.

The new pricing will take effect at the end of January, when Solaris 10 is made available internationally as well as in the U.S., said Loiacono.

Sun plans to make Solaris open-source, and company officials say there is nothing preventing release of the source code, despite its use of some third-party code.

"Because its open source you can"t get locked in," said Jonathan Schwartz, Sun"s president and chief operating officer.

Moreover, McNealy said Sun plans to indemnify customers. "When you buy software, you should have a company with cash and an intellectual property portfolio that can protect you," he said.

No details were expected Monday about how the open source licensing or governance model will work; those efforts remain a work in progress.

Solaris 10 is a major reworking of the operating system. Key improvements include a faster networking technology that Sun has built into the TCP/IP stack.

Fike said in an interview that because of those networking improvements, application performance at FedEx ?has been dramatically improved? for network-intensive applications. One improvement Fike called particularly strong is Solaris Dynamic Tracing or DTrace, which allows users to examine the interaction of an application with the operating system.

Fike said he has been able to identify performance problems within 15 minutes in live code with the tool -- regardless of which third-party application may be running.

Philadephia Stock Exchange Inc. has also been testing Solaris 10, and officials said the networking stack performance improvements, coupled with the application optimization with DTrace, have increased performance to such an extent that they expect to reduce the amount of Sun hardware they need and cut maintenance costs.

For instance, one trading application running on a 12-CPU Sun Fire 6800 UltraSparc server was tested on a four-CPU Sun Fire 4800 on Solaris 10. Exchange officials said the performance was better on the four-way systems than the 12-way system.

The stock exchange is putting a lot more demand on its systems with a new electronic trading system it?s rolling out. Without this performance gain in Solaris 10, the exchange faced the prospect of buying additional Sun machines, said Thomas Wittman, senior vice president of trading system development. It was either that or ?take a look at something else, whatever that something else might be.?

Sun has also included a partitioning technology, N1 Grid Containers, that can boost system utilization, which the stock exchange will also test. ?We think all that has a lot of promise for us,? William Morgan, the exchange?s executive vice president and CIO, said of the operating system.

Solaris was launched in 1992, and Sun officials said that all applications are backward-compatible.

Sun in recent years has been hit by a shift to low-cost Intel-based servers running Linux and Windows. Company officials said in interviews that they were late to see the shift but argued that their alliance with Advanced Micro Devices Inc., reached a year ago this month, and expanded x86 offerings are proof that they have shifted to the new market realities.

While Solaris 10 is in competition with other Unix vendors such as IBM Corp. and Hewlett-Packard Co., the company is also clearly targeting Linux enterprise vendors with its new release of Solaris.