Compaq tackles server appliance market

The server appliance market is set to proliferate, observers say, and the addition of them is likely to be popular with some Compaq customers such as small businesses and Internet service providers. Compaq is the first big-name company to begin getting its feet wet in this market, said International Data Corporation analyst Amir Ahari.

Server appliances, also called "thin servers," offer some very desirable options: high performance, low maintenance, and ease of use and installation, he said. "I think these products in the long term are going to change the dynamic of the market," Ahari said.

Ahari isn't the only one with that opinion. Microsoft, Intel, Oracle, and several other companies are making moves to try to position their products for the market.

However, server appliance sales will bite a chunk out of low-end server sales at Compaq and other companies, "cannibalizing" their server lines, Ahari said. "It's going to happen. They won't say it, but it's going to happen," he said.

The first TaskSmart machines, due in July with starting prices less than $10,000, will be dedicated to "caching" Internet information, a process that speeds up the delivery of Web pages or other information by storing the data closer to the location of users who need it.

Compaq plans to introduce several other models as well, each designed for jobs such as serving up Web pages, handling email, serving up files, providing network security, and hosting databases, said John Young, director of Compaq's appliance and communication server division.

The three Internet caching models, the C1200R, C1500R, and C2000R, each are based on a 450-MHz Pentium II chip, Young said. They come with fast hard disks and two, three, and five Ethernet ports respectively, key features needed for network dwellers.

The overall advantage of server appliances is the lower cost of installation and maintenance, Ahari said. "If you're a novice at a small company, you don't want to pay that extra for more than what you need. You want something simple," he said.

Non-Microsoft operating system
The TaskSmart systems don't use Microsoft Windows, but instead a customized version of Novell NetWare, Young said. "The operating system kernel was rewritten for caching Web objects. The performance gains for that are huge," Young said.

Dell also has licensed the special Novell software, called Internet Caching System, or ICS, said Starla Cox, a marketing executive with Novell.

"I think it's great news for Novell. They're getting the mind share and the installed base," Ahari remarked, cautioning that the product category still is new and the product's reputation will rest on customer satisfaction.

Hewlett-Packard also has talked about server appliances, saying that the Linux operating system is a good choice because of its low cost and its Internet abilities.

Ahari agreed that Linux was well suited to server appliances. For example, a machine using Linux and the Apache Web server make sense. "They do not add on top of the cost of the hardware," he said.

Indeed, Cobalt Networks uses Linux as the foundation for its server appliance products.

Microsoft isn't standing still, though. It's developing a new version of Windows NT called Windows Appliance Server, expected to hit the shelves this year.

Competition?
Although Compaq is the first big-name player to offer server appliances, many smaller companies have been working at it for years, including Cobalt, Auspex, Network Appliance, and others.

Those companies simply haven't had the marketing clout of a giant company such as Compaq, Ahari said.

But Compaq's biggest competition might be neither from these smaller companies nor from traditional competitors such as HP, Dell, and IBM. Instead, Ahari said the competition might come from a totally different direction: Intel.

Intel sells its own Intel-branded systems in Asia and sells kits to any "whitebox" manufacturer of generic computers, Ahari said. But a stronger indicator of the company's server appliance capabilities is visible in its appliance network server designed for use at the center of home networks, he said.

"If the suppliers [such as Compaq] cannot meet the demand, Intel will," Ahari said. "Obviously they have a cost advantage when putting their own chips in their own systems."

Indeed, Intel and Microsoft have joined up to try to increase the support for the server appliance market.

Oracle, too, is getting in on the server appliance business with its Raw Iron initiative to create machines in which the operating system is invisible and customers only see Oracle's database software. The Raw Iron machines run atop Sun Microsystems' Solaris operating system, and HP is one of the manufacturers.

Regardless whose machines sell, there will be an "educational period" where companies evaluate the relatively new method, Ahari said. The first adopters are likely to be small businesses, Internet service providers, and telecommunications companies, he said.