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Firms flock to growing server appliance market

New hardware and software companies are joining the growing "server appliance" movement, creating new categories for the special-purpose computers.

New hardware and software companies are joining the growing "server appliance" movement, creating new categories for the special-purpose computers.

A server appliance is a back-end computer that is usually geared for a specific task, such as handling email, housing a database, or storing data. Once the domain of smaller companies such as Cobalt Networks, Encanto Networks, and Meridian Data, more recently the big boys have been arriving--companies that have been selling powerful servers for years such as IBM, Hewlett-Packard, and Compaq Computer.

There's a big reason so many companies are interested: money. Merrill Lynch has predicted that server appliance sales will grow from $1.1 billion in 1997 to $16 billion in 2002.

And while many of these server appliances are relatively inexpensive, some of the highly specialized versions cost a bundle. For example, Mirapoint's email servers cost as much as $30,000 and Network Appliance's super-high-speed file servers can cost well over $100,000.

Now, news from a trade show for Internet service providers is highlighting a new category of server appliance makers: established companies that, unlike traditional server makers, don't have to worry about server appliances undercutting sales of general-purpose servers.

Inktomi, a software company that makes money powering search engines and other Internet sites, has made a product out of server software it developed to help speed Internet access. Intel will build the actual hardware for these devices.

Traffic Server Engine is Inktomi's "caching" software that helps companies stash information across computer networks, making it easier for a Web surfer in Boston, for example, to retrieve information from a Web site that's in Japan. Inktomi said Intel will build appliances using the software, which runs on top of Sun Microsystems' Solaris operating system.

The Inktomi-based servers will compete with a multitude of other caching products. Dell and Compaq sell caching servers using special software from Novell. Network Appliance has its own high-speed caching products. Cobalt and CacheFlow, two server appliance companies that have filed to go public, also offer caching servers.

Competitors moving right along
But the traditional players aren't standing still.

Santa Cruz Operation, a seller of Unix operating system software, has signed a deal with with Micron Electronics, a computer maker, under which SCO appliance server software will be used on Micron's new NetNow service. NetNow is part of Micron's push to make money by renting out Internet real estate to companies that don't want to be bothered with the hassle.

In addition, SCO executives said yesterday during a conference call that Micron will use the SCO software in stand-alone products, similar to the way Compaq uses the software in its NeoServer server appliances.

Like Inktomi, Cobalt also tried to capture the attention of attendees of the ISPCon show. The company debuted a new server, the RaQ 3i, which is designed to power e-commerce operations on the Internet.

The RaQ 3i is a new level of complexity to the appliance market, which typically focuses on handling relatively standard tasks such as serving up Web pages. The appliances will be sold with e-commerce software built in, including Oracle 8i database and packages from Intershop, Mercantec, and others, said Kelly Herrell, vice president of Cobalt.

Based on Intel-compatible AMD chips, the RaQ 3i is unlike Cobalt's previous products, which use MIPS chips, Herrell said. Not including the software, the servers will cost between $1,300 and $4,000, the company said.

And EMC, a company that sells data storage hardware, could become the latest partner in Oracle's "Raw Iron" initiative to sell appliances with Oracle's popular database software built in.

Oracle is backing the server appliance push with its Raw Iron initiative, which has drawn participation from traditional server makers Dell Computer, HP, Siemens, and others. Now, with the tightened ties between Oracle and EMC, there's a possibility that EMC will join that list, said Mike Rosha, Oracle's senior vice president of platform technology, in an interview yesterday.

EMC is known for its robust but very expensive data storage systems, but because the company's products aren't servers, the Raw Iron initiative would be a new direction for the company. EMC's storage products currently connect to servers from other companies, such as IBM, Sun, Compaq, or HP.

Server appliances sometimes are inexpensive replacements for general-purpose servers, as in the case of Maxtor's MaxAttach file server.