Intel tests "thin server" field

Intel is pushing an unusual strategy for a company which typically keeps its distance from finished computer products: sell Intel-branded servers.

Always on the lookout for new markets for its chips, Intel detailed a strategy for expanding its offerings in the nascent "thin server" market at a recent Dataquest conference on server technologies.

This new thin variety of servers is a single or limited function computer that doesn't run a general purpose operating system such as Windows NT. It is marketed as low cost, "appliance"--because of its ease of set-up and maintenance, according to Dataquest. Generally, it comes in a sealed-case design, implying that it is designed as a plug-and-play device, analogous to consumer appliances.

Included in this category is Intel's InBusiness Internet Station introduced earlier this year, which has the ability to connect multiple users to the Net and each other while sharing available bandwidth.

Click here for a photo of Intel's InBusiness Internet Station.

Intel also is currently offering a single function print server called the NetPort.

Small businesses--those which employ 100 people or fewer--are the target of vendors with thin server offerings. Typically, they don't have a dedicated person doing system support, and many offices with multiple PCs haven't networked their computers because of the cost and complexity of installing a traditional PC server, said Dataquest analyst James Staten.

Yet, these same companies are looking to take advantage of services such as email, shared Internet access, and sharing of resources such as printers.

Enter the thin server. Dataquest thinks the market for networking appliances could grow to $16 billion in revenue by the year 2002, up from $2 billion this year.

Intel said it plans to expand its offerings with enhanced versions of these devices as well as several other new products over the next few months. While the company declined to provide details, what is known is that the company will face growing competition.

Whistle Communications, for instance, offers a toaster-size device that provides email, Web browsing, and Web publishing features for under $2,000. Hewlett-Packard offers a dedicated product for print sharing, and Meridian Data has a storage server that hooks up directly to the network.

Dataquest expects Intel's presence in this market to draw attention to other products and help grow the overall thin server market, which companies such as Cisco are hoping to play in.

Initially, Intel said its role won't be that of a supplier of the system building blocks, as it does for the PC industry.

"What you're going to see is Intel focused on delivering actual products to small business customers as well as to the channel, not necessarily focused on providing pieces that would make somebody else's products," said Jeanne Talbot, Intel spokeswoman. "But certainly as these products come to market, we would want people to think about using Intel processors inside them."

Dataquest's Staten doesn't think thin servers will steal sales from traditional servers.

"There's a [strong] belief that these devices will cannibalize traditional server sales. That probably won't happen because these are additive to server deployments already in place," Staten said.

But while there's lots of opportunities for sales of these products, it will "take a lot of market education," Staten said. "That's a role Intel will have to take a lead in."

Intel is an investor in CNET: The Computer Network.