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Linux firm gets cash infusion from SoundView

The upstart company is hoping a $3 million investment will help it gain a foothold in the increasingly crowded server appliance market.

A Linux software company is hoping a $3 million investment will help it gain a foothold in the spicy but increasingly crowded server appliance market.

SoundView Technology Group has placed an investment in Realm Information Technology, which until now has been running off $5 million in private funding that got the company started in 1996. The new funding will be used to expand Realm's software and West Coast operations.

Realm is the developer of ApplianceWare, an application that the company hopes to sell to appliance manufacturers as an add-on. The software runs atop Linux on Intel and Alpha systems and can be administered over the Web or through Sun's Java software.

Realm sells and develops software for Linux-based server appliances, special-purpose servers that reduce cost and complexity or increase performance compared to their general-purpose brethren. Market research firm Dataquest has estimated that server appliances will be a $10 billion market in 2003. However, server appliances also are less configurable, so a customer has to buy a new box if they need to expand beyond the original appliances.

Currently, Realm makes software for just one type of appliance, "network-attached storage," or NAS, but the company will expand into other areas as well.

The NAS market is increasingly crowded. Hewlett-Packard, with offerings of its own, will expand its product line through a deal with Procom. Quantum and Maxtor have NAS products of their own through acquisitions. And CyberNet Systems, which intends to hold an initial public offering in March, has begun selling its NetMax line of software for storage servers and other devices.

Last year, Realm moved its headquarters from Atlanta to San Jose, Calif.. It also hired several new employees, including Michael Wee as vice president of sales and marketing. Wee came from Creative Design Solutions, a storage server appliance company acquired by hard disk maker Maxtor. In July, the company hired as chief financial officer Dan Seitam, the former CFO at US/Intelicom.

The company's software currently can connect storage devices including disk drives and CD-ROMs, to networks with Unix, Windows or Novell software.

Linux is an open-source software that is making inroads against other operating systems such as Windows NT.