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Just three years after Sun Microsystems paid $2 billion in stock for server appliance maker Cobalt Networks, Sun kills off the storied Cobalt product line.

Just three years after Sun Microsystems paid $2 billion in stock for server appliance maker Cobalt Networks, Sun has killed off the Cobalt product line.

The move marks the end of the Cobalt brand of Linux servers at Sun, although Sun will continue to resell Linux operating systems from Red Hat and SuSE Linux on x86 servers. Sun also sells Linux for the desktop in the shape of the Sun Java Desktop, but its own server line now runs Solaris exclusively.

A Sun representative said the company would maintain security patches and honor Cobalt warranties for the next three years. And Irish start-up Antefacto in 2002 picked up a part of the appliance server market by launching the S1000 high-availability appliance.

On Sun's Web site, the latest Cobalt appliance server, the dual-processor Raq 550, has joined the Raq4R and other Cobalt devices in the end-of-life section. The actual date of termination for the Raq 550 is Feb. 19, 2004, according to the Sun representative. No new Cobalt devices are listed on the Web site, and Sun's entry-level server area is now populated exclusively with the Sun Fire range of servers.

Sun's move marks the end of the line for one of the dot-com era's most innovative hardware manufacturers. As a start-up in the late '90s, Cobalt Networks popularized, if not created, the notion of the appliances--servers dedicated to a single task. Cobalt launched its first product, the Qube, in March 1998. This small, easy to use Web and e-mail server and gateway was designed for small businesses.

But it was the launch of the Raq--a small rack-mounted unit--that made Cobalt's mark on the Internet, as ISPs filled their cabinets with the distinctive blue "pizza boxes" at the height of the dot-com boom. At Cobalt's customer conferences, then Chief Executive Stephen DeWitt used the analogy of vending machines to demonstrate how appliance servers would revolutionize the way in which companies buy software.

Other manufacturers, including IBM and Dell, began shipping similar products, but none matched the success of Cobalt, and in 2000 Sun bought the company for $2 billion, a tacit recognition that its own low-end servers weren't selling well enough in the market for hosting Web pages. However, the marriage was not an easy one. Some Cobalt engineers left, citing a clash of cultures between Sun and Cobalt. For Sun, the acquisition meant more than acquiring an unfamiliar brand; the company also found itself, for the first time, selling high-volume servers built using a mixture of Linux and x86 processors.

Sun has since learned to live with these high-volume technologies; it is continuing its Linux experiments, most recently with the Sun Java Desktop, and now has deals with Intel and AMD on the Net Fire range of servers.

Sun also seems to recognize that there is still life in the server appliance, as it continues to sell the Sun-branded iForce VPN/Firewall Appliance, powered by Sun and Check Point. Market research firm IDC reported recently that sales of security appliances surged during the third quarter of 2003 as enterprises installed them in their main networks, having seen lower-end devices prove themselves in branch offices. Some 20 percent of these cost more than $25,000, compared with just 10 percent in the second quarter, according to IDC's figures.

Cisco Systems and NetScreen continue to dominate the market for security appliances, said IDC, and both companies have seen revenue growth of more than 20 percent compared with the same period last year. Of the big players, Nokia has fared the worst, losing market share both in terms of units and revenue. While it is now No. 2 for revenue, with 15.1 percent of the market, it is fifth in unit shipments, with only 6.8 percent of the market, behind Cisco (27.7 percent), NetScreen (20.8 percent), SonicWall (13.2 percent) and WatchGuard (12.1 percent).

For security applications, many companies are turning to appliances because they are easier to install and run than software alone, said IDC. Sun did not figure in the top five security appliance vendors.

ZDNet UK's Matt Loney reported from London, and CNET News.com's Karen Southwick contributed to this report.