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VA Linux plunges into booming storage market

The company releases its 9205 network-attached server, which is designed to easily add storage capacity to a network.

VA Linux Systems leaped into the market for storage servers today, becoming the latest example of a server company trying to benefit from the need for housing data.

The company released its 9205 network-attached storage (NAS) server, which is designed to easily add storage capacity to a network. A NAS server is an alternative to using general-purpose, but more expensive, servers that can deal with a host of other duties, such as handling email or sending print jobs to the printer.

With the announcement, VA joins IBM, Compaq Computer, Dell Computer, Hewlett-Packard and other "mainstream" server designers that are all taking on storage-focused competitors such as Network Appliance, Procom, Auspex and EMC.

The announcement comes the same day as NAS market leader Network Appliance released a new top-end machine that in topped-out configurations costs more than $1 million and holds as much as 12 terabytes (TB) of information.

VA's, by comparison, holds up to 2.1TB and is much less expensive. Entry-level configurations start at $29,300, and the most expensive model, with dual CPUs, costs $132,000, said marketing manager Cheryl Sindelar. She added that customers are most likely to gravitate toward 1TB versions costing $65,000 to $85,000.

NAS is a booming market, W.R. Hambrecht analyst Prakesh Patel said in a note today. Market research group Dataquest projects the market will grow to $2 billion by 2003.

But just because the industry is crowded with competitors doesn't mean there's not room for VA, Patel said. "We believe VA is targeting a large but underserved market opportunity," he said.

VA's entry into the NAS market should improve the company's profit margin, he said. For one, the server is relatively cheap to make: It's made of commonly available components, Patel said, and the cost of development of the Linux operating system is spread among many volunteers, as well as among companies besides VA.

Gartner analyst Pushan Rinnen says the network-attached storage (NAS) marketplace, led by Network Appliance and EMC, is convincing hard disk NAS sellers that there is much green to be gathered in the Internet service industry.

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"We estimate the gross margin on the VA Linux 9205 could be as high as 67 percent," Patel said. But even a much more conservative number would be higher than VA's most recent quarterly operating margin of 22 percent, he said.

As is typical for NAS products, the 9205 can plug into a variety of network types, including Windows, Unix and Apple Macintosh. VA provides a year of 24-hour technical support, the company said, and new storage capacity can be added without shutting down the server.

VA's product can be bolted to racks, a feature desired by the increasing number of customers that house computing power in large data centers. A 2.1TB model is 14 inches high, VA said.

The product offers the ability to send email alerts to VA and customer support personnel, the company said. It also comes with Linux's new ext3 "journaling" file systems, a technology that logs file changes and therefore enables a server to recover from a crash more quickly.

The machine accommodates tape backup systems and is qualified to work with Workstation Solutions' software for backing up data, VA said.