Intel stretches storage for small firms

Intel's new product, called the InBusiness Storage Station, joins the giant chipmaker's line of servers aimed at the networking needs of small businesses.

With the so-called server appliances, Intel is building and selling an entire computer, complete with chip, motherboard, box, and operating system. That's significant, given that, traditionally, Intel has strayed from competing directly against its customers. Historically, Intel has supplied chips and other building block components for others to build computers, not, as with these new devices, the computers itself.

While server appliances have existed for several years, led mostly by start-ups, heavy hitters such as Compaq and Hewlett-Packard have only recently embraced the market that is expected to grow from $1.1 billion in sales in 1997 to $16 billion in 2002, according to Merrill Lynch.

Although several different types of server appliances exist, they are all designed to be simpler to install and simpler to use than the general-purpose servers that prevail in today's market. Today's new product from Intel falls into the category of "network-attached storage," a box that's designed to easily increase the amount of storage space available to relatively small groups of individuals.

Kimball Brown, a server analyst with Dataquest, predicts that competition in the low-cost server appliance space will be fierce. First, companies will be pitting their own products against each other, with general-purpose server lines competing against server appliances. Second, companies will be competing against Intel.

Compaq and HP, following in the footsteps of companies such as Network Appliance, Cobalt Networks, Auspex, and Mirapoint plan their own storage server appliances, though they likely will be fancier, faster, and more costly than the Intel devices. Dell also has embraced server appliances, selling Dell-branded Network Appliance file servers and licensing Novell operating system software for Internet caching servers that speed up Web surfing.

IBM, in contrast, is focusing on the general-purpose server.

In today's announcement, Intel executives say they are filling a hole in their family of small business products. In addition to its printer sharing and peripheral sharing appliances, the chipmaker offers an email server appliance, as well as hubs and switches.

Analyst Shannon Pleasant, of Cahners In-Stat, said the product makes sense for small businesses that need a central storage system for some of its data.

"Your traditional high-end server that needs oodles of software is not something that would appeal to small businesses, not to mention the price," Pleasant said.

Intel's storage product will appeal to small businesses who don't want to save similar files on each user's hard drive. "They don't want to keep emailing each other back and forth with updates. This storage option keeps common files in one central storage location and helps them better manage bandwidth and the network."

Nortel Networks' NetGear recently released a similar network hard drive for small businesses. The fact that two companies have created two new products for small businesses shows that they can't simply repackage enterprise products for smaller companies, Pleasant said.

The networking companies, including 3Com, are fighting for part of the $9 billion that small businesses are expected to spend on networking products this year, she said.

Barb Jones, product marketing manager of Intel's small business networking operations, added that its storage appliance also serves as a backup to laptops' and PCs' hard drives.

The Intel InBusiness Storage Station, which runs on Windows 95, 98, and NT with a 266-MHz Pentium processor, comes in two models: a 12 GB version that costs $999 and a 24 GB model that costs $1,399. The 12 GB model is available tomorrow, while the 24 GB version will ship in September.