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Microsoft takes aim at Linux with reworked system

The software giant takes a swipe at Linux as it joins forces with Intel to tackle the emerging market for "server appliances," a new category of special-purpose computers.

Microsoft took a swipe at the growing Linux movement today as it joined forces with Intel to tackle the emerging market for "server appliances," a new category of special-purpose computers.

Microsoft announced it has revamped its Windows NT Embedded operating system to run on server appliances, computers used for specific tasks, such as handling email or serving data to client PCs.

Intel today said it will use Microsoft's reworked operating system--now called Windows for Express Networks--in a server appliance aimed at helping small businesses network their computers. Called Intel InBusiness Small Office Network, the all-in-one product will allow a small business to connect up to 25 computers and allow them to share an Internet connection, access email, files, and printers, the company said.

Analysts say Microsoft's move is a counter-attack against the rival Linux operating system, which is making inroads into the growing server appliance market. Market analysis firm Dataquest has predicted Linux will be used in a quarter of server appliances by 2003.

"This is to counter Linux's advance in the server appliance space," said Giga Information Group analyst Stacey Quandt. "There's a large number of Linux software companies who are targeting the appliance market--and Microsoft wants to compete."

Cobalt Networks, for example, builds Linux-based server appliances, while upstarts like CyberNet Systems and Lineo make Linux-based software for server appliances, Quandt said.

Microsoft and Linux companies aren't the only companies tackling the operating system market for server appliances. Santa Cruz Operation, a Unix-based software maker, and Novell, maker of the NetWare operating system, both have specialized version of their operating systems designed for server appliances.

While server appliances have existed for several years, the big computer makers including Compaq Computer and Hewlett-Packard, have recently embraced the market, which is expected to grow from $1.1 billion in sales in 1997 to $16 billion in 2002, according to Merrill Lynch.

Compaq and HP, for example, have followed the lead of companies such as Cobalt and Network Appliance with a storage server appliance that gives businesses a central storage system for their data.

Microsoft executives today, however, dismissed talk about competition with Linux, saying its product is aimed at small-office server appliances.

"There are other competitors that utilize Linux within their products, but we're focused on a unique set of features that meets the needs of small business customers," said Vince Mendillo, Microsoft's lead product manager for Windows NT Embedded.

Other companies disagree, however. For example, Linux-based companies, such as Cobalt and e-Soft, are going after the small business market.

Mendillo said Microsoft's new Windows for Express Networks operating system can run server appliances aimed at 25 computer users. The operating system also features security through firewall software, and the ability back-up data, he said.

CNET's Linux Center For Intel, today's product announcement beefs up its family of server appliances aimed at small businesses and allows the giant chipmaker to better compete against 3Com and other networking firms for a piece of the small business market. According to research firm Cahners In-Stat Group, small businesses are expected to spend about $9 billion to connect their businesses.

"It's a network-in-a-box," said Kirt Bailey, product line manager for Intel's small business networking operation. "You can take it out of the box, quickly attach PCs to it and have everyone connected with full networking services in about an hour."

The inBusiness Small Office Network, available in mid-March will include a built-in Intel Celeron processor that runs at either 366 MHz or 466 MHz, 64 MB of memory, a 13 GB hard drive, a 56k modem and built-in networking equipment, such as hubs. Pricing starts at $1,299 each.