Network Engines has nabbed $25 million in funding to help it stand out in
the thicket of companies building special-purpose
Network Engines builds Intel-based servers, each 1.75 inches tall and
designed to be bolted into racks by the dozen for use at Internet service
providers (ISPs) and other companies who need lots of small servers to handle
tasks such as serving up Web pages.
Network Engines licensed its
design to IBM, which sells it as
the Netfinity 4000R. With the new funding in hand, Network Engines
will expand and improve its products and marketing, the company said.
Manufacturers of the special-purpose computers known as "server
appliances" have been stealing some of the attention that had been focused
on the more traditional, general-purpose servers. Server appliance advocates
argue that, by being tuned for a specific job, server appliances offer
either higher performance, lower cost or easier management.
Network Appliance, the first server appliance company to go public, has
seen its stock soar since November. The price rose to an
all-time high of 83.88 a few days ago, and it has risen more than 9 percent
in closing trading today to 85.38 on the news of a 2-for-1 stock split and that the company has joined the Nasdaq 100.
But eager investors have other options to choose from as well.
Cobalt Networks and eSoft both make server appliances based on the Linux
operating system, another trend that has captured investor attention. And
CacheFlow, like Cobalt, had a
successful IPO in November.
Auspex and EMC, also publicly traded companies, sell server appliances as well.
Network Engines' server appliances initially were based on Windows NT, but
the company introduced a Linux version called Xengine in May.
Linux is an open-source operating system, currently enjoying a rise in
HarbourVest Partners, Canaan Partners and Landmark Partners contributed to
the most recent round of funding, along with earlier Network Engines
investors, the company said. Network Engine's initial $1 million in funding
came from Ascent Venture Management in 1997. The company secured a second
round of $8.3 million from Memorial Drive Trust Advisers, Egan-Managed
Capital, Corning Capital and Ascent Venture Management.
It's becoming a rather crowded market.
By acquiring other companies, hard disk makers Quantum and Maxtor have
started selling storage server
appliances devoted to the task of data storage--a way to boost the thin profit
margins that have hurt their business. Today, Quantum installed Anders
Axelsson, formerly of Honeywell, as its new vice president and general
manager of its storage appliance division
Server appliances are making their way into the product lines of
traditional server companies such as IBM, Hewlett-Packard, Dell, Sun
Microsystems and Compaq. But one of the more interesting entries into the
market is Intel, which by building and selling server appliances has begun
competing with the very companies that buy its chips.
Intel has a line
appliances for small businesses that want machines that handle email, a
connection to the Internet, printing tasks, or just file storage.
In addition to the publicly traded server appliance makers, there are a
host of privately owned companies as well, Mirapoint,
NetMax, Encanto Networks and TechNauts.