Server maker RLX trims executive ranks

The chief executive officer, president and other key members of the management team at the start-up have left the company or cut back on their duties.

Michael Kanellos
Michael Kanellos Staff Writer, CNET News.com
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas.
3 min read
The executive parking lot at server start-up RLX Technologies has a few empty spaces now.

The chief executive officer, president and other key members of the management team at the company, which hopes to popularize slimmed-down "blade" servers using Transmeta's Crusoe processor, have left the company or cut back on their duties.

Gary Stimac, a Compaq Computer founder who helped bring RLX to prominence, has stepped down as CEO, the company said, although he will remain as chairman. Mike Swavely, who served as president and COO, has resigned.

Pat Collins, who had served as vice president of operations, will take over as CEO, president and COO, said Kevin Bohren, vice president of marketing. The company is not searching for a replacement CEO, he added.

Additionally, three vice presidents and the company's CFO--all former Compaq executives--have resigned from the company. In all, RLX has about 100 employees.

"Even though our business continues to grow, it is not growing at nearly the rate we had hoped," Bohren said, adding that the resignations were a result of the business climate.

Going forward, RLX will concentrate on more targeted, niche markets, Bohren said. New products are due in the relatively near future.

RLX's straits reflect the current desperate state of the technology market and the notorious difficulty of trying to break into the hardware industry. The company pinned its business plan on an intriguing concept: that rising prices for energy and office space would drive demand for small, dense, energy-efficient servers.

Transmeta chips consume less energy than standard Intel server chips, according to proponents. By being more energy efficient, more servers can be crammed into a finite space. Blade servers further maximize space by eliminating redundant cables and computer chassis.

RLX, which is based in The Woodlands, Texas, as of February 2001 had received $59 million in equity investment from, among others, Soros Private Equity Partners and IBM. Several executives and engineers from Compaq and Nortel joined the company. It also got an endorsement in June when IBM agreed to resell the company's servers. Exodus Communications had also begun to experiment with the company's equipment.

Unfortunately for the company, though, the established server powers were already on the trail. Soon after RLX and other start-ups with Crusoe servers unfurled their business plans, Compaq, Hewlett-Packard and IBM touted upcoming blade server projects. Intel also announced an effort to produce energy-efficient components for the market, denting the appeal of Transmeta-based boxes.

Demand also dried up. Target customers included Web-hosting companies, many of which have drastically curtailed operations or gone under. Exodus, for instance, filed for Chapter 11 bankruptcy protection.

"That business has dried up as far as new hardware goes," said Bohren.

FiberCycle and Rebel.Com, two other Crusoe server start-ups, have already closed operations. In August, RLX laid off about 17 percent of its employees.

The other executives that resigned are Keith McAuliffe, vice president of hardware; Ronnie Ward, vice president of software development; J. Tempesta, chief financial officer; and Bob Jackson, vice president of business relations.