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IBM, Soros invest in server start-up RLX

RLX Technologies, which designs small, energy-efficient servers, picks up $40 million in financing from IBM and Soros Private Equity Partners.

RLX Technologies, which designs small, energy-efficient servers, has received $40 million in second-round financing from IBM and Soros Private Equity Partners.

The Woodlands, Texas-based company hopes to capitalize on one of the growing problems in the computing world: the amount of heat produced by servers.

Web hosting companies and e-commerce sites install hundreds of servers to ensure that the Web sites they manage stay afloat. The increased server population, however, is forcing these companies to invest heavily in cooling systems and additional floor space so that heat generated by all these electricity-gobbling machines can dissipate before doing damage.

The server, code-named Razor, is expected to come out in the first half of 2001. Razor will run on less energy than conventional PC servers because of a number of architectural nuances, according to the company. For one, it will depend upon a Crusoe processor from Transmeta, which consumes less power than standard PC processors.

The Razor will also be smaller than traditional PC servers, which allows more of them to fit into a finite space, company representatives have said. The design of the computer will be similar to the blade architecture used in the telecom industry, in which the server is essentially an exposed circuit board that slides inside a cabinet. Traditional PC servers come in individual plastic cases, although the blade architecture is catching on rapidly.

Compaq Computer, among other companies, is also coming out with a hyper-dense server later this year.

Along with $40 million in second-round funding, RLX announced that Chris Michalik of Soros Private Equity Partners will take a seat on its board. The investment company is tied to financier George Soros.

To date, RLX has accumulated $59 million in investments.

Although RLX is a start-up, several of its executives have been around the industry for years. Gary Stimac, RLX's chief executive, was one of the original Compaq executives. Mike Perez, RLX's vice president of technology, used to run Compaq's server division.

"In the current funding environment, today's announcement is an important validation of our strategy, our technology and our management team," Stimac said in a statement.