RLX was also mentioned in today's WSJ..
Best regards,
John
Despite Slump, Money Pours
Into New Server Companies
By GARY MCWILLIAMS
Staff Reporter of THE WALL STREET JOURNAL
The dot-com implosion has slashed computer demand. A price war has broken out, and markdowns are steepest for the server-computers used to manage Web sites.
But despite the slump, millions of dollars from the likes of International Business Machines Corp., financier George Soros, and Deutsche Bank AG's Deutsche Banc Alex. Brown are flowing into new server companies intending to take on the mainstays of the computer-server business.
The allure? A radical new design that cuts the cost of running the heavy-duty, electricity-hungry computers that power Web sites and corporate-data centers. Borrowing designs from big telephone switches, the innovators have designed ultrasmall computers that fit like playing cards in a deck. The computers on a card, called blades, are about the length and width of a carton of cigarettes. Several hundred of these computers can be crammed into a chassis that now holds 42 of today's popular pizza-box shaped server-computers.
Their small size, their ability to share Internet connections and the disk storage among the blades allow these computers to operate on a fraction of the power and air conditioning of traditional servers -- promising to reduce critical costs for Internet data centers. For the companies that house and manage thousands of computers for Internet operations, such very small and cost-efficient machines allow them to collect more fees per square foot of computer space.
"The economics of these systems are so compelling it's imperative for anyone in the data-center business to take a strong look," says Speros Koulouras, chief executive of start-up FiberCycle Networks Inc. (www.fibercycle.com), Los Gatos, Calif. He estimates Internet centers using his company's space-saving design would generate seven to eight times the revenue of current servers.
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Built for Cramped Quarters
The start-ups developing ultracompact computers:
FiberCycle -- Founded by former telecommunications executives, this company has a design that crams hundreds of tiny computers in a chassis no bigger than a refrigerator.
eGenera -- Founded by a former corporate computer manager. Its initial computer is a fail-safe design geared to corporate data centers.
RLX Technologies -- Staffed with former Compaq Computer executives, this IBM-backed company builds low-power computers for Web-hosting and Internet data centers.
Zetari -- Its founders came out of the networking world. It has yet to announce its first computer.
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His company and RLX Technologies Inc., The Woodlands, Texas, have tried to optimize their computers for the rapid delivery of stored Web pages. Each has built its machines using ultralow-power chips originally developed for laptop PCs. Both companies also keep costs down by running the open-source Linux operating software.
RLX President Michael Swavely says that while performance used to drive server sales, now buyers must consider the operating costs as well. The low-power demands of RLX's System 324 allow data-center operators to forego special air conditioning and slash electricity bills.
RLX computers deliver 1,400 Web pages a minute, yet require one-fifth the electric power and take up one-eighth of the square footage of traditional servers, he says. The company, which has raised $59 million to date, is backed by IBM, which agreed to sell the computers to its Internet customers.
Compaq Computer Corp. has unveiled its own ultrasmall servers, due out late this year. The world's leading maker of PC-servers says it will introduce future members of its server line incorporating a blade-like design.
Compaq is working with chip-maker Intel Corp. to adapt PC chips for portable computers to a server design that would include nearly 300 tiny computers in a traditional server chassis. Wednesday, Dell Computer Corp. also said it plans to develop blade-type servers using Intel chips.
EGenera Inc. (www.egenera.com), which is pitching its machines to large financial-service companies as well as Internet-server providers, believes corporate buyers will be interested in these smaller and more-flexible computers down the road, says CEO Vern Brownell, a former Goldman, Sachs & Co. chief technology officer. EGenera, Marlboro, Mass., raised $20 million from venture capitalists and expects to soon receive another $20 million to begin marketing its computer.
Credit Suisse First Boston Corp. has agreed to test eGenera's BladeFrame computer, "hoping to see major reductions in our per-server operating costs," says Evan Bauer, a Credit Suisse chief technology officer. EGenera's computer allows customers to automatically add or subtract individual blades as the workload dictates. "It's something we're very excited about," says Mr. Bauer.
Of course, radical approaches can be a tough sell in a market consumed with a price war. For example, Zetari Inc. (www.zetari.com), a Waltham, Mass., start-up initially organized to develop a Web-friendly computer, is now exploring ways to shift its focus to software for rapidly deploying new servers, says a spokesman. |
