7/07/99 - Compaq Jumps Into Server Appliance Market (novell is wining)
HOUSTON, TEXAS, U.S.A., 1999 JUL 7 (Newsbytes) -- By Craig Menefee, Newsbytes. Trumpeting itself as the "first major vendor" in a new market, Compaq Computer Corp. [NYSE:CPQ] has introduced a family of single-purpose "appliance" servers. Called Compaq TaskSmart, the first models, available now, are designed for Internet data flow caching, and nothing else.
Single-purpose appliances of the NetApp and Compaq TaskSmart variety are sometimes called thin servers. What sets them apart from other servers is that they are highly optimized for one application. In essence, they gain speed and simplicity by shedding much of the overhead needed by general purpose servers.
Compaq describes the result as "plug-and-forget management."
James Staten, an analyst with Gartner Group's Dataquest unit, has cautioned that more user education will be needed to further speed market growth. Even so, analysts have generally commented that Compaq, with its gold-plated corporate credentials, is bound to accelerate market growth just by jumping in.
"We've forecasted that this year - 1999 - the revenues will pass $90 million for caching appliances," Staten told Newsbytes. "We're expecting this market to grow phenomenally. By 2003, we're expecting over $1 billion in revenues in this category, and we think that's conservative."
Newsbytes notes the appliance server segment was pioneered by current market leader Network Appliances of Santa Clara, Calif. In May, NetApp reported revenues of $90.8 million for the quarter ended April 30. That's 80 percent greater than the same quarter in 1998 and sets a run rate far ahead of Dataquest's forecast for the year.
Asked about NetApp's current run rate, Staten commented, "Well, we try to be conservative."
He added, "Without taking anything away from NetApp, you still have to remember they're coming off a relatively small base."
Staten says the ripple effects from Compaq's entry will probably not affect NetApp, which is very specific in its focus, so much as they will affect Dell, Novell and Microsoft.
"They're most likely to go up directly against Dell, which is another top-tier manufacturer endorsing the category," Staten commented. "That gives validity to the whole industry," including NetApp competitors CacheFlow and InfoLibria, as well as giant Cisco Industries which also offers a caching appliance, he noted.
Staten continued, "A key point about what Compaq is doing is that this appliance runs on Novell's ICS or Internet Caching Software. Novell plans to OEM (original equipment manufacturer) this software to other players, so it's not exclusive to Compaq. But it's an endorsement of Novell software. Compaq found Novell software to be the fastest, the best solution. They could have chosen Linux, could have done a licensing deal with NetApp or CacheFlow, but they went with Novell."
Newsbytes notes Dell has also announced a licensing deal with Novell.
Staten commented, "Novell is going into this market with a full, software-only push. They're not just stopping with caching. They're also planning to do network-attached storage or file sharing, for example. The strategy is to seed the market with Novell-based appliances that all speak Novell Directory Services."
The analyst describes says it's a territory fight with Microsoft, a type of battle the Utah firm knows well. Staten says Novell could win.
"The core is, can Novell get so well seated that (Microsoft's) Active Directory becomes irrelevant? Most ISPs and network users we speak to who have worked with both, love Novell Directory Services better. Few have worked with Active Directory and of those, very few say it's great. So Novell is likely to succeed."
Compaq acknowledges its TaskSmart server line may rob sales from general purpose servers, in effect cannibalizing the Texas firm's own markets at least to some extent. Even so, Compaq spokesman Ted Bockius told Newsbytes, "We're comfortable with that."
Some observers consider appliances to be an evolutionary step toward greater efficiency. One source close to Compaq, speaking not for attribution, noted the appliances do not compete directly with general purpose servers, which are used for internal networks among other applications.
Paul Gottsegen, director of Compaq "industry standard" server marketing - a label for Intel-based Microsoft NT systems - describes the appliances as a boon for firms doing business on the Net, saying in a statement that they deliver "breakthrough Internet cache performance that increases Web response time by as much as ten times, enabling customers to conduct more business at a lower cost."
Other markets include education, where Compaq says the servers can make it faster to access frequently visited Web sites while letting administrators filter undesired sites. Also, Internet service providers (ISPs) and corporations can use the thin servers to accelerate Web access, grow WAN (wide-area network) bandwidth, and "vastly improve" user and customer response and Web server farm scalability, the firm says.
TaskSmart Internet caching servers will start at $9,999. Other servers in the series will include models optimized for Web pages, e-mail, files, security and firewalls and database hosting, according to various reports.
Compaq says its TaskSmart C1200R and C1500R models are available now and TaskSmart C2000R will be available later this month. The firm describes the new server line at compaq.com .
Reported by Newsbytes.com, newsbytes.com .
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