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Cobalt's Third-Generation Server Appliance to 'Open the Floodgates' to Low-end E-commerce

Oct 25, 1999, 23:06 (0 Talkback[s])
(Other stories by John Wolley)

By John Wolley, Linux Today Silicon Valley correspondent

MOUNTAIN VIEW, California, October 25, 1999 - Cobalt Networks, Inc., will announce tomorrow at ISPCON the RaQ 3i, their third-generation "server appliance" product, designed specifically to support high-traffic web portals, e-commerce, and application hosting.

Like the RaQ and RaQ 2 products before, and the original Cobalt Cube, the RaQ 3i is pre-configured with a Cobalt-enhanced / optimized Red Hat Linux and is designed to be as simple as possible to use: with a 15-minute setup time, it is as close to "plug and play" as a webserver can be, requires virtually no maintenance after setup, and has a price that anyone who needs to be on the Internet can easily afford. But the RaQ 3i is four times faster than the RaQ 2, uses an x86 instead of a MIPS cpu, and is designed to support greater third-party application complexity than was feasible on the earlier model. (A story in The Register gave the impression that Cobalt is "dropping" MIPS altogether and switching to x86 chips -- however, only the RaQ 3i is slated to use an x86 cpu; the Cobalt's existing products will continue to use MIPS cpu's.)

These enhancements, with application support coming from third party independent software vendors (ISVs), open the door to e-commerce to virtually any organization that needs to do business on the Internet. More aptly, it looks like the RaQ 3i is set to open the e-commerce floodgates! As Kelly Herrell, Cobalt's vice president of marketing, put it, with the RAQ 3i, "we want to do to e-commerce hosting what we've done to web hosting"

What has Cobalt done to web hosting?

Simple web hosting, as opposed to "e-commerce", allows an organization to have a website that provides information, but without the capacity to complete transactions (e.g., accept credit cards). Behind the scenes, in a fairly quiet but sweeping revolution in simple web hosting, Cobalt server appliances have used Linux and inexpensive hardware to dramatically reduce the cost to a small-to-medium size organization of hosting a website. At the same time, they have greatly expanded the possibilities for service providers to make money offering dedicated web hosting at a low price: a service provider can buy Cobalt servers for (US) $1000-3000 and lease them to customers for a price that recoups the investment in a matter of months -- a service provider can lease the Cobalt servers and sub-lease them to customers at a higher monthly rate, for an instant positive cash flow. What Cobalt hopes the RaQ 3i will do is extend this quiet revolution to e-commerce, allowing even the smallest businesses to complete business transactions through their websites.

While we're used to hearing about software companies targeting the Fortune 500, Herrell describes Cobalt's target market as the "global one million" -- the small-to-middle-size organizations that are feeling competitive pressures to take advantage of the Internet, but are too small to justify the cost of the technical resources necessary to host their own websites on general purpose servers. The RAQ 3i offers these organizations high-traffic web portals, e-commerce, and application hosting at a price that any organization can afford -- and they can have the devices physically located at a service provider's data center, with day-to-day monitoring handled either by the customer or by the service provider. For example, digitalNATION offers web hosting on a dedicated Cobalt server appliance located in the service provider's data center starting at (US) $230 per month with no setup fee.

Some analysts were initially skeptical when Cobalt brought the Cube to market at such a low price point -- the business model was based on the then unproven assumption that a webserver running Linux and open source programs like Apache and Sendmail, could be plugged in, turned on, and run without any serious tech support from Cobalt. A year later, a tour of Cobalt's headquarters here in Mountain View indicates that Cobalt has indeed pulled it off -- only a handful of their staff are dedicated to tech support, and it's the only department that's not bursting at the seams as the company continues its rapid expansion. The third party ISVs provide the tech support for the applications that they sell for the Cobalt servers.

Cobalt is well on its way to becoming the "second Linux IPO" (initial public offering ), after pioneer Red Hat. Because of SEC restrictions related to the IPO filing -- the "quiet period" -- Herrell could not comment on competing products or on unannounced plans of ISVs to support the RAQ 3i. Tomorrow's press release will include supportive quotes from Ed Callan, vice president of marketing at Intershop, and will mention Oracle, OpenMarket, Miva, RSA, Sane Solutions, CyberCash, Signio, and Real Networks. Recent press releases from OpenShop and Breakthrough Software in the e-commerce area, Medweb in medical imaging servers, and Progressive Systems in firewalls, indicate broad ISV support for the Cobalt platform. Also, Gateway has recently agreed to resell Cobalt server appliances to supplement their line of general purpose servers, and Concentric Network Corp. has announced plans to use the RaQ 2 in its hosting services.

This spate of recent announcements of third party support for Cobalt says what Herrell isn't allowed to -- the future is looking very bright for Cobalt's line of Linux-based server appliances.

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