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

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

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

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.