A Solution to the Power Shortage?

A tech startup unveiled a Web server that isn't a glutton for electric power. Its timing may be perfect.
Joseph RadiganJanuary 17, 2001

(Editor’s note: “Today in Technology,” will cover the corporate technology market on a daily basis. Comments are welcome. Send E- Mails to [email protected])

The blessings of good timing. No sooner did Southern California Edison default on some of its debt and move to the brink of bankruptcy than RLX Technologies announced its plans to market a Web server that consumes less power than most servers on the market.

Not that the two events are directly related. RLX’s management has been planning this product for months. Meanwhile, the California electricity crisis has happened rather suddenly. Until a few weeks ago, no one outside the utility industry could have predicted it.

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But the coincidence of the RLX news announcement with a major, headline grabbing event such as the near insolvency of one of the country’s largest utilities has afforded the fledgling maker of Web servers some free publicity.

That’s a good thing

“With all the concern about power, they should be able to generate some interest,” says Rob Enderle, a vice president with the market research firm, Giga Information Group. Enderle is based in the Bay Area, where residents had been warned on Tuesday of the threat of a rolling blackout.

The significance of the power issue didn’t escape RLX’s management team, including chief executive Gary Stimac and president and chief operating officer Mike Swavely, both of whom worked at Compaq Computer earlier in their careers.

During the press conference, Stimac said, “We believe we can redefine server economics.” While the company hasn’t announced a price for the Razor server it expects to unveil in the first half of the year, Stimac noted that the total cost of ownership of a Web server includes the electric power to run it and the real estate to house it. The price for both commodities, particularly in hot high-tech markets like the Bay Area, has been soaring.

Since the RLX server uses less power than standard servers built upon Intel’s Pentium architecture and also takes up less space, RLX’s sales force will at least have a market that’s ready for its sales pitch. Whether that eagerness can be converted into sales is another matter, but there’s a sense that the young company is on to something.

The RLX server will use the Crusoe processor from Transmeta and Red Hat’s version of the Linux open-source operating system. RLX will also support Microsoft’s Windows 2000 operating system.

“The use of open source technology is widespread,” says Robert Parry, a senior research analyst with the market research firm, The Yankee Group. “It’s attractive to the people building Web sites.”

“In a short time, Transmeta has made a good name, particularly for notebooks and laptops,” says Jay Patel, who is also an analyst at the Yankee Group. Deploying the same chip in a Web server is simply a matter of scaling it to handle much larger workloads. That shouldn’t be a problem.

The design for RLX’s server was hatched in December 1999 by John Cracken, a partner in the Dallas venture capital firm, Cracken Harkey, and Christopher Hipp, who was president of Digital Media Performance Labs, a system integrator specializing in high- performance Unix and Linux applications. Hipp is now RLX’s chief technology officer.

The company’s founders recruited Stimac last fall, and he quickly brought on some of his former colleagues from Compaq.

In all, the company says it has some $19 million in funding, and besides Cracken, Stimac, Hipp, and Swavely, the board of directors includes William Tai, a partner at the Silicon Valley venture capital firm, Institutional Venture Partners, which was one of Transmeta’s early backers.

Transmeta’s chief technology officer, Colin Hunter, also has a seat on RLX’s board as does John Harkey, who is also a partner with Cracken Harkey.

The management team includes J Tempesta as chief financial officer. He was vice president and general manager for Compaq’s displays and peripherals division. Before that, he was controller for Compaq’s PC products group.

In another twist of timing, RLX’s product was unveiled a few hours before Intel released its results for the fourth quarter. On the one hand, Intel barely nosed ahead of Wall Street’s lowered estimates, but the company also warned that its first quarter sales would fall 15 percent from the $8.7 billion in revenue it had in the fourth quarter.

Whether RLX’s server with Transmeta’s chip finds the sweet spot of the market remains to be seen, but clearly it’s being introduced at a time when Intel is stumbling. That as much as anything may encourage prospective customers to try it out.

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