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INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | | FEBRUARY 20, 2001 COMPANY CLOSEUP By Lori Hawkins Hot Talk about a Very Cool Chip RLX is building an ultra-compact Web server around a low-heat Transmeta processor. Will this upstart transform the server market?
Because RLX Technologies Inc. has the look of a Trojan Horse -- one that is packed with a powerful management team aiming to turn the computer-server market on its ear. At the company's helm is Gary Stimac, who helped found Compaq Computer, headed its server division, and is credited with helping to make it the leader it is today. SOARING AMBITION. Just as Compaq changed computing when it introduced computers for the masses in the 1980s, RLX is pledging to challenge traditional servers by building an ultra-compact unit for Internet data centers. "We're going to redefine server economics," Stimac promised potential recruits late last year. Several of them -- including Mike Swavely, former Compaq president for North American operations, signed on with RLX, which is short for the company's original name, RocketLogix. How does RLX plan to shrink the metal boxes and take on market leaders like Compaq, Dell Computer, IBM, and Hewlett-Packard? The trick is in the chips. Unlike traditional servers, which are based on Intel chips and Microsoft software, RLX will use processors from Transmeta Corp. The six-year-old company, which is based in Santa Clara, Calif., developed its small, less-power-hungry processor for laptops and handheld devices. Because it uses only 25% of the juice consumed by Pentium chips, Transmeta's product generates significantly less heat, allowing more servers to be stacked together. The new RLX server would allow data centers -- which use thousands of machines to run the operations of Internet service providers and corporations -- to pack eight times the current processing muscle into the same space. That, in turn, would dramatically increase profit margins. "This is exactly what data centers have been asking for," says Swavely, RLX's president, who adds: "Until now, no one has given it to them." INTEL'S RESPONSE. The server Goliaths have been slow to respond for several reasons, analysts say. The first is that Transmeta's chip has no track record in servers, notes John Enck, research director at Gartner. Second is the fact that companies like Compaq and Dell, which have long and deep relationships with Intel, don't want to risk those ties on an unproven rival. "Whenever they go outside, it causes rifts and ripples within the relationship," explains Enck. "And I'm sure Intel has disclosed to them plans to address this area." Indeed, Manny Vara, an Intel spokesman, says the company plans to crank up a new manufacturing process later this year with the objective of producing a faster chip that will require less power. For now, it's mainly the little guys like RLX experimenting with new chips. They're trying to break into a nascent market for small servers: Dataquest expects sales to jump to $2.8 billion by 2004, vs. $240 million last year, as demand for computing power grows. Gartner's Enck says RLX, with its strong management team, leads the pack of newcomers that includes FiberCycle Networks of Los Gatos, Calif., Rebel.com of Ottawa, and Amphus of San Jose, Calif. It's still early days for RLX and its 60 employees. The company was founded in December, 1999, by Chris Hipp, a computer-systems designer who is now the company's chief technology officer. Stimac, who had been working as a consultant and evaluating business plans for venture-capital firms, came across one in October from RocketLogix. He liked what he saw so much that he joined as CEO in November and started recruiting his old Compaq buddies. WINNING EDGE? Swavely, who left Compaq in 1991, had served on corporate boards and as a tech consultant before joining RLX. Higher-ups from Dell, Sun Microsystems, Nortel Networks, and Alcatel also climbed aboard. RLX has raised $19 million from investors that include former Compaq CEO Rod Canion and Sternhill Partners, a Houston venture-capital firm. RLX's first product, code-named Razor, is to begin testing this month at Internet data centers. Full-scale production is set to start in the second quarter. Once under way, Swavely said the company expects 35% to 45% gross margins. "Our servers are aimed at the Web server applications, which is a relatively entry-level application as servers go," he explains, adding: "It doesn't compete with a Sun or IBM database machine." Not yet, anyway. But if Razor makes the cut, RLX may eventually prove that Stimac's vision to redefine server economics is more than a boast.  Lori Hawkins is a freelance writer based in Austin, Tex.  | | |
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