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SEPTEMBER 24, 2004
Server Power That's "Priceless" Azul Systems CEO Stephen W. Dewitt explains how his startup aims to edge out tech giants in the server market Upon returning from a honeymoon in Bora Bora in the summer of 2002, Stephen W. Dewitt got a call from a venture-capitalist friend asking for his opinion of a tiny nine-person startup that wanted to make a new kind of hardware server. Dewitt, fresh off selling his Cobalt Networks to Sun Microsystems (SUNW ) for $2 billion in 2000, decided to listen -- and quickly accepted a job as chief executive of what has become 105-person Azul Systems. In a tech world in which powerful PC-based servers are available for $1,500, it's accepted wisdom that it's no use competing with the commoditization of hardware. Now, Azul is coming out of stealth mode to talk about its plans to take on giants, such as IBM (IBM ), Hewlett-Packard (HPQ ), and Sun. Here are edited excerpts of interviews with Dewitt, who has given inside access to BusinessWeek's Peter Burrows as the company has developed over the past 15 months: Q: What new idea or capability does Azul bring to the table that will enable it to have a chance in the cut-throat server business? A: If I had to give the elevator pitch, I'd say, "we deliver network-attach processing that eliminates the need to do capacity planning at the individual application level." It's like the Visa commercial -- it's priceless...No one has ever delivered a massive pool of processing like this. Q: What does that mean? Why is that a big deal? A: Today, whatever the application you're talking about, you have to figure out how much power you're going to need at any point -- say, next Thursday at 4:00. Who knows? You can't predict that. The only way to do it in the past was to buy more than you needed. We wipe that out. That's the big story here. Q: Tell me more. A: There's all this buzz about utility computing, but it reminds me of the drug companies. They give you enough meds so you can live with the disease, but they don't cure you. They don't solve the problem. The fact is that computing is still too complex. You don't sit around saying, "my toaster needs a little bit more horsepower to make this piece of toast, so I better turn down the lights and the thermostat." That's a joke. We deliver on-demand computing in seconds, vs. all the complexity of these other approaches."  Azul's DeWitt: "If we prove our stuff works, we win"Q: Your computer can only run so-called "virtual machine" code such as that created with Java or Microsoft's (MSFT ) .Net -- but not the thousands of programs that were written specifically for the IBM mainframe, the Windows PC, Sun's Solaris servers, and other specific computer platforms. How big is the market you're targeting? A: Right now, we're addressing maybe 10% of the universe of enterprise-class applications. That's it. But that 10% is growing a heck of a lot faster than the other 90%. And time marches on. Q: You know the world is going to be skeptical that your company can pose a threat to giants like IBM, HP, or Sun, right? Or that you will even survive? A: Yes, the huge wave of skepticism will hit, and that's understandable. We haven't proven anything yet. But we'll take that very high bar and make it the measure people evaluate us on. If we pass it, we reach a credibility that few startups have ever attained. I think people will get that. And there hasn't been a story like this in the systems world for a long time. The only stories in the systems world have been bad, about delays or mergers or some special sauce [like grid computing] that makes a bad environment just a little bit better. It's going to be fun to watch. Q: And you really think Azul can bring a sense of fundamental innovation back to the server market? A: Listen, if we prove our stuff works, we win. If we don't, we lose, and I'll be coaching a lot more Little League. But that's the thrill of the hunt, and that's what Silicon Valley is all about. That's why God created startups. You never really know if you're going to hit it. But we've got the guts and the technology and the [financial] wherewithal to go out and try to change everything.  Edited by Beth Belton
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