Vendors selling server appliances promised customers they could have a box up and running in 15 minutes. Well, for the vendors, their 15 minutes of fame are up.
IBM Corp., Hewlett-Packard Co., Sun Microsystems Inc. and Dell Computer Corp. all rode the server appliance bandwagon, billing the special purpose servers as the quick fix for customers with complex, expanding data centers. The server makers rolled out product after product to fill their appliance arsenal and grab sales ahead of the competition. However, most of these companies have since trimmed their appliance lines with even greater speed and much less fanfare than their product launches.
HP provides the most recent example of an appliance vision gone awry. The company arrived late to the appliance party, bringing out its first products in April of last year. To make up for its tardy entry into the market, HP unveiled 19 different server appliances for handling everything from caching to application serving and touted strong partnerships with Intel Corp. and Inktomi Corp. as proof the new product line would thrive.
After completing its acquisition of Compaq Computer Corp. in May, HP changed course and killed off both its new appliance line and an older set of products from Compaq sold under the TaskSmart brand. Experiencing "minuscule" sales with its server appliance products, HP has decided to pitch more general purpose servers to customers instead, said Hugh Jenkins, vice president of marketing at HP.
"Maybe this was some mis-marketing on the industry's part," Jenkins said. "There was an aura that appliances would be simple, like a toaster simple, when in fact, the types of tasks appliances were used for required a hell of a lot of consulting."
"I think we realized pretty quickly into starting to sell the products that the types of applications (appliances) were aimed at did require heavy lifting. I guess we are not the only company that has found that out," he said.
Other companies that ran into lackluster appliance sales include IBM, Dell and Sun -- all of which made early and aggressive pushes into the server appliance market.
IBM acquired appliance maker Whistle Communications Inc. in 1999 only to retire the products a short time later. Dell launched its PowerApp line of products in April of 2000 and then shelved the systems and now sells appliance software for its mainstream server line. For its part, Sun completed a US$2 billion acquisition of appliance leader Cobalt Networks Inc. in 2000 to help the company tap the low end of the server market. Sun has since shifted its strategy to focus more on general purpose Linux servers.
All of these vendors hoped to cash in on the idea of a fixed function server that shipped with easy-to-use but limited software. If a customer needed to improve network speed, then a caching appliance or load balancing appliance would do the trick. For those dot-coms with expanding work forces, an e-mail appliance could be the answer.
Marking the need for appliances, research firm IDC wrote the following at the time of Dell's appliance launch: "While IDC believes that appliance servers will be used for a number of applications, the fastest-growing segments of the market will be for Internet-related activities such as Web serving and caching. We anticipate that each of these categories will represent more than $1 billion in appliance server opportunities by (calendar year 2004)."
Analysts, like the vendors, have pulled back on their forecasts for the server appliance market, saying that customers are looking for general purpose servers instead. More flexible servers fit in well with the new network architectures being proposed by IBM, Sun and HP that require applications to be moved from server to server in an automated fashion.
"By and large what we are moving toward is something I like to refer to as a soft appliance," said Gordon Haff, an analyst at Nashua, New Hampshire-based Illuminata Inc. "The types of provisioning software being rolled out requires a general purpose pool of hardware that you turn into special purpose boxes through software. Then, you can change these functions as you need."
Sun's server strategy backs up this claim.
The company will continue to sell its Cobalt products but has moved the software for these systems to its Sun LX50 general purpose server as well. The LX50 runs Linux, an OS introduced to Sun by the Cobalt team, and the appliance management console, said Peder Ulander, director of marketing for the volume systems products at Sun, in Santa Clara, California.
In addition, Sun will release new software packages for its LX50 server at the Comdex trade show next month, hoping to provide customers with "appliance-like" general purpose servers.
Ulander, a former Cobalt employee, charged that Dell and HP did not really understand what it took to make an appliance and that the concept is not dead.
"HP's stuff was based on a bunch of Intel technology and random partners," Ulander said. "They took general purpose, basic servers and branded them as appliances. There wasn't any usability. It was more of a systems bundle than an appliance."
Still, even Sun which stands by its appliance line, says its Cobalt Qube and RaQ appliance products may take on a new form. Ulander said the product lines will survive but added that he could not say exactly "what form factor and what direction" Sun may take.
IBM and Dell still sell appliance-like products that are general purpose servers loaded up with various software packages. These systems, however, do not resemble the fixed-function boxes promised in the appliance hey-day.
Analysts add that companies like Mirapoint Inc. that makes a messaging appliance or Google Inc. with its search appliance may have some success even though the overall market has dwindled.
"Appliances are certainly not totally dead," Haff said. "There are places on the edge of the network where having a fixed-function system will have a roll."
While appliances might eke out a niche place in the server spectrum, their demise among the big server vendors is clear.
"If you look at HP, I think the assumption you can make is that they were not making a buck at it," said Charles King, senior analyst at Sageza Group Inc. in Mountain View, California. "It was better for them to exit the space than pour money down that rat hole anymore."
The pull back on appliances is a result of the tough economy, King said. Each vendor has had to pick those products which help out the bottom line, and, in most cases, server appliances did not fit the bill.
