LANs /

Shake-up at RLX

By April Jacobs
Network World, 10/29/01

HOUSTON - Start-up server blade maker RLX Technologies said last week it would restructure itself in the wake of a downturn in the overall server market, and named a new president as part of its plan.

RLX gained renown in the fast-growing but tiny blade market by being the first to ship products based on Transmeta's low-power Crusoe processor. Server blades pack more server power into less space than conventional servers.

The company had been led by a team of industry veterans, many of them from Compaq. Some of that changed last week, when Michael Swavely, former of president of Compaq's North America operations, stepped aside as president and COO and was succeeded by Pat Collins, formerly a vice president at Dell. Gary Stimac, also a former executive at Compaq, will remain as chairman of RLX, but a spokesman for RLX said Stimac would no longer serve as CEO. A replacement has not been named.

Collins says RLX is still in good financial shape with "plenty of cash in the bank," but it was set up to operate in a much brighter economy. One of its main problems has been its focus on selling to service providers, a strategy that did not turn out well when those players began encountering financial problems. Instead, says Collins, RLX will change direction, focusing on application-specific offerings. He did not offer details, except to say that RLX could offer bundles of server blades with applications and management features.

RLX isn't the only company struggling in the server market. John Humphreys, an analyst with the market research firm IDC, says initial estimates show third-quarter server shipments fell 2% worldwide compared with the third quarter of 2000, causing steep revenue declines of 22%. In the U.S., server shipments fell 14% from the same quarter last year, causing a 30% decline in revenue for server makers.

Humphreys says RLX is part of a growing area in the server market, but one that isn't growing as fast as some would have liked. "Any new segment is going to have difficulty in an economy like the one we have now," he says, noting that IT managers may be wary of investing in new technologies.