Server appliances die a quiet death

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.

Dell, Hewlett-Packard, IBM and Sun all rode the server appliance bandwagon, billing their 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 late entry into the market, HP unveiled 19 different server appliances for handling everything from caching to application serving and touted strong partnerships with Intel and Inktomi as proof the new product line would thrive.

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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.

Dell, Hewlett-Packard, IBM and Sun all rode the server appliance bandwagon, billing their 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 late entry into the market, HP unveiled 19 different server appliances for handling everything from caching to application serving and touted strong partnerships with Intel and Inktomi as proof the new product line would thrive.

After completing its acquisition of Compaq in May, HP changed course and killed off both its new appliance line and an older set of products that 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, says Hugh Jenkins, vice president of marketing at HP.

"Maybe this was some mismarketing on the industry's part," Jenkins says. "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 says.

Other companies that ran into lackluster appliance sales include IBM, Dell and Sun - which all made early and aggressive pushes into the server appliance market.

IBM acquired appliance maker Whistle Communications in 1999 only to retire the products a short time later. Dell  launched its PowerApp line in April 2000 and then shelved the systems and now sells appliance software for its mainstream server line. For its part, Sun completed a $2 billion acquisition of appliance leader Cobalt Networks 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 these vendors say they 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 workforces, an e-mail appliance could be the answer.

Marking the need for appliances, IDC wrote 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]."