Sun drives the final nail in Cobalt's coffin

Swallowing a $2.1 billion chunk of pride

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$2.1 billion does not go as far these days as it used to - just ask Sun Microsystems.

Sun's massive 2001 purchase price for server appliance maker Cobalt Networks seems a tad silly with the entire product line being sent out to pasture. Thanks to a tip, The Reg has uncovered Sun's decision to end-of-life every Cobalt product, including the elegant Qube and RaQ systems, with no replacements planned. And with Cobalt's demise ends a couple of eras - one of dotcom hype-driven investments and another marking the death of the server appliance.

The service provider and dotcom explosion helped drum up the need for the server appliance idea. Customers had massively expanding web farms on their hands and needed any easy way to manage all of the gear. Server appliance vendors - most notably Cobalt - jumped at this opportunity by wrapping their hardware with a friendly GUI for server management tasks that even AOL users could follow.

Sun grabbed Cobalt at hype's height, shelling out a small fortune for the company's customers, software and hardware. Why Sun could not develop a clean Linux OS and GUI for less than $2 billion, we do not know. Nonetheless, Sun was booming at the time, and the Cobalt buy seemed like the quickest path to building out its edge server arsenal.

"Cobalt started the web hosting appliance movement, and can be credited with the first 1U rackmounted server," said Chris Hipp, an industry consultant and co-founder of blade server maker RLX. "It was truly a revolution in its day. We sold hundreds of the little things to hosting companies in my days as a VAR. Now we're left with software-only solutions like Ensim, which although it is good, it's just not the same."

Sun was not alone in the server appliance search. IBM, HP, Compaq and Dell all rolled out product of their own. None of their gear ever lived up to the Cobalt kit, but they had it around just in case.

But just as interest in the server appliance reached fever pitch, BOOM, the economy imploded, and server consolidation quickly became the mantra chanted by customers and vendors alike. Sun's rivals killed off most of their server appliance gear shortly thereafter. And these days, most appliances are for very specialized tasks in the security or Web search realms.

Sun has long defended the Cobalt buy by saying it helped introduce Linux into the company. This is true enough, as many of the old Cobalt folks are busy working on Sun's Linux desktop effort and various offshoots of this project. (Although Sun did lose the top Cobalt executives.) Other former Cobalt workers who left after the acquisition are said to be driving Porche convertibles across the U.S. with massive grins on their faces, even when a few hundred dollar bills flutter off in the wind.

Even former Sun President Ed Zander - now the freshly minted Motorola CEO - is still proud of the Cobalt purchase.

"Actually, I was a big fan of Linux. Even though I left because I had done that job for four to five years and wasn't going to move up, I bought Cobalt (a Linux server appliance company)," he told CNET, in an interview this week. "The market was changing. There were kids coming out of college, lots of start-ups. I also saw what commodity microprocessors had achieved. When we bought Cobalt, we basically told the executive team and the board that we had to get behind Linux big, but I left soon after, and people just didn't agree with me."

We wonder if his new employer is aware of this past purchase or of Zander's enthusiasm for it.

While appliances have largely faded, their story is not all that sad. The easy-to-use products more or less gave rise to today's blade servers.

"Most people don't realize it, but Cobalt was the catalyst for the beginning of the blade revolution as well," Hipp said. "After watching my customers deal with the nightmares of racking, cabling, powering, cooling and managing hundreds of Cobalts in their datacenters, I realized that there had to be a better and more efficient design for web servers. That is what led us to the design of the first RLX blade server platform and a new company was born. RLX now has a range of products, but it all began with Cobalt."

Sun backs up this move to more general purpose x86 kit with the rather weak statement issued to us after we prodded for a explanation of Cobalt's abrupt end.

"Sun is strategically focused on delivering choice and performance to our customers, offering general purpose x86 servers that can run Solaris SPARC, Solaris x86 and Linux operating systems," Sun said. "With Sun's low cost computing strategy and x86 offerings, Sun delivers the high performance and cost effective architectures that meet customer demand and needs. With the recent announcement with AMD, Sun will continue to bring unparalled performance compared to our competitors in the x86 space."

In the end, the general purpose servers won out over the appliance. Was it worth $2.1 billion to find this out? Probably not. And so ends one of the more painful chapters in Sun's history. ®

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