"Everybody’s chasing that appliance server model," says Mark Bayliss, president and CEO of Winchester, Va. -based Visual Link Internet, an ISP and virtual hosting service. "They’ve all contacted us and said they’re coming out with something."

Bayliss’s company chose to work with Cobalt Networks in Mountain View, Calif., a company that Quandt calls the market leader in appliances. Many other analysts and insiders agree, pointing out that Cobalt almost single-handedly created the server appliance market as we know it, carving their own niche full of stylish bright-blue boxes some four years ago. (Sun Microsystems recently acquired the company in a move intended to bring Sun a solid measure of market penetration in both the areas of high- and low-end servers.)

Applying the Appliances

Visual Link had been building its own Linux machines for dedicated Web hosting until it noticed a considerable market potential in hosting sites on appliances instead. The company soon struck up a strategic agreement with Cobalt, creating CobaltRacks.com, and began to almost immediately sell more than 200 servers per month (customers "buy" a Cobalt system to host their site, but Visual Link maintains the hardware at their own site). "The appliance-hosting market allowed the people who had the marketing skills, without the problem of having an IT department, to go directly into [the website] business," says Bayliss.

In addition, technical support costs?Visual Link’s largest expense after buying bandwidth?fell by 90 percent, according to Bayliss, because the thin servers required less regular maintenance and fewer experienced administrators than the older Linux boxes.

Derek Linders, a technical specialist with Mississauga, Canada-based EDS Innovations, a consulting and solutions provider, similarly had been eyeing server appliances, but he hit a snag when he tried to develop a low-cost solution for a customer that would cover firewall protection, Internet sharing (for 50 PCs on one DSL connection) and remote access to servers for e-mail, voice mail, and server maintenance and support.

Then Linders found the box he was looking for from Rebel.com. The company manufactures the NetWinder 3100, a product that can act as a file server, virtual private network gateway, print server, Web server, e-mail server, collaboration server, Internet firewall and proxy. Linders discovered only after his search that the CEO of NetWinder and his own CEO are brothers.

While tapping into the allure of appliance simplicity and a browser-based interface, the NetWinder has an additional edge: lower power consumption?a requirement for some and a pleasant bonus for others.