Former Compaq execs in server start-up

RLX Technologies is building a unique, ultra-compact Web server built on Transmeta and Linux.

Former Compaq Computer Corp. executives are staffing and funding an Internet computer start-up that is building a novel, ultra-compact business computer employing neither of the PC industry's usual technologies.

The company, called RLX Technologies Inc., is expected to announce Tuesday a management team that includes Compaq co-founder Gary Stimac as its new chief executive, people close to the company said.

Unlike Internet servers made by Compaq and Dell Computer Corp., RLX's initial computers are being designed with Transmeta Corp. chips, which because of their low power consumption are used in laptop PCs, and a version of the open-source Linux software, according to these people. A spokesman for RLX declined to comment on the company or its plans.

If successful, RLX could pose a challenge to Compaq (cpq) and to Intel Corp. (intc) and Microsoft (msft), which supply chips and software used in most Web-site computers.

Reinventing the server
Robert W. Stearns, a venture capitalist at Sternhill Partners, which has invested in RLX, called the executives "the folks who invented what is now the PC server. They're about to re-invent it."

RLX is one of several start-ups designing "ultra-dense" servers to meet the economics of Web-site hosting. For companies that house and manage thousands of computers for Internet operations, such very small machines allow them to collect more fees per square foot of computer room.

William Tai, another RLX investor and venture capitalist with IVP Partners, Menlo Park, Calif., said the company aims to deliver servers with "eight times the processing power per cubic foot at one-quarter of the power consumption" compared with current servers.

RLX, founded in 1999 as RocketLogix Inc., last summer raised $12 million from wealthy individuals and computer-industry luminaries, including Microsoft researcher C. Gordon Bell and Compaq co-founder Rod Canion.

It has relocated its headquarters to The Woodlands, Texas, near Compaq, and has received pledges for more than $40 million for a first-round of venture financing, according to Tai.

Mary T. McDowell, senior vice president of Compaq's PC server group, brushed off the challenge, noting Compaq sells the majority of PC servers designed for vertical racks. It continues to evaluate smaller designs, she said.

The market for very small Web servers isn't large but is poised for rapid growth as more corporations turn to Internet-service providers to house and operate servers. Gartner Group Inc.'s Dataquest market-research arm projects sales of such servers to reach $2.8 billion by 2004, up from $420 million this year.

Stimac has recruited former Compaq managers involved with its early hardware and software development. RLX also hired a Compaq vice president who, until recently, oversaw the Houston computer-maker's relationships with Internet-service companies.

Many of his recruits come from the team that led Compaq into the PC server market, a business it dominates even today. Stimac left Compaq in 1996. RLX's new president is Michael S. Swavely, a former Compaq marketing and sales executive.

Stimac and Swavely together sit on the boards of TeleComputing Inc., a Ft. Lauderdale, Fla., company that provides online software, and small-business service provider OfficeDomain Inc., Austin, Texas.