Rebranding the Box

Sun Cobalt has slipped out of favor with some facilities-based hosters because it missed a critical step in the evolution of its server appliances — a painful reversal of fortune for the homegrown company.

Sun Microsystems paid $2 billion for Cobalt Networks last September. Not long after that, star customers, such as Rackspace Managed Hosting, asked the vendor about selling its software separately from the hardware. The customers were growing uncomfortable with Cobalt requiring them to buy new hardware each time they wanted to upgrade their appliances, and suggested upgrades would be better handled with software changes. They were also, in a sense, asking Cobalt to abandon its branded-appliance approach to product development.

"We asked them many times to give us their software, but they always wanted to marry it to the hardware," says Lew Moorman, Rackspaces chief marketing officer. "We found that there are other tools that allow us to give the customer the flexibility that we have always been about."

Rackspace and others say they wont upgrade from RaQ 3 boxes to RaQ 4, the next generation of Sun Cobalts flagship server appliance. They are instead looking for deals with server-automation companies such as Chantilly, Va., Plesk to get RaQ 4-style functionalities out of RaQ 3 hardware.

Historically, Cobalts strength was that it made server management simple.

Traditional management of Web servers, e-mail and other common Internet-based applications entails understanding how the software supporting these services operates and interacts with the server. Cobalt was the first to make it feasible for nontechies to perform these tasks using a simple point-and-click interface.

Rackspace was so impressed with Cobalt that it agreed to participate in a case study with the vendor earlier this year.

.Another, and perhaps equally compelling, reason that hosters loved Cobalt was the efficiencies of scaling the business. Sales support and provisioning costs were cut because customers were doing a lot of self-provisioning. Hosters could customize servers quickly because configuring Cobalt hardware and software is akin to playing with Legos.

While none of these priorities has vanished, Cobalt no longer fits the bill as a vendor partner.

"They just dont provide the flexibility our customers want," Moorman says. "There are limitations on the types of control you have over the interface, over the number of domains you can control. Frankly, its built as an appliance."

And since Cobalt doesnt appear to want to evolve past being a box, Rackspace is looking to take its business elsewhere.

Rackspace believes that Plesk Server Administrator 2.0 can pick up where Cobalt left off. Released two weeks ago, Plesks new software can migrate users from Cobalts RaQ 3 platform to Plesks system. PSA 2.0 essentially reformats Cobalt servers to accommodate new applications and breaks down some of the barriers built into the appliance, such as limits on the number of users that can share it.

Plesk is popular among Linux engineers and virtual Web hosters — companies that rent colocation space with large data center owners such as Rackspace and then sell branded hosting services.

While neither Plesk nor Cobalt would confirm if the purchase order has been placed, Plesk is believed to be the frontrunner for Rackspaces upgrade work. Plesks software works on white boxes as well, and by choosing Plesk over Cobalt, Rackspace could add any hardware it wished while preserving the functionalities first introduced into the mass-hosting market by Cobalt.

"If your plan is to move off Cobalt, you could install our software on Cobalt and then migrate your users from that platform onto a Plesk platform running on something else — be it another 1U server, a full-blown server or any number of different platforms," says Neil Condon, Plesks chief operating officer.

If Rackspace moves down this path, companies such as Plesk could carve a niche with business customers that entrust mission-critical managed services to platforms that are cheap to build, deploy and maintain. Plesk and its cohorts may do what Apple Computer did for personal computing software, helping businesses that are seeking inexpensive ways to outsource applications.

Plesk isnt likely to be alone as it moves in on Cobalts territory. It is believed that further down the road, Rackspace will want to use software from Plesk competitor Ensim, which is significantly more expensive, but is better suited for managing a large-scale reseller program.

"There is another product we are looking at, called business in a box — an offering that helps virtual hosters by allowing [them to set up hosting] packages with billing and multiple layers of service support," Moorman says.

True Blue

Cobalt executives say that while software solutions may seem more flexible today, they may, in the long run, leave hosters such as Rackspace with egg on their faces.

Cobalt appliances have a development environment, database capabilities, Secure Sockets Layer and file transfer protocol built in, and 5,000 developers writing applications to take it beyond supporting simple applications such as Web sites and e-mail, says Peder Ulander, group product marketing manager of Suns server-appliance business unit.

"I think one-quarter of the appliance value proposition is definitely the ease of setup, ease of management and ease of use. Three-quarters of it is the overall integration of application into the product," Ulander says.

Ulander points out that a partnership between eSoft and Gateway to build out-of-the-box appliances failed because the only advantage eSoft gave was a graphical user interface. "And the way the service provider industry is going, the customers are looking for services, not boxes with easy browsers."

But John Williamson, eSofts managing director, says the Gateway deal unwound because the computer maker left the server business.

Still, if Ulanders assumptions are correct, Rackspace may lose some of the efficiencies it has developed on the Cobalt platform, because of higher integration costs. Still, it appears Cobalt is already losing ground.

ESoft still runs on other platforms, such as 3Coms, and Williamson says Cobalt remains in his companys competitive sights. ESoft recently rolled out a product similar to Plesks that helps hosters avoid migrating to RaQ 4.

Buzz on the street suggests Sun Cobalt will throw in the towel and unbundle its software by years end. While Ulander doesnt rule out the possibility, he wouldnt confirm the rumors either.

"Taking a look at our overall strategy [of] being service management and deployment at the edge, we will continue to drive our roadmap to power it," Ulander says.