Compaq Scores $20 Million Linux Deal

By Peter Galli  |  Posted 2002-04-02 Print this article Print

In another coup for Linux, Compaq Computer Corp. on Wednesday will announce a $20 million deal with Web hosting firm RackShack, which will equip its data centers with Compaq ProLiant servers and offer its clients a tier-one, Linux-based Web hosting soluti

In another coup for Linux, Compaq Computer Corp. on Wednesday will announce a $20 million deal with Web hosting firm RackShack, which will equip its data centers with Compaq ProLiant servers and offer its clients a tier-one, Linux-based Web hosting solution. In terms of the $20 million deal, RackShack—the dedicated hosting subsidiary of Everyones Internet, an Internet and DSL service provider based in Houston—will immediately deploy about 1,000 ProLiant DL320 servers running Red Hat Linux and Ensim Corporations WEBppliance software appliance, which transforms a Compaq ProLiant server into a high volume Web hosting appliance.
RackShack has also committed to buy another 8,000 to 10,000 servers over the next two to three years, Robert Marsh, CEO and president of both RackShack and Everyones Internet, told eWeek in an interview Tuesday.
While RackShacks hosting business had exclusively been centered around Sun Microsystems Cobalt Rack server appliance until last November, after Sun bought and took over Cobalt, "it was not as in tune with the hosting provider relationship as the Cobalt team had been in the past. Marsh said. "So, whereas we had bought about 1,000 Cobalt racks in the first half of last year, those numbers dropped dramatically to the point where we are not making any purchases today from Sun Cobalt." Last November RackShack also launched a Linux-based solution: a traditional "white box," or generic, server paired with an Ensim control panel, which gave more power than the Cobalt solution but with the same ease of use, he said. As the companys volume of servers soared to 500 a month, it started looking for a premium name-brand tier-one product to add to its hosting fold. "We held open discussions with Dell [Computer Corp.] and Compaq, and tried to open serious discussions with IBM and Sun," Marsh said. "IBM was not interested in opening serious discussions and Sun Cobalt wasnt interested in putting an aggressive deal on the table despite the huge volume of Cobalt product we had previously purchased. "As such, companies like ours, who previously pushed the Cobalt product, are now pushing a tier-one product like Compaq or a generic white box running Linux and a control panel," he said. The company had been pleased and surprised at the quality built into the ProLiant servers, especially the cooling and fan systems, which were ideal for data center environments as the server remained cool and ran well. "It is also more stable and faster than the white box alternative," Marsh said. While there was a price delta between the white box and the ProLiant server of almost 300 percent, Compaq had put aggressive financing on the table. "If you take the increased reliability, the lower cost of maintenance and the lower cost to finance this, the delta became much smaller and a very doable deal at the pricepoint that we put these servers out there," he said. Judy Chavis, director of the Compaq Corporate Linux Program Office, in Houston, told eWeek that its clients were under financial pressure due to the current economic and market conditions and were looking to cut costs wherever they could. "We are aggressive on every single deal we do, from the enterprise space all the way down to the small and medium-sized businesses now adopting Linux in their space. We scratch and crawl for everything," she said. RackShacks Marsh confirmed that the aggressive solution offered by Compaqs SMB Organization, Compaq Financial Services, Ensim and Compaq reseller HPM Networks had provided the best solution for its business and technology needs. "We took the ProLiant server and the Ensim Unlimited Control Panel, with a combined retail price tag of about $3,000, and threw that together in a hosting relationship with better bandwidth than a T-1 line and are able to roll this out to our customers at $129 a month and a setup fee of between $99 and $349," he said.
Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at


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