With a string of announcements set to be made over the next few weeks, vendors like Dell Computer, IBM and 3Com are plugging in to the appliance market.
At first glance, there's little money to be made from low-margin commodity devices. But a closer look reveals that resellers, integrators and service providers may benefit from these new wares. After all, somebody has to install and maintain all of these devices.
If you've seen one appliance, you certainly haven't seen them all. 3Com's new Audrey, a wireless tablet announced this week for the home market, bears little resemblance to IBM's xSeries 330, a new rack-mount network server the size of a pizza box. But both companies describe their respective wares as appliances.
"Essentially, an appliance is a device that has been optimised for a particular function. You're seeing lots of appliances now, from OEMs as well as smaller start-ups. And as this market matures, there will be more and more types of appliances," predicts Tom Manter, research director at the Aberdeen Group.
Generally speaking, appliances can be divided into two main categories: client appliances and server appliances.
Client appliances include consumer Internet access devices like 3Com's Audrey and Compaq's line of iPaq gear; Net-enabled set-top boxes, such as Ravisent's Nucleo; and thin clients from companies like Wyse Technology, Compaq and Dell, for the business space.
On the server side, some products now being positioned as appliances actually can be used for multiple purposes, depending on which features are being implemented. Sun Microsystems' Netra t1, for one, is supposedly suitable for remote management; email; firewall security; authentication; caching; and/or file-transfer applications.
But a lot of other server appliances are strictly intended for one purpose alone. One start-up just entering the game, Megaxess, is now beginning to line up distributors and resellers for a line of hardware and software that includes the Eagle HQ, an appliance dedicated to detecting network failures and congestion, and then automatically switching users to alternative paths.
Other dedicated server appliances run the gamut from network-attached storage (NAS) devices like Quantum's Snap Server to caching and security appliances from a variety of vendors.
Sales for some devices appear strong. Intrusion.com recently sold US$927,000 worth of security appliances to SecureGate Ltd. The latter provides managed security services to more than 30 federal government agencies in Australia.
Typically, vendors are touting server appliances as lower-cost, easier-to-use alternatives to full-blown network servers. Some critics might carp that these products are merely smaller editions of the rack-mount servers that have been around seemingly forever.
But big OEMs certainly are treating the emerging appliance market very seriously. Alex Youst, a strategy and product-line manager at IBM, sees IBM's xSeries 330 general-purpose "thin server" as a direct competitor to both Sun's Netra t1 and Compaq's Proliant DL360, formerly code-named Photon.
Youst says IBM plans to announce additional members of a new appliance "family" over the next few weeks. Meanwhile, IBM is targeting the xSeries 330 "squarely at Internet service providers, as well as at all other companies that use the Web to do business, either externally or internally." Early customers include Weather. com and the BigFNI.com.
Similarly, Dell has been incrementally unfurling a series of single-purpose devices. Seattle Light and Interhop Network Services, a Canadian ISP, both have deployed Dell's caching appliance. Server appliances also could prove popular with ASPs, which sometimes need to rapidly expand their back offices using easily managed hardware. Small businesses also stand to benefit, since server appliances are low-cost "quick fixes" that address storage needs and other problems.
DSL service provider Nemonic.com is using Netopia's security appliance to create VPNs for dot-com businesses that want the low cost and high bandwidth of DSL, yet are also conscious of DSL's security foibles. Nemonic is gaining additional revenue by adding email services and third-party remote software to the solutions mix, according to a company representative.
Some players insist that there's money to be made in the consumer space, too. Camillo Martino, marketing director in National Semiconductor's Information Appliance Group, foresees revenue opportunities for service providers as well as merchants in the consumer space.
National Semi has been talking to service providers like AOL and MSN about subsidizing consumer purchases of Net appliances. Under that strategy, consumers would get rebates on appliances they buy. In return, providers would get long-term commitments for use of their ISP services.
