Cobalt: Appliance Servers for the Rest of US

Not long ago, Linux was the path to riches. It was a guaranteed way to
boost a company’s market cap by multiples. Well, that is no longer the
case as many Linux stocks have plunged or pulled their IPOs.

Yet, the Linux market is growing rapidly. If anything, the recent downturn
represents great opportunities.

Linux has great promise for small and medium size businesses. These
organizations need the benefits of an IT infrastructure, but of course do
not have the technical talent nor the budget to implement complex systems.

A company called Cobalt Networks
has a solution. It develops low-cost, easy-to-install
network appliance servers. With Cobalt products, all software is pre-installed.
A person need only connect the appliance to the network and enter a few
commands (it takes about 15
minutes). A company will then have use of a variety of key services like
email, commerce engine, hosting, file storage, firewalls, and so on.
Because these components are seamlessly integrated, there is a high degree
of reliability.

Whats more, the Cobalt applications are growing. The company has an
extensive developer program. Over 500 programmers are working on

Cobalt recently purchased Chili!Soft, which is a developer of Microsoft
Active Server Pages (ASP) technology. With the acquisition, Cobalt will
attempt to integrate Microsoft and Linux tools.

Cobalt’s financials have been showing lots of strength. In the past
quarter, revenues were $12 million, which was a 34 percent sequential
increase and a 357 percent increase from the same period a year ago. Losses
are moderate: $2.6 million in the past quarter.

The future for server appliances looks particularly bright. Dataquest pegs
the market to grow from $2 billion in 1999 to $16 billion by 2003. This is
good news for Cobalt; after all, the company has the highest market share
globally for server appliances.

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