March 19, 2002

NetWinder: You can't keep a good Linux appliance vendor down

- By Steven J. Vaughan-Nichols -

Can a Linux hardware vendor, NetWinder, formerly, come back from the dead? Winston Morton, formerly with Marconi and various IBM subsidiaries and now CEO of NetWinder, thinks so.

The hardback book-sized NetWinder server appliances have never lacked for popularity. The company was also a darling of the Linux crowd because NetWinder was one of the first companies to actually ship a system with a chip from Transmeta, Linux creator Linus Torvalds' employer.

Indeed, even after the original company folded in July 2001, some of its
fans and former employees continued to support the appliance, and even continue developing for it, at

Ralph Siemsen, a founder, explains, "Since the software is almost 100% Open Source, we thought it right to have a site where customers and outside developers could interact with the people who make the NetWinder -- without a layer of marketing/sales/support in between."

What brought NetWinder's parent company,, down in the first place, according to former CEO Mac Brown, was the economy and, despite FY 2000 sales of $40 million, the server's production and development costs.

Others believed that the lack of an organized global distribution plan lead to Rebel's fall. Many on Slashdot, while liking the machine, thought it was too highly priced and the company was mismanaged.

Regardless of which factor was most to blame, when an all-but-signed deal with Fuji Xerox fell apart so did The deal would have given both more cash and a distribution channel. Today, Brown still thinks NetWinder has potential, but he is busy with a new start-up, M4 Technologies.

Morton, and a small group of investors, thought NetWinder had more than potential. They've bought NetWinder back from the limbo of KPMG receivership.

You might ask why. Morton's answer: "We were very impressed by the technology. It was one of the early players in this market and it proved itself over and over again."

He agrees that NetWinder has a big job ahead to make a comeback in a world where blade servers, while still not shipping, have all the buzz, and Sun is finally making a major commitment to its Cobalt line of Linux appliances.

Morton isn't fazed by the challenge. Of Sun, he says, it's "always good to have a big competitor pushing the technology, it will give us lots of opportunity to ride on the coat tails. We don't have to go head to head with Sun."

Siemsen is optimistic about the new company. "It looks like they are running a tight ship
financially, so we're not sure how they plan to handle future software development, security updates and the like. Apparently they are shipping hardware again, so that is a good sign. The Crusoe-based NetWinder is a fine machine, which retains the small form factor and low power consumption of the original design. Still, it is a niche product, the cost point is inevitably high since the volumes are not there."

He's right. Morton is running a tight ship, but he is planning for more software development for the NetWinder platform. While plans at this early stage are sketchy, he plans to work with independent software vendors and integrators to make NetWinders work as application servers as well as in their current role as small office/Internet appliance servers by looking for and developing "new applications and end-to-end solutions."

As for cost, Morton is "finalizing pricing plans" but expects the new NetWinders pricing to "be very aggressive" and to make "NetWinders a volume play." How? He plans to do it by cutting prices to the bone at first to gain market share and by working on partnerships with OEMs and resellers to bundle NetWinders as part of office solutions in a box.

Morton explains that a strong distribution strategy, which was one of's weaknesses, is vital. He said the barely three-week-old company has always partnered with EMJ Data Systems for distribution. The company is also spending a lot of its time focusing on OEM opportunities and vertical integrators (such as companies that deliver products and services designed specifically for lawyers, real estate agents and doctors).

As for the equipment itself, for now the company is selling from the inventory of older NetWinders. In the future, "We'll keep working with ARM and Transmeta. They're good chips at a good price." Beyond that, Morton is taking with old NetWinder customers to see what they want in the first new versions of the platform. While a rack-mounted NetWinder is a possibility, he says NetWinder has "ruled out the blade server space." He is, however, looking into NetWinders as the core for a thin-client business solution.

As for the operating system, it is most likely to remain NetWinder's own house brand of Linux. But, aware that there have several BSD ports to the platform, he's open to the idea of an official BSD port if there's customer demand for it.

Morton sells it well, and he knows answers to the question that a newly reborn Linux
company must face. Now, the question is, with blade servers to the right of him, Cobalt to the left, and other appliance companies in front of him, can NetWinder make it? The odds are against the company, but based on the early signs, it looks like NetWinder might just be resurrected after all.

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