Server start-up RLX lays off 17 percent

RLX Technologies, which specializes in dense "blade" servers, has laid off approximately 17 percent of its work force as the technology doldrums linger.

The company, based in The Woodlands, Texas, cut about 20 employees, said Kevin Bohren, vice president of marketing. Nearly all of the employees were from administrative departments, he added; engineering, sales and marketing were not touched. After the layoffs, the company will employ approximately 100.

"Unfortunately, we're not immune to the market environment," he said. "Our sales on a month-to-month basis are growing, but the (economy) has put a little cloud" on the market.

RLX is one of a number of companies promoting blade servers, which are far thinner than standard servers and consume less power. As a result, IT managers can install hundreds more servers in the same amount of floor space. This saves both space and cost.

The market, which essentially began earlier this year, has drawn start-ups like RLX and FiberCycle as well as computing stalwarts like Compaq Computer, IBM, Intel and Hewlett-Packard. RLX's servers use Crusoe processors from Transmeta.

Bladed-server sales are just a blip in 2001, with projections of about 50,000 unit shipments, according to a report from IDC earlier this month. But IDC predicts that by 2005, 2 million blade servers will be shipped, with total revenue of $4.5 billion. The total server market in 2005 is expected to be $102 billion.

Despite the gloomy environment, Bohren sees hope on the horizon. Customers who installed demonstration systems earlier in the year are coming back to order servers that will be used in business operations, he said.

"We're seeing signs that are enlightening, but it is still too early to tell," he said. "You hit the beach at Normandy, but then you have to go over that first hill. We're on that first hill."