Sun Discontinuing Cobalt Linux Servers

Sun Microsystems is phasing out Cobalt, the line of Linux-based hosting appliances it purchased for $2 billion at the height of the Internet boom. Sun has set an end-of-life date of Feb. 19 for its last remaining Cobalt product, the RaQ 550 server, but will continue to provide support and security updates for three years. The decision to discontinue Cobalt, announced Sept. 1, presents a challenge for numerous hosting companies that filled their racks with the distinctive blue server appliances.

The number of sites on Cobalt has declined since August 2002, when it reached its peak of 3.1 million hostnames and 942K active sites. Our November hosting survey found Linux-Cobalt serving 871K hostnames and 527K active sites.

The phaseout of Cobalt comes at a time of considerable flux in the Linux server market. With Red Hat changing its licensing terms, many hosting companies are considering alternative Linux distributions. The discontinuation of Cobalt is bound to prompt further shift in market share among Linux vendors.

Cobalt products became popular with hosting companies for their compact 1U design and user-friendly interface. The acquisition of Cobalt Networks in September 2000 marked a strategic shift for Sun. At the time, the all-stock deal was seen as providing a rapid entry into both the Linux and server appliance markets, and a combination of two of Microsoft's most successful competitors.

But Sun struggled to position Cobalt, and new products from hosting automation vendors made accessible control panels more widely available. Meanwhile, the focus of hosts interested in high-density servers shifted from 1U rackmount units to ultra-thin blade servers. In January Sun took a $1.6 billion charge to its earnings to reflect the decreased value of the Cobalt acquisition.