Former Compaq executives are staffing and funding a startup server maker that will use Transmeta microprocessors and the Linux operating system.

Compaq co-founder Gary Stimac and former president of North American operations Michael Swavely will introduce the new company's management team and server product line at a press conference on Tuesday.

Different from internet servers made by Compaq and Dell, sources say RLX Technologies' servers, code-named ICE, are being designed around Transmeta's Crusoe processors and will run a version of the Linux operating system.

The startup claims that its machines pack eight times as much processing power into the same space as Intel-based rack servers from companies like Compaq, while using a quarter of the power.

In addition to RLX, at least three other companies will release servers based on the Crusoe processors this year - Amphus, FiberCycle Networks and Rebel.com.

Rack servers formed the fastest growing segment of the Intel-based server market last year, according to research firm IDC. From the first to the third quarter 2000, rack servers grew from 13 per cent to 25 per cent of all Intel-based servers shipped during the period. And by 2004, IDC predicts that the products will make up more than half the Intel-based server market.

The startup is also said to be developing software to manage its servers.

Stimac, who is chief executive at RLX, was employee number five at Compaq where he built the company's server division into a $4bn business. Former Compaq employees Mike Perez, Ronnie Ward, Mike Clark and Kevin Bohren have also joined Stimac and Swavely in the venture.

Originally called Rocketlogix, RLX was founded last year by Christopher Hipp and John Cracken. It has raised $12m from individuals and computer industry luminaries including Microsoft researcher C Gordon Bell and Compaq co-founder Rod Canion.