Starting a server company these days is like setting out to cross the cold, dark, unforgiving Atlantic in a dinky Viking long boat. It’s not an adventure for the faint of heart.

The bards only tell tales about those who made landfall, not those who got swamped and drowned. And the computer industry hasn’t produced many heroic sagas lately.

But that’s kinda SeaMicro’s point. It argues that there’s been no novelty in the volume server space in 20 years – other than blades – and that the tired old x86 box, optimized for the legacy workload, isn’t any good at what it’s being asked to do now – namely run the Internet.

It takes up way too much space and demands way too much power.

According to the Environmental Protection Agency the volume server is consuming more than 1% of all the electricity in the United States at a cost of more than $3 billion a year, and according to Google the thing costs more to run than to buy.

Power is an Internet company’s biggest opex item, claiming upwards of 30% of its opex spend. That’s why SeaMicro, a stealth start-up that broke cover Monday, is building scale-out servers around Intel’s puny Atom chip thinking that it will live to plunder the modern equivalent of Lindisfarne, establish the first Russian state and dicker with the emperor of Constantinople just like its Viking antecedents.

It claims that if you put enough of these Atom suckers together you get a 75% reduction in power and real estate, no change in software and way better output. Figure roughly three times the performance-per-watt of the classic x86 server CPU running web-tier applications.

That’s why SeaMicro got a $9.3 million grant from the US Department of Energy, which is a whopping lot of money in DOE terms, more than any other server company got, and why Khosla Ventures, the green VC fund started by Sun co-founder Vinod Khosla, put $25 million in the joint along with Draper Fisher and Crosslink Capital. They’re looking for – and hoping they’ve found – an alternative to the energy-draining volume server.

The SM10000 machine SeaMicro’s been working on for the last three years uses 512 1.6GHz Intel Atoms – 2,048 CPUs to a standard rack – a quarter of the space at a quarter of the power running the same off-the-shelf operating systems and applications as the best-in-class volume server.

SeaMicro’s box is supposed to be able handle the millions of small, simple, independent jobs involving search, social networking, web page views and e-mail checks with far more aplomb than the classic server, which was really invented to resolve a relatively small number of large, complex, basically very hard problems. The classic server is also idle, poorly utilized and inefficient most of the time because of the Internet’s bursty traffic patterns.

Through the wonders of CPU I/O virtualization, SeaMicro gets most of its patented power reduction from cutting out 90% of the power-hungry widgetry around the CPU – the switches, terminals servers and load balancing devices in the classic server that are actually responsible for two-thirds of the power it consumes.

Once it got rid of that stuff the start-up was able to shrink the server’s typical pizza-box motherboard to the size of a credit card, leaving it with just the Atom CPU and chipset, its own all-important ASIC and 2GB DRAM, making possible eight servers in 5 x 11 inches.

Then it developed its own supercomputer-style interconnect fabric to link its 512 mini-motherboards into a low-power single-box cluster computer with 1.28 terabits-a-second throughput and created its own compute, storage, networking, server management and load balancing rack.

It says that once it wrung power cuts out of the system level, it could leverage the skimpy power demands of the Atom, the chip that up until now has been used in netbooks and – Intel hopes – some mobile phones.

The company also came up with Dynamic Compute Allocation Technology (DCAT), a combination of CPU management and load balancing so the machine can dynamically allocate workloads to specific CPUs on the basis of power-use metrics, create compute pools for any given application and ensure that energy use is optimal. The widgetry, which also promises cloud-optimized security, is fully redundant with hot serviceability.

The 10U SM10000 systems include 1 terabyte of DRAM; up to 64 SATA solid state or hard disk drives; and eight to 64 gigabit Ethernet uplinks or two to 16 10gigE uplinks. A base configuration will list for $139,000 and should be available in the US, Japan, Germany, France and Hong Kong to start on July 30.

SeaMicro CEO and co-founder Andrew Feldman, a networking veteran who was an entrepreneur-in-residence at Crosslink Capital, claims Intel, which didn’t think Atoms would be used this way, is adjusting to the notion that its precious Xeon chip might get displaced and consoling itself with the thought that it’ll sell a lot more Atoms at a lot better margin.

However, the SeaMicro design isn’t restricted to the Atom. The architecture is supposed to be able to support any CPU. It could as easily support ARM, Mips or the PowerPC, but Atom is reportedly the most efficient choice so far.

As it is now, Feldman said companies could consolidate 40 Xeon servers like a Dell R610 with one SM10000.

One dual-socket, quad-core Westmere box uses 250W-270W; the SeaMicro box with its 512 Atoms comes in under 2kW. Stacking four of the machines on top of each other in an 8kW/44U rack equals 2,048 single-core Atoms, which Feldman says is the highest CPU density-to-power ratio achieved so far.

With the CPU utilization the 57-man SeaMicro is promising, server farms of 1,000-4,000 machines could save somewhere between $1.1 million and $6.1 million in power costs and between $2.6 million and $21.9 million in power and space combined.

Feldman says the company is already backlogged 45 days and that “largest Internet brands in the world” are running with his machine. He won’t say which. He could be looking at breakeven in a year.

SeaMicro’s other two founders are its CTO, erstwhile AMD Fellow Gary Lauterbach, the chief architect of Sun’s UltraSparc III and IV, and its VP of product management and product marketing Anil Rao out of Juniper Networks and Force10.