InformationWeek
Defining The Business Value Of Technology
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September 18, 2000 |
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Web Hosting Heats Up
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"I'd be willing to pay for a hoster to do load balancing between sites and handle content distribution as well," says Andrew Comas, head of technology research at J.P. Morgan & Co., which uses several hosting companies, including IBM and Digex, for some services.
Hosting services help companies deal with the shortage of technical staff. "It's hard to attract and retain the staff needed to man a site 24-by-7, which is critical when downtime means lost business," says Camille Corim, VP of Web systems and services at Working Woman Network, whose informational Web site, Workingwoman.com, is hosted by Exodus Communications Inc. "It's cheaper to use their manpower."
Hosting centers typically provide network connections to multiple telecom service providers to ensure companies have enough bandwidth to handle unexpected peaks in demand and eliminate single points of failure. Customers that buy hosting services often also buy network services, which is why the market is so appealing to telecom carriers. Qwest's Wilks says each dollar of Web-hosting sales generates $5 in sales of network bandwidth.
Those features are also attracting application service providers, which need multiple, geographically dispersed, secure facilities and high-speed network connections. Wilks says about 20% of Qwest's hosting revenue comes from ASPs.
Loudcloud Inc., an Internet infrastructure services company started a year ago by Netscape founder Marc Andreessen and others, this week is launching Global Connect, a service designed for businesses that distributes network traffic among Loudcloud data centers for better performance and reliability. Last week, Loudcloud moved into a data center in the United Kingdom--its first in Europe--and it's adding operational services such as configuration, billing, and customer monitoring that can be used by ASPs to provide services to customers.
As businesses seek more-sophisticated services, analysts predict more alliances and acquisitions. "I expect to see a serious industry consolidation in 12 to 18 months," says Giga Information Group senior analyst Joel Yaffe.
Users say that might not be a bad thing. "An industry consolidation wouldn't surprise me, as most everyone wants to become a full-service Web hoster," says Adam Joffe, director of technical operations at Sony Online Entertainment Inc. in San Diego. "We could potentially benefit as we'll need more advanced services to expand internationally."
Sony uses an AT&T co-location service in San Diego to host the servers for its online game site. Because as many as 65,000 players may be using the site at one time, Sony requires that AT&T provide 500 Mbps of bandwidth to its servers. "Our business could only be enabled if we could get high-speed bandwidth to our servers--sheer capacity," Joffe says. "While we didn't have the top network engineers to make the bandwidth decisions that were crucial to us, AT&T did."
With all the activity, businesses need to be selective when choosing a service provider, users and analysts say.
LandsEnd.com in Dodgeville, Wis., has been using co-location services for about five years from a Berbe Information Systems hosting center in Madison, Wis. "You need to find an established vendor that's customer-focused, has a sound business plan, and is willing to partner with you," says director of business systems Linda Severson."You want a company that can grow and evolve with you."
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