Intel Opens Service Centers; Microsoft Invests In USWeb/CKS

Intel Corp. stepped solidly into the Internet hosting market with its announcement yesterday that its first Internet service center is open for business.

Intel Online Services Inc., the vendor's Internet hosting business, has opened a facility in Santa Clara, Calif., designed to support more than 10,000 servers, with network provisioning, redundancy, and a heightened level of security for both the facility and data. Future sites will include an 8,000 server facility in Fairfax County, Va., scheduled to open in the first quarter of 2000, and Internet data centers in Japan and England, which will be operational in the first half of next year. Intel expects to have 12 sites in operation by the end of 2000, not including a development facility in Folsom, Calif., that will be used to validate new services before they are placed in a live environment.

Intel's goal in opening Internet service centers is to deliver what the company refers to as second-generation Internet application-hosting services. Intel and its partners in the venture--including Proxicom, US Interactive, and UUnet--will provide and manage the facilities and network, as well as purchase, integrate, and deploy all hardware and software necessary to run applications. First customers include the e-Citi unit of Citigroup, [email protected] Shopping Service, and NEC.

David Rowe, director of marketing for Intel Online Services, says his company's past performance in the chip market is a strong indication of the success it will see as a host for E-businesses. "Intel has a history of providing reliable products that are ready on launch day," Rowe says.

Meanwhile, Internet services company USWeb/CKS plans to build a standardized-architecture managed-applications service, and Microsoft has agreed to foot the bill.

USWeb yesterday unveiled iFrame, a strategy under which the hosting company will offer a standardized architecture for building, deploying, and maintaining integrated Internet applications. USWeb/CKS will use the framework to host both standard and custom applications.

To finance the development and marketing of the new framework strategy, USWeb/CKS will receive $67.5 million from Microsoft over the course of the next 12 months. As part of the deal, USWeb/CKS will pay royalties to Microsoft on service offerings stemming from this technology. In addition, Microsoft will pay $14.9 million to USWeb/CKS in exchange for a warrant that will let the software giant purchase 1 million shares of the Internet company at $27.59 per share at any point during the next five years.