Hosts Strut The Latest Line

Managed services, wireless at top of fashion list.

If youre wondering what the well-dressed host will be wearing this year, look for managed services, bigger infrastructures and wireless offerings to be all the rage.

Top-tier hosting players like Digex Inc., Exodus Communications Inc. and Intira Corp. all have full agendas for 2001, as they and others seek differentiation and a break with their reputations as mere cage and bandwidth developers.

"Nearly all the hosting companies we talk to are moving upstream," said analyst Carrie Lewis, of The Yankee Group Inc., in Boston. "I think that its going to be a dynamic year."

On the managed services front, where nearly every major hosting company is already involved, offerings will blossom this year through both a la carte pricing and the use of bundled packages for vertical markets, Lewis said. With Intira and IBM, of Armonk, N.Y., using terms such as "netsourcing" and "e-sourcing," however, its important for companies to avoid confusing customers about what they offer, she said.

While simple co-location will still earn market share, last years stream of managed services news wont slow. Such announcements advertised services like site monitoring and traffic tracking; firewalls and virtual private networks; Web-based self-service and billing portals; and streaming media tools and data caching.

Despite the plethora of optional services, one market still largely untapped is managed hosting for small companies. Startups in particular cant afford to have their sites go unmanaged, but in todays economy, they also cant afford a top-tier hosters bills, said Dave Ward, co-founder of custom footwear company Solemates Inc.

"From our viewpoint, the key is value for our money," said Ward, in Santa Cruz, Calif. A customer of NaviSite Inc., of Andover, Mass., Ward fears a day when managed services will work to a get-what-you-pay-for approach, leaving companies such as his with a problem.

According to officials at AT&T Corp. and Exodus, the infrastructure ball will also keep rolling. Officials at AT&T, of Basking Ridge, N.J., announced last week two coast-to-coast OC-192 IP backbones, with additional plans to add eight data centers to their existing stable of 13.

Similarly, Exodus, of Santa Clara, Calif., will increase its data center space from 26 to 36 by the end of the year. Most of the expansion will be in Europe, Asia and Australia, officials said. Exodus will also announce a service to help its customers convert legacy data into IP-ready storage, probably next quarter, officials said.

That infrastructure is important to K.C. Choi, an IT professional with senior citizen-oriented site, of Irvine, Calif. started out with Exodus but switched to NaviSite after experiencing major system outages in an Exodus data center in Seattle.

"As far as providing additional services, it was very difficult, or it was a one-off agreement," Choi said. But even at NaviSite, which Choi commends for having "accountability from a financial perspective," features that give customers real-time performance statistics can stand improvement. "If you know Im looking at you, it helps keep things on an even keel," he said.

Another trend on the horizon this year involves the wireless industry. Some companies, like Digex, announced last year plans to deliver personalized service-level-agreement information and related performance updates to customers handheld computers and Internet-ready cell phones. Now, Digex, of Beltsville, Md., will join Intira, of Pleasanton, Calif., and Exodus in doing even more, as all plan announcements next quarter of wired-to-wireless translations of Web sites and client applications.

The objective is to let companies focus on their content while the hoster deals with browser compatibility and technical protocols, a Digex representative said.

Bigger news in wireless hosting may come in the next half of the year, Exodus officials said, with the addition of a major wireless upgrade to their network backbone. There will also be alliances announced between hosting companies and service providers such as AT&T and Sprint PCS Group, of Kansas City, Mo., officials said.

But while wireless services might be "cool," they should not be a top priority, experts agreed.

Although now may be a good time for hosting companies to begin looking at wireless, Yankee Groups Lewis said, Boston-based Aberdeen Group Inc. analyst Dana Tardelli and Gartner Group Inc. analyst Ted Chamberlain, of Stamford, Conn., both said that the use of wireless hosting services is further off than corporate marketers would have people think.

"Its sexy, but they need to really clean up processes," Tardelli said. "I really believe their challenge will be executing in volume the very services they claim to provide."

"Wireless is definitely a very fringe topic right now," Chamberlain added.

Despite the planned developments in managed services, infrastructure growth and the controversial wireless area, some customers say they are pleased with the status quo.

One example is Joe Zarba, e-commerce director for New Balance Athletic Shoe Inc., of Boston. Zarbas team chose Intira about a year ago, he said, because it wanted full service, not just a place to put servers.

Describing his site, which runs sales force automation and a dealer business-to-business application in addition to consumer content, Zarba said, "We wanted a turnkey solution from a hosting company that would configure and monitor. The only caveat we found ... is if the application had problems, thats still our problem. But theyll notify us if its down."