Making Best of Data Center Slowdown

Brokers work to fill up space in emptying data centers, matching customers with hosting companies

Not long ago, IT administrators looking to outsource servers to a hosting company had only expensive services from a handful of name-brand providers to choose from. But the struggling economy and dot-com crash changed that.

These days, enterprises looking for such services can turn to a new crop of smaller, nimbler providers touting price over brand. At the same time, those premium providers, such as Sprint Corp. and WorldCom Inc., now cash-strapped, are cutting rates and finding creative ways to fill their unused capacity.

Indeed, high-end providers are moving downstream, albeit quietly, as each sale of co-location risks making their premium-oriented marketing seem contradictory.

Enter co-location brokers. As big hosting companies squirm to fill space in their emptying data centers, a cottage industry of space brokers is growing, matching customers seeking space with hosting companies eager to fill it. Companies such as ColoTraq, a division of Interaqt Corp., of Morristown, N.J.; Data Center Exchange, a division of NodeCom Inc., in Princeton, N.J.; and StoreVentures Inc., in Arlington, Texas, are some of those playing matchmaker to providers and users. These brokers match users location, budget and special needs, and they have varying levels of features and impartiality with the appropriate companies.

Recently, however, the companies listings have been dotted with name-brand providers such as Broadwing, Globix Corp., Sprint, Verio Inc., WorldCom (and its UUNet and divisions) and Yipes Communications Inc.

"Traditionally, Ive been through the major players," said Daniel Walton, president of Wishbone Networks LLC, an Oklahoma City image hosting specialist and a StoreVentures user. "With the way the markets going these days, everyones looking for better pricing. [StoreVentures] allows me to save on my purchasing."

"One of the first things we wanted to address was having our servers co-located at a reputable establishment," said Kevin Long, director of business operations at LinkZero LLC, in Hamden, Conn. Through ColoTraq, Long said he found what he needed, at a good price.

Matt Williams, director of product management for co-location at Verio, in Chicago, said the market is forcing hosting companies hands. "Wed like to see more deals with enterprise customers, theres no question about that," Williams said. "The bottom line is, space and bandwidth are rapidly becoming commodities. But at the end of the day, there are ... a lot of customers that are very price-sensitive."

But selling cage space can be as difficult as selling managed services. To help fill space, Verio offers a free month of service for every year to users who switch from a competitor.

Providers are "literally just giving away the space if they know theyre going to make money on bandwidth or managed services," said ColoTraq CEO Dany Bouchedid.