Services Aim for Midmarket

Filling a void, AT&T, WorldCom, Cable and Wireless announce hosting packages at Internet World.

A bevy of service providers, including AT&T Corp., WorldCom Inc. and Cable and Wireless plc., are vying to fill the void in the $4 billion Web hosting industry created by the demise of Exodus Communications Inc. while sidestepping titans such as IBM and Electronic Data Systems Corp.

But since anyone can build a secure data center—and smaller, regional companies everywhere are doing just that—the larger telecommunications companies and holding companies that now control all but the elite enterprise hosting customers are suddenly becoming feature-happy.

At Internet World in New York earlier this month, AT&T, of Basking Ridge, N.J., announced new services for load balancing, data storage, security and VPNs (virtual private networks). The storage service will use storage area networking and network-attached storage units from EMC Corp., although customers can specify otherwise, said Paul Digiacomo, director of AT&T managed storage services.

The load balancing will work between data centers and between customer locations. Meanwhile, the new security features scan customer Web sites for vulnerabilities, and the VPN options are for remote access to networks and hosted applications.

Also at Internet World, WorldCom, of Clinton, Miss., announced hosting packages for small and midmarket enterprises in a joint announcement with its Digex Inc. division, of Laurel, Md.

"Today thats a market thats not well-served and has a high propensity to outsource," said Ron McMurtrie, vice president of WorldCom Global e-Services.

The services are preconfigured, offer capacity on demand and are accessible through a customer services portal. The packages, on Sun Microsystems Inc. and Microsoft Corp. systems, are available now in the United States, England and Canada and will be available in France, Germany and Japan early next year.

Another midmarket hosting company at Internet World, Divine Inc. subsidiary Data Return Corp., of Dallas, now hosts the low end of IBM Global Services hosting contracts, according to sources close to the company. Divine gained steam in the hosting niche this year, also acquiring Intira Corp., of Pleasanton, Calif., and still other more regional acquisitions are likely, Divine officials said this fall. In addition, C&W subsidiary Digital Island Inc., of San Francisco, now supports Seattle-based RealNetworks Inc.s RealSystem Media Commerce Suite, officials said. C&W bought the bankrupt Exodus earlier this month.

For Jeff Carter, director of technology at Elogex Inc., the news from Digex and its peers is encouraging.

"From our perspective, [midmarket customers] dont have a clear grasp on things like performance testing and ways to manage their security and things of that sort," said Carter, in Charlotte, N.C. "In those cases, I think its a pretty good bargain."

But the way that hosting companies such as Digex keep users insulated from such realities can be both positive and negative, Carter said.

"The disadvantages are you lose some control over your network, [and] it takes time to make changes," he said.

Hosting companies could make outsourcing more attractive to enterprises by allowing users to buy equipment at the end of the lease, which would enable users to write off the depreciation costs of the equipment, Carter said.