Verio Pushes Into Enterprise Hosting Space

Verio Inc. is looking to push up the ladder in the Web hosting world, relying on a branding campaign, its telecom parent, cost-saving plans and managed services to move it into the larger enterprises.

Over the next two years, the Englewood, Colo. company, which recently reorganized its corporate structure and appointed a “senior vice president of operational excellence,” wants to capture part of the $4 billion hosting business, which Gartner Inc.s Dataquest division said could mushroom to $12.6 billion by 2005.

Verio recently created a division solely for enterprise hosting customers, with the name of Tokyo-based parent NTT Communications Corp. on it, said Verio CEO Justin Jaschke. The plan is to exploit NTTs existing global customer list, he said.

The company also wants to consolidate data centers and to work closely with Agilera Inc., an application service provider, also of Englewood, of which Verio owns 30 percent.

“As the business models develop—and they become further intertwined—we may [merge] the company, but thats not a decision that has been made by either side,” Jaschke said, declining to give a timeframe.

Offering additional managed services is also on the docket, Jaschke said. A security deal with Riptech Inc., of Alexandria, Va., will soon be announced, and applications monitoring, content delivery, caching and mirroring are all possibilities, he said. And NTTs I-mode service will need support in the United States.

“We would certainly like to be the backbone behind that,” Jaschke said.

But even with the right allies, Verios reputation as a player for small and midsize businesses could negatively precede it. Chicago-based GolfServ Online Inc., a content provider for CNNSI.com and USAToday.com, was one of the first Verio enterprise customers.

“Were pretty happy with Verio. Theyve always been pretty helpful to us in helping us through some tough times,” CTO Mike Caspar said.

But GolfServ only became a customer when Verio bought its original hoster, DigitalNation Inc., in July 1999. GolfServ never considered Verio before because of Verios small-business reputation, Caspar said.

“Even now, when I say, We use Verio, people look at me funny,” he said.

Analysts said that will be an ongoing problem if Verio hopes to compete against the likes of IBM, Electronic Data Systems Corp., WorldCom Inc., Qwest Communications International Inc. and AT&T Corp.

NTTs coattails will help in the Far East, but they wont be as useful in Europe and the United States.

“One of their biggest problems is going to be the channel,” said Ted Chamberlin, of Gartner Dataquest, in San Jose, Calif. “You dont get fired for buying IBM. Verios going to have a tough time. The one thing we do know is the demands going to be there.”