Oct 3, 2003 : The webhost industry: week review

📅 October 3, 2003 - This week, the Web hosting industry saw its most notable movement along themes of acquisition and expansion, as several companies announced growth, through both acquisition and other means, and several companies released new products or services intended to broaden the scope of their appeal.
On Monday, Hostway announced that it had acquired Australian Web hosting, colocation and managed services provider Dedicated Hosting, which reportedly has a customer base of more than 1,000. Terms of the acquisition were not disclosed, but the merger marked the second Australian acquisition of the month for Hostway, which previously purchased the dedicated server business and other assets of GlobalHost, a Web hosting firm unrelated to the similarly-named American business. Hostway said it would continue to expand through mergers and acquisitions.
And on Thursday, Destra Corporation announced that it had acquired the dedicated hosting business of Enet21 Pty Ltd., a provider of dedicated hosting, colocation and managed services, for consideration of up to AUD$600,000 in cash and shares. The company says Enet21 clients will be integrated into the existing infrastructure of Destra subsidiary OzHosting.com, another company that recently acquired assets belonging to GlobalHost, in this case bringing on 1,000 new customers.
While some companies announced the results of completed acquisitions this week, word circulated from other businesses still earlier in the stages of buying.
On Thursday, Level 3 Communications said it was aiming to acquire financially distressed telecommunications carriers as part of its revenue-boosting efforts. Level 3 representatives reportedly told investors this week that there are many opportunities for the company to make acquisitions similar to the ones the company has already made. Level 3 says it has approximately $1 billion in cash and could access additional funding if a potential acquisition called for it. The company says it is looking for providers based in the same services, and the same geographic area, as Level 3, which would allow for certain synergies.
Just three days before these comments, Level 3 said Monday that it planned to expand its European network in Scandanavia, scheduling services to Copenhagen next month and an increase of network capacity into Stockholm. The company says customers have been encouraging the expansion, which will offer them greater access to the Level 3 network. In addition, Level 3 said it had signed an agreement to provide network services to Powerline Communication, an ISP and Web host in Denmark.
While some companies sought this week to approach new customers through acquisition or expansion, others broadened their reach in an altogether different direction, by broadening the scope of their own services.
On Monday, Rackspace Managed Hosting said it had launched its worldwide Business Partner Program, an extension of its customer referral program. Rackspace said it would deliver the program through a partner portal, providing access to sales and marketing tools designed to help companies expand their businesses. According to Rackspace, the launch of the new service is intended to demonstrate the company's commitment to its referral partners, and was designed particularly with systems integrators and application developers in mind.
UK-based Web hosting firm 1&1 Internet Ltd. said on Wednesday that it planned to enter the US market in January of 2004, and would prepare for that launch by offering a 100-day pre-launch promotion including three years of the company's Professional Package for free. The plan includes 500MB of Web space, 50 e-mail accounts, 5GB/month of traffic and a variety of software tools, as well as a $25 coupon for Google's AdWords. The total value of the offering, according to the company, is approximately $1,000. 1&1 says it hopes the deal will introduce its products to a large number of users and position the company as a player in the competitive North American hosting market.
And on Thursday, Affinity Internet introduced its KnowledgeBase online resource portal, designed to provide customers of Affinity-based products with a place to locate resources, post feedback and share knowledge and information on hosting topics. The company says KnowledgeBase will operate as an extension of Affinity's customer support team, offering answers to questions and limiting the need for customer support contact. The portal, says Affinity, includes an FAQ section, current top 10 questions and a glossary of Web hosting terms, as well as articles written by Affinity technical support team members. The KnowledgeBase too, previously available only to ValueWeb customers, will now be available to other Affinity brands such as BigStep, HostSave, SkyNet and WinSave.
This week's news dealt with some of the big themes in Web hosting: businesses building their customer bases through a variety of means, as well as matters of consolidation and competition. And, while these trends will undoubtedly continue to color the news, we should also expect the coming weeks to reveal new developments in some of the more immediate issues facing the industry.