Feb 22, 2002 : The webhost industry: week review

📅 February 22, 2002 - This week seemed to be a particularly gloomy one for the Web hosting industry, as numerous companies cut jobs, went bankrupt or teetered on the brink of Chapter 11.
The week got off to a bad start with the announcement that managed hosting firm Verado would file for Chapter 11 bankruptcy protection in Delaware after reaching an agreement on a pre-negotiated liquidation with bondholders.
The company also announced the sale of its Irvine, California Data Center "as a going concern through a sale approved by the bankruptcy court," the company said.
Meanwhile, it would appear that yet another company is poised to file for bankruptcy: this time, Virginia-based voice and data firm XO Communications. According to a report published by Business Week Magazine Thursday, the company is expected to file for bankruptcy protection in the next two weeks in a push to convince debtholders to agree to a recently introduced restructuring plan.
"It could happen in days - it could be two weeks," a "source close to XO" told the magazine.
There was also bad news from hosting firm Verio this week as NTT Communications, Verio's parent company and one of Japan's top Internet firms, said more job cuts and data center consolidations were imminent at the Web hosting company. Reuters said the company plans to lay off a quarter of its workforce, totaling 2,600 by the end of the year, and close approximately 10 of its 22 data centers.
This is the second round of layoffs for NTT Communications, a wholly owned subsidiary of Nippon Telegraph and Telephone Corp., since September. Less than six months ago laid off 750 employees and closed several data centers.
And Thursday, Web hosting firm Globix said it would delay the filing date of its previously announced Chapter 11 petition until the week of February 25 to possibly modify the terms of the company's lease of Globix House, its principal office.
Just in case that wasn't enough, however, one more piece of disappointing news to pass along: on Wednesday, telecom giant Cable & Wireless, the new parent company of Exodus Communications, cut its full-year sales and margin forecasts for its global networking business. C&W lowered its forecast because of "continuing difficult market conditions."
Now on to some brighter announcements, starting in Europe: Dedicated Servers, part of Host Europe PLC, this week announced the successful launch of its new high-end Web hosting solutions designed to cope with the demands of hosting large corporate Web sites. With a line of dedicated and virtual services now fully established, Host Europe is zeroing in on the managed services market.
Hardware specialists Sun Microsystems unveiled an aggressive marketing campaign to promote its new Qube 3 server appliance this week, which it hopes will replace Windows NT machines in both homes and offices because of its power and simplicity. The new program allows NT users to switch to the Sun platform at a reduced rate.
And on Wednesday, Broadwing Inc. unveiled a unique SLA suite that guarantees latency, packet loss and availability both on and off the Broadwing network for all of its IP products. The integrated communications provider now guarantees less than one percent packet loss, 90 milliseconds round trip latency between the Broadwing network and its top three traffic exchange partners and 100 percent availability with one-hop core routing for off-net traffic. Availability and latency between Broadwing and its traffic exchange partners will be monitored by performance measurement firm Keynote Systems.
Hosting firm Verio also had some good news this week: the company also announced the availability of its new Managed Private Server, a dedicated server aimed at small businesses that outsource their hosting infrastructure. Verio says servers contain all the benefits of a managed server, including administration, security, equipment, bandwidth, and data backups, at an affordable cost.
It was an unpleasant week for the hosting industry, with a lot of bad news that seemed to far outweigh the good. And judging by the current state of the tech sector, unfortunately, it would appear that things will get worse before they get better.