WJ., Here is the San Jose Mercury news piece on INTC moves...
Intel takes leap into Web hosting
Chip maker will manage firms' e-commerce sites
BY TOM QUINLAN
Mercury News Staff Writer
Chip giant Intel Corp. -- the ultimate hardware company -- expanded into the ethereal world of Internet commerce Tuesday with the official launch of a new service that will host and manage e-commerce sites for companies like Citigroup and Excite@Home Corp.
Armed with a $1 billion war chest and a slew of partners, Intel hopes to carve out a substantial piece of the fast-growing market for managing commerce over the Internet.
Intel intends to host commerce-oriented Web sites, a service known as Web hosting, at a dozen facilities around the world. The first such ``Web farm,' a $150 million facility with the capacity to handle more than 10,000 computer servers, opened for business Tuesday across the street from the semiconductor maker's Santa Clara headquarters.
Early next year, Intel will open similar facilities in Fairfax, Va., Tokyo and London, and by the end of the year the full dozen should be operational, said Mike Aymar, an Intel vice president and general manager of the new business, called Internet Online Services Inc.
In addition to investing in the necessary hardware, Intel will put together a menu of software applications and consulting services from third-party partners and combine it with network services from MCI Worldcom's UUNet unit.
Essentially, the company will offer a one-stop shop to customers who want to order a customized e-commerce site without going to the trouble and expense of developing it themselves.
``We're giving customers choices, where they can have NT or Solaris as the operating system,' Aymar said. ``For the Internet server, they can choose from Microsoft, Apache or Netscape. If they want a suite of applications, they can buy it from Pandesic.'
The market for Web hosting services is growing quickly. According to International Data Corp., the market today is estimated to be worth about $1.5 billion in total revenue but is projected to grow to more than $12 billion by 2003. Other estimates suggest the growth rate is even higher.
Many companies offer Web hosting services, and Intel faces significant competition from computer service giants like IBM Global Services and Electronic Data Systems Inc., which have long been in the business of providing integrated solutions for their customers. A number of smaller companies have also popped up in recent years to ride the Web hosting wave.
Intel hopes to win customers with an unusual marketing tactic: Sign up with Intel, and the company will guarantee that everything under its roof will work, from the network connection to the applications running on Intel's servers.
``To everyone else, service guarantees are pretty much limited to the network and the physical environment,' Aymar noted.
Intel's fees will start at a few thousand dollars per month, but could run 10 times as much, depending on the services a customer requires.
Intel has already announced a short but recognizable list of customers who have signed up for the service, including Japanese computer maker NEC Corp., the e-Citi unit of the Citigroup financial services conglomerate and the shopping service of Excite@Home.
One Intel rival, Exodus Communications Inc. of Santa Clara, said it will take Intel a couple of years of practice to match the service level of Exodus.
``We've been doing this for five years,' said Sam Mohamad, Exodus' executive vice president for worldwide sales and services. ``We have 1,300 customers, and while that might not sound like a lot, these are companies for whom e-services are a mission-critical part of their business. If the server isn't up, they aren't selling.'
Exodus offers Web hosting as well as a less sophisticated service called co-location, where companies rent space and network access but provide their own servers. The company's customers include Hewlett-Packard Co., Yahoo Inc. and its GeoCities unit, Microsoft Corp.'s Hotmail service, Adobe Systems Inc., CBS Sportsline and Nordstrom.com.
While Exodus has far weaker finances than Intel, reporting just $42.5 million in sales last quarter, Mohamad said Intel's standardized offerings can't match Exodus' more customized approach.
``Companies like Yahoo can't be run on just a standards-based solution,' Mohamad said. ``It wouldn't work for them. That's why we've spent a lot of time developing our services and consulting expertise.' |
