Internap Outlines Premises-Based Strategy
Oct 27, 2003 (ComputerWire via COMTEX) --Fresh from acquiring the husks of two of its most significant startup competitors, Internap Network Services Corp says it now has the technology pieces in place to take its internet route control offerings to customers' premises.
Chief marketing officer David Abrahamson told ComputerWire Internap plans to combine elements of its own network offering with the best technology bits of netVmg Inc and Sockeye Networks Inc, which it recently closed the acquisitions of.
Internap offers internet connectivity from 32 facilities, which are all connected to all the internet's major backbones. Using some proprietary real-time measurement and routing software, Internap shunts customers' data down whichever link is fastest.
Abrahamson said Internap now plans to also address the "first mile" problem by combining this service with the premises-based appliances from netVmg and the global internet performance data provided by Sockeye's network of probes.
The rest of Sockeye's product will likely be discontinued, though Abrahamson said Internap may cherry-pick some of the popular features, such as its reporting tools and graphical user interface, for the new combined offering.
"One of the reasons we acquired netVmg and Sockeye... was that we needed our technology in our customers' premises," said Abrahamson. This will allow customers to have route control over multiple links, one of which could be to Internap.
"We could have easily built that technology ourselves, taking our Assimilator technology and putting it in a box," he said. "But we realized we had the opportunity to buy these companies for pennies on the dollar."
Indeed, both firms were picked up cheap. Sockeye, which had been funded with $40m in two rounds, was bought for $1.75m in shares just two years after its launch.
NetVmg, which had been funded to the tune of $79.5m, was sold for 345,000 units of convertible preferred stock in a complex deal that will award 1.5 million warrants to netVmg investors if they invest $4.4m into the company in future.
According to Abrahamson, the firms failed due to a combination of small sales teams and bad timing - launching "coming off the .com crash" to be seen as a "gee-wiz technology that they didn't need" by cost-conscious customers.
"The investors got impatient, couldn't cope with the burn rates these companies were experiencing," he said. NetVmg had a hard time selling anything recently due to concerns from buyers over its financial stability, he said.
"We've sold more netVmg boxes in the last month that netVmg sold in the last 12 months," Abrahamson said. "We've already created a sales funnel that rivals the size of our services funnel," he added.
Internap had current assets of less than $30m at the end of its last report quarter, and continues to make a loss, but Abrahamson said that the company currently expects to become cash flow positive in the current quarter. |
