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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Robert S. who wrote (14975)	1/12/2000 10:40:00 AM
From: Mike 2.0	Read Replies (2) \| Respond to of 54805

Re EXDS-Robert thx for posting this. Comments follow: "We own the data centers, the [Internet protocol] networks, the infrastructure layer and professional services. There's really not another player in the industry that has all four of those internally," said Paul Santinelli, vice president of technology and applications for GlobalCenter. Analysts said Exodus also offers many similar software services. Web hosting firms will increasingly look to offer new services once they gain a critical amount of business, analysts said. "The long term thing is to capitalize on the core value, which is filling up your data centers, and then get into extracting additional revenue from customers at those sites," J.P. Morgan Securities analyst Mark Langner said. I think that EXDS is better positioned to reap the "core value" that Langner is talking about, thanks to EXDS' initial "land grab" of being first to build out an enviable number of data centers. They are way ahead in this regard and IMO gives them king status. IMO unless EXDS as reason for customers to move out they have a very large satisfied installed base to market value-add services. This reminds me of an interesting ASP related presentation I saw recently. The presenter presented the ASP anticipated revenue stream on a graph resembling an upward "staircase" line. I asked him if the reason for the forecast increase was due to anticipated new "seats" sold by the ASP. No, he said, he was trying to present the anticipated revenue stream from an existing customer, which will increase as additional value-added services are offered to that customer. The logic extends easily to the AIP/web host, like EXDS. In other words, not only will companies like EXDS grow as their data center space grows, but the revenue per installed customer will grow while fixed costs remain, of course, fixed. The economics of the data center business plan become very attractive indeed. GlobalCenter executives said they have been careful not to compete against their customers as some communications firms aspire to do through hosting application software. I agree this is a good move. QWST's Cyber.Solutions unit offering SAP, etc. certainly completes with aspiring ASPs. That would be enough for me as an ASP to seek another data center vendor. I do not see the ASP's themselves being a compelling investment; the switching costs (i.e., data conversion/transfer to another ASP host) are simply nominal. "We want to be known as the BASF of the Internet industry. We don't make the skis, we make them better," Santinelli said. "We want to make it easier for people to get dot com'ed, before they get dot-creamed." Good sound bite! Confirming in my mind that the move to "digitize" businesses will not be a walk but a wind sprint. This news piece leads me to feel very comfortable with EXDS, but GBLX demands my attention. I will look into GBLX further. Thanks