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To: Mylan Hart who wrote (27389)	5/5/1999 1:25:00 AM
From: Mylan Hart	Respond to of 44908

Plugged In: More Hi-Tech Firms Offering Services By Duncan Martell PALO ALTO, Calif. (Reuters) - In high technology, it used to be that building widgets was enough to make fat profits, whether it was manufacturing and marketing personal computers or making the chips that powered them. Not anymore. PC prices plunged below the $1,000 mark well over a year ago, and the blistering growth of the Internet has changed all that. Technology heavyweights -- including Intel Corp. (Nasdaq:INTC - news), Dell Computer Corp. (Nasdaq:DELL - news), Compaq Computer Corp. (NYSE:CPQ - news) and Lucent Technologies Inc. (NYSE:LU - news) -- are now crowing about becoming ''solutions providers.'' Since hawking boxes and chips is not enough, these same companies now want to be one-stop providers of all manner of high-tech services. For one, Intel, the world's largest chip maker, is angling to build dozens of vast data centers to store information for companies. Another example is fast-rising start-up Exodus Communications Inc. (Nasdaq:EXDS - news), which by the end of the year will have more than 20 so-called Internet data centers. The company powers Web sites for online auctioneer eBay Inc., computer maker Sun Microsystems Inc. (Nasdaq:SUNW - news) and free e-mail provider Hotmail. ''The outsourcing market for Web hosting is shifting from the consumer'' to businesses, Ellen Hancock, president and chief executive of Exodus, told investors at the Hambrecht & Quist technology conference in San Francisco. And that's the reason the company bought Cohesive Technology Solutions Inc. To build a data center costs, on average, $888,000. And before much longer, a company may need another one in New York, London, Tokyo and so on. On the other hand, companies can give Exodus $148,000 -- its average annual revenue per customer. The trend is going beyond just businesses. Even high-tech companies that cater to consumers are recognizing that hawking boxes is not enough. At last week's Hambrecht & Quist Technology conference in San Francisco, the chief financial officer for Gateway Inc., the second-largest direct seller of PCs, conceded it's no longer enough just to sell PCs. ''We want to provide all the solutions around the PC,'' John Todd told investors at the technology conference. The company now offers customers an Internet connection when they buy Gateway PCs and offers a one-stop shopping feature it calls ''Your:)Ware.'' Intel, at its most recent meeting for analysts, unveiled its biggest, boldest push into new markets since the late 1980s, when it bailed out of the memory chip business it invented for the greener field of microprocessors. The Silicon Valley giant plans to build data service centers so that small- to medium-size businesses can set up electronic commerce activities, as part of its new business group's emphasis on the Internet. Eventually, the chip maker will have a vast network of ''server farms'' -- groups of powerful computers that store data. International Business Machines Corp., on the other hand, is considered an old hand in the services business. It has been bundling its computers with its own services for more than a decade, and the business now accounts for more than 30 percent of IBM's annual sales. For example, IBM supplies computer operations management consulting and technical services to a blue-chip list of corporate clients -- a business that is growing 20 percent a year, or 50 percent faster than the overall industry. ''One of the things we like best about this opportunity (in services) is that it's big -- twice as big as hardware, and there is no dominant competitor. At least not yet,'' IBM Chairman Louis Gerstner told shareholders last week at the company's annual meeting.