• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Following Lead of Colleagues, Sprint Exits Struggling Web-Hosting Business

Posted on: Tuesday, 24 June 2003, 06:00 CDT

Jun. 25--Sprint Corp. is bolting the struggling Web-hosting business and will close eight data centers, including one in Rancho Cordova, by the end of the year.

Executives at the telecommunications company based in Kansas City, Kan., declined to say Tuesday how many people work at the Rancho Cordova facility, but noted that such operations typically employ 15 to 20 workers.

Sprint's announcement follows a similar move by Cable & Wireless PLC. The British company said earlier this month it would sell its U.S. Web-hosting division, which includes 12 data centers and 2,800 workers.

The two companies typify the woes of an industry bedeviled by overbuilding, the technology slump and millions of dollars in losses.

Data centers, sometimes known as data hotels or server farms, are specially designed warehouses built to host companies' online operations.

The centers usually feature access to high-speed data lines as well as backup power supplies, industrial-strength heating and air conditioning systems and high-tech security devices to deter intruders. Some are staffed with software and hardware specialists who keep customers' gear running smoothly.

During the dot-com boom of the late 1990s, companies such as Sprint, Exodus Communications and Intel Corp. bet that the proliferating number of Internet companies would spike demand for server farms.

But when the boom went bust, Web-hosting companies were stuck with expensive buildings and few paying customers.

"The industry way overspent ahead of demand," said Andy Schroepfer, president of Tier 1 Research in Minneapolis. "Sprint entered the game far too late, with too big a build-out."

Sprint isn't the only company with local operations to struggle with the data center business. Small companies like InFlow Inc. and Telegis Networks shut their Sacramento data centers, while publicly traded Waave Telecommunications collapsed and its assets were acquired by Herakles Data.

But that doesn't mean the data-hosting business is dead, Schroepfer said. Nationally, data centers are using an estimated 40 percent of their space, up from 27 percent at the end of 2001, Schroepfer said. He attributed the increase to a combination of growth in demand and the closure of some big data centers.

Sprint's misfortune could be an opportunity for other companies. An executive at Sacramento-based RagingWire Telecommunications, for instance, said he already has heard from Sprint's local customers and Cable & Wireless' Bay Area clients seeking a new home for their servers.

"We've received dozens of inquiries, but there are no done deals yet," said RagingWire President Yatish Mishra.

"But we could be huge beneficiaries of Sprint and Cable & Wireless exiting the business."

-----

To see more of The Sacramento Bee, or to subscribe to the newspaper, go to http://www.sacbee.com

(c) 2003, The Sacramento Bee, Calif. Distributed by Knight Ridder/Tribune Business News.

FON, CWP, CW, INTC,

More News in this Category