Sprint making strides in Web hosting market

While the Web hosting market suffered last year with market leader Exodus Communications filing for bankruptcy and others closing data centers, Sprint was busy planting its flag on that turbulent landscape.

However, establishing itself as a force in the hosting market won't be easy for the telecom company that's better known for its PCS wireless services and fiber-optic IP network. Sprint first must focus on shrugging off its label as a Johnny-come-lately to the hosting game.

Sprint "is facing an uphill climb," says Carrie Lewis, an analyst with The Yankee Group.

Sprint had only two data centers when it launched its E-Solutions Web hosting and managed services division in November 2000. Since then, Sprint has rolled out a suite of managed services that lets it manage everything from the network to the application and opened eight data centers, making it one of the only hosting companies to open rather than close facilities in 2001.

Perhaps its biggest steps into the market have been recent customer wins that include eBay and Yahoo. However, analysts say both customers are using collocation services, not the managed offerings that Sprint is focused on providing.

"We're beginning to build momentum by the kinds of customers that we're picking up," says Keith Paglusch, president of E-Solutions.

As for eBay, Kevin Pursglove, senior director of communications, says Sprint's fledgling status in the hosting market was of little concern as eBay conducted a yearlong search for a hosting provider. EBay wanted hosting service outside the San Francisco Bay Area in order to improve site availability and disaster recovery.

Sprint offered a Tier-1 Internet backbone, reliability, scalability and financial viability - all at the right price, Pursglove says. "We were looking at performance to date as well as the opportunity to deliver a first-class product to eBay in the future." Whether Sprint had gotten into the market late "was not an issue to us," he says.

As for that late entry, Paglusch says a failed merger with WorldCom in late 1999 and early 2000 set Sprint back, but also gave it a chance to learn from the mistakes of competitors.

"What we learned is you don't want to go in and just be a collocation provider," he says. "You want to make sure your focus is on managed solutions and total end-to-end solutions."

In addition, Sprint took a conservative approach to building data centers.

"We don't go in and build out a huge data center," Paglusch says. "We may lease a bunch of space, but we build it out in small increments and we'll add to it as we gain customers."

Sprint E-Solutions is focusing on five areas: supply-chain management, infrastructure services, messaging, e-commerce and content management. Paglusch says Sprint stands apart from other hosting providers in terms of security, its nationwide IP network and its ability to integrate wireless into its services.

While Sprint may be coming into the market having learned from the mistakes of others, analysts say its market share stands at less than 1%. Paglusch says about 70% of Sprint E-Solutions customers are getting managed services, but includes managed security, managed networks and managed installation in that mix. Analysts, which figure managed hosting services as above and beyond network management or managed firewalls, say the majority of Sprint customers are collocating.

Analysts also say Sprint has the potential to be a strong player.

"They've got a great network and they've got a great brand name. They've got brand-new facilities that they built internally that are up to par with anything else in the market," says Andrew Schroepfer, president of Tier 1 Research. "For an enterprise that wants a stable company that's proven their intelligence by learning lessons from the rest of the marketplace and has a credible service offering, Sprint should definitely be on the list for consideration."