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AT&T sketches out a Web business plan

AT&T is taking a page from Microsoft's marketing book, staking out its intentions of becoming a leader in the Web infrastructure business a bit before it has the ability to deliver.

AT&T is taking a page from Microsoft's marketing book, staking out its intentions of becoming a leader in the Web infrastructure business a bit before it has the ability to deliver.

The business of Web hosting, application, and content delivery is growing with the speed of a grass fire, and AT&T wants to make sure it's at the top of this market, company officials say. Yesterday, the company made several announcements detailing its plans.

In its new incarnation as ambitious cable and Internet company, AT&T already has the network it needs to reach its goal. The problem is, it doesn't quite have the technology or physical facilities to reach the scale it foresees--and that's where the Microsoft connection comes in.

Microsoft is

Web hosting firms grow
up
famous for announcing its software early, aiming to carve out a space for itself in the market before it's actually ready, simply by virtue of its size and likely future footprint. AT&T now appears to be adopting this course as it readies a renewed push into the Web business market.

"It's definitely a way to stay in the public light and not have their thunder stolen by people like [Web hosting company] Exodus before they are ready to go," said Joe Laszlo, an industry analyst with Jupiter Communications.

But analysts question the latecomer's ability to shoulder aside the smaller companies, which have already established good reputations and customers bases.

Rolling out Ma Bell's welcome mat
AT&T yesterday said it would step up its Web hosting business, a lucrative niche of the Net infrastructure that is growing rapidly, and one in which Mall Bell still has a relatively small footprint.

The company said it would add 26 data centers to its network over the next three years, with 1 million square feet of space already identified for this purpose. It will start by boosting the amount space dedicated to its existing centers in New York, San Francisco, and Boston, and then move forward next year with new centers elsewhere. The company did not give a dollar figure for the project.

The plans sound ambitious, and should be enough to give established players like Exodus, Digex, and Frontier's GlobalCenter pause.

But the market is growing quickly enough to absorb virtually whatever capacity telcos and other hosting companies can throw at it, analysts say. Forrester Research estimates that the industry is growing at a rate of 76 percent per year and will be worth more than $14 billion by the year 2003.

"AT&T has enough clout to be able to convince people that they're going to be able to do what they say," said Jeanne Schaaf, an analyst with Forrester Research. "But I don't think AT&T's going to edge anybody the market. They're up against people who got there faster and quicker."

AT&T means to expand its presence beyond the mid-sized business market it's now focused on. But it will have to prove it can provide the kind of complicated services that large Internet companies need along with its existing network.

"If you look at AT&T, its roots are in the consumer business," said Paul Santinelli, Frontier GlobalCenter's vice president of technology and applications. Large Internet companies with complex needs are more likely to stick with a company like Frontier with several years of experience of the top of the market, he said.

AT&T executives could not immediately be reached for comment.

Nor does AT&T's planned Web data center construction exceed other major players' efforts, analysts and competitors noted. MCI WorldCom, recently announced a $100 million construction effort data hosting business. Frontier GlobalCenter is building half-dozen new centers of its own, with several of these measuring 100,000 square feet or more.

Making the Web work faster
AT&T also said today that it will begin trials of another new Internet infrastructure technology that helps Web pages load faster, by locating copies of Web pages at many different places throughout a busy network.

This is a business now dominated by tiny startups with names like Akamai , Edgix, and Sandpiper. AT&T says it will partner with one or more of these companies--it will work with Akamai, among others, in trials beginning in November--to provide a Web content companies with a fast lane to consumers' computers.

AT&T's choice of a partner will likely shift the dynamics of this still-young business, providing the endorsement of least one 800-pound network gorilla to a start-up trying to make its name. That could be bad news for other companies trying to popularized their own content-speeding technologies.

But the market is still new enough--and the way that each company approaches the task different enough--that competitors say they are not yet worried.

"They are looking at something more consumer-oriented," said Abhi Chakhi, director of business development for Edgix, one of Akamai's chief competitors. "It's not really a service like what we're doing."