GlobalCenter offers the world to dot-coms

Long-distance carrier Global Crossing's Web hosting division announced four new services today for Internet firms, designed to help start-up companies launch their businesses more quickly and cost-effectively. Web hosting centers store or "host" company Internet sites on server computers in various locations so users can more quickly access information.

Coupled with the recent addition of former AT&T cable executive Leo Hindery as chief executive, the company appears to be positioning itself for an initial public offering next year.

But GlobalCenter is not alone in the Web hosting arena. A handful of companies such as Exodus Communications and AboveNet offer similar high-end hosting services, while smaller companies such as PSINet, Verio and Concentric Network target the medium-sized business market.

Even GlobalCenter executives privately admit Exodus has the early lead in the hosting market. Large telecommunications carriers, such as Qwest Communications International, also are chasing after the business of large Net-based companies and could have an advantage by offering packages of voice and data services.

Many analysts predict the Web hosting market may face falling prices as competition increases, and firms like GlobalCenter and Exodus are looking to offer new services to offset the expected decline in profit. But it may not be enough. An emerging wave of companies known as application service providers (ASPs) is eyeing a similar strategy of providing outsourced services for businesses.

Both moves are also further indications that GlobalCenter will have more autonomy under Global Crossing than it did under Frontier Communications, which was recently acquired by the Bermuda-based fiber-optic company.

"GlobalCenter really sort of disappeared from the scene [under Frontier]," said Joel Yaffe, a data hosting industry analyst at Giga Information Group. "I think that now that the Global Crossing acquisition has closed, that's going to allow GlobalCenter to assert themselves."

The addition of Hindery should bring solid leadership to the Web hosting unit, analysts said.

"I suspect his addition is going to inspire more confidence among investors," Yaffe said.

The company will begin offering a series of "on demand" services, including tape drive backup and recovery and performance monitoring. The firm also plans to offer caching and content delivery software.

GlobalCenter has entered into revenue split arrangements with Akamai Technologies, StorageTek, Keynote Perspective, StorageNetworks and EMC to provide their various products, which will be available individually or as a package, executives said.

GlobalCenter executives believe the new services, coupled with the firm's existing networks, data centers, and professional services unit, will differentiate the company from hosting competitors Exodus Communications, AboveNet and other communications rivals such as Qwest Communications International. GlobalCenter operates six data centers and is building 11 more.

"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.

GlobalCenter executives said they have been careful not to compete against their customers as some communications firms aspire to do through hosting application software.

"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."

Shares in Global Crossing jumped nearly 10 percent today to close at 51.38. Stock has traded as high as 64.25 and as low as 17.87 in the past 52 weeks.