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Intel will take a charge of approximately $100 million in winding down the operation.
Unfurled in, IOS hosted e-commerce sites and performed other services for companies that did not want to maintain their own computing centers.
Although Intel had no history in the services business, it said it had experience setting up and managing factories on a global basis, a major task for Web hosting companies. To that end, Intel built hosting centers stacked with hundreds of servers in the United States, Europe and Asia.
The division, though, attracted few customers. Problems accelerated after an overall decline in the services industry began in 2000, which led other, more-successful services businesses, such as Exodus Communications, to file for bankruptcy protection.
Intel has steadily trimmed investments and the number of employees in the division.
Other experimental business groups were terminated in 2001, including adivision, an e-commerce group and a consumer-electronics group.
"In the course of building IOS, we developed advanced technology that automates and standardizes key Web hosting functions, as well as operational expertise that enabled us to deliver some of the best service levels in the industry," Dalibor Vrsalovic, president of IOS, said in a statement. "These capabilities will be absorbed into Intel's worldwide information technology operations to support our goal of becoming a 100 percent e-corporation."