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Intel shutting down Web hosting division

The chipmaker is closing the last of many business experiments it undertook in the late '90s after having steadily trimmed investments and the number of employees in the division.

Michael Kanellos Staff Writer, CNET News.com
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas.
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Michael Kanellos
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Intel is closing its Web hosting division, the last of many business experiments the company tried in the late '90s.


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The Santa Clara, Calif.-based chipmaker will phase out operations of Intel Online Services (IOS) over the next 12 months. Existing customers will be shifted to other service providers, and no new customers will be sought. The division's staff consists of "several hundred" people, many of whom will be shifted to other divisions, according to an Intel representative.

Intel will take a charge of approximately $100 million in winding down the operation.

Unfurled in 1999, 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 a streaming media division, 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."