July 1, 2006 -- (WEB HOST INDUSTRY REVIEW) -- Just days into his new post as CEO of the Web hosting operation created in the merger of dedicated server giants EV1 Servers (ev1servers.com) and The Planet (theplanet.com), Douglas J Erwin says he is fine-tuning his hands-on knowledge of the hosting business as the newly formed company develops ideas on how to best employ its considerable resources.
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Appointed on Monday, Erwin is a technology veteran who spent 13 years with IBM and was vice president and chief operating officer at BMC Software. Most recently, he was chairman and CEO of blade server technology pioneer RLX Technologies, where he says The Planet was one of his biggest customers.
Now, Erwin sits at the helm of one of the hosting business's most significant sets of resources, created by the merger, in May, of two of the largest players in the dedicated server business. The merger was orchestrated by investment firm GI Partners (gipartners.com), which acquired controlling interests in both Web hosting companies, seeing an opportunity to make a significant play in the hosting market.
Erwin's plans are now to spend three months developing a new strategy for taking the best of both EV1 and The Planet to the market
"We're going to take the next 90 days," he says, "and these guys are going to educate me, and we're going to come out with a strategy that we will share with our investors in the company, and to the outside world on October 1."
While he is a newcomer to the specific assets of the two companies, Erwin says he has some clear ideas of the resources they have, and how those resources can be used. On the immediate agenda, however, is integration.
"I've done a lot of mergers and acquisitions," says Erwin, "and quite frankly I've done a lot of selling of companies. And one of the things we need to focus on first is the integration of these two companies. We've got a lot of great assets. We've got a lot of great people. We've got a lot of great processes. But right now we're still two companies. And we need to merge ourselves with one management team understanding where we're driving. So that management team, in structure, will be done in the next 30 days, at which time we will be working parallel with the strategy. But it's going to take us longer to come out with what I think is something we can take to the market."
One of the new avenues he expects the company to pursue is the selling of additional services to the company's existing install base. The area has huge potential considering the enormous base or installed customers between the two companies, and the somewhat limited range of services they have historically provided.
"I think there are some things that we can do far better than we have in the past with these two companies rolling together," says Erwin. "And that is, in particular, support of the 55,000 servers and customers that we have today, in providing additional services that they might or might not have been offered in the past. Things like backup capabilities, firewall protection. A lot of people don't want them when they first start, and after they realize they're putting more and more important stuff on these servers, those sorts of things become of interest to them.
"In the past we haven't really done anything to market to our install base. It's pretty much become a customer, send us your money, and that's it. So I think there are some very good opportunities there for us to supply more services to our install base."
Many things are unclear at this point - from what the new company will be called, to whether it will pursue new markets in higher- or lower-end solutions. It is likely that GI Partners will seek to add new services or assets to the business through further acquisitions, but what those acquisitions might be is also unclear.
The real certainty in the matter is the value of the assets. The combined company operates seven data centers, totaling 370,000 square feet of Web hosting space, a combined set of R&D resources and talent and the shared best practices of two leading Web hosting businesses. Whatever emerges from the 90 days of planning to come will be a powerful force in the Web hosting business.
"These guys are taking two very large, dominant players in the hosting business and rolling them up," says Erwin. "And now they're probably about 500 to 600 people and about $120 million-plus in revenues. And it's an interesting opportunity in this market space. I think there's going to be a lot more roll up and consolidation. You can see it going on, and I think that today, the opportunities that are afforded to larger players enable them to supply more products, different services to the install base. Critical mass, I think is absolutely critical moving forward."