While the hosting industry has experienced renewed growth over the past year, recent initiatives by the major carriers to expand their hosting portfolios could accelerate market growth and broaden the reach of the hosting industry as a whole. Some of the new carrier offerings are also accelerating the convergence of the hosting and utility computing services markets.

Despite its pending acquisition by SBC (sbc.com), AT&T (att.com) is expanding its network of hosting facilities worldwide, and recently added two new features to its application hosting and performance management arsenal: Server and Operating System Support and Managed Utility Computing Pay-Per-Use.

AT&T is expanding its facilities in the Silicon Valley and San Francisco Bay area with a new Internet data center in San Jose. The new data center will complement its existing facility in Redwood City and increase the company's hosting capacity in that region by more than 100 percent. Internationally, AT&T is also adding hosting services in Shanghai, China to go along with its existing IDC in Hong Kong.

AT&T's US hosting facilities are offering application performance management capabilities for a wide array of enterprise applications, such as customer resource management and enterprise resource planning. AT&T's new Shanghai data center will offer application performance management capabilities in early 2006.

On top of adding facilities and expanding geographically, AT&T's new SOSS service continuously tracks changes made to the customer's hosted application environment, provides hardware "break/fix" services, updates security patches and troubleshoots operating system-related applications problems.

AT&T's customers can also run multiple applications and operating systems on a single server as a result of the company's new server virtualization capability. This increases system utilization levels, accelerates application deployment cycles and reduces operating costs. It also enables AT&T's hosting customers to make changes to production servers without scheduling costly downtime.

AT&T has also added a new Managed Utility Computing Pay-Per-Use pricing option that allows customers to use Sun Microsystems' hardware on demand in response to fluctuating business requirements.

MCI (mci.com), too, has been expanding its hosting portfolio, even as its acquisition by Verizon (verizon.com) nears. In September, MCI unveiled a utility storage service, which enables the carrier to provide storage area networking solutions to enterprises in response to their varying needs. This represents a more flexible and cost-effective alternative for enterprises that have historically had to acquire excess storage capacity to meet their cyclical business requirements. MCI's new service also permits customers to consolidate their multiple storage platforms, significantly reducing their storage management challenges.

In addition to expanding its hosting product portfolio through internal development, MCI is rapidly adding to its managed service capabilities by acquiring independent managed service providers such as NetSec in the managed security services sector and Totality in the managed application services realm.

The recent initiatives of the major carriers are not only aimed at challenging the traditional hosting companies. They are also intended, in part, to keep pace with the progress of SAVVIS (savvis.com), a multi-dimensional service provider that has ventured furthest into the utility computing services market. Originally positioned as a specialized Internet Protocol provider, SAVVIS purchased Cable & Wireless' US hosting facilities to give it a service delivery platform and Wham!Net to gain a foothold in the content delivery market. The company has been an early adopter of leading-edge technologies such as 3PAR virtualized storage systems, Egenera's blade servers and Sun's SunRay thin client systems so it can offer end-to-end utility computing solutions that include centralized hosting and distributed desktop services.

Independent hosting companies that have become optimistic about their future because of the growing demand for their services should keep a close eye on the rapidly evolving carriers who are seeking to not only steal away a share of the traditional hosting business, but also raise the bar by adding a new set of utility computing services to their portfolios.