April 7, 2003 -- (WEB HOST INDUSTRY REVIEW) -- After a brief hiatus, PSINet Europe (europe.psi.net) is betting on a renewed interest in managed services to propel itself back to the top of Europe's communications sector.
Following the well-publicized bankruptcy of its parent company in June 2001, PSINet Europe appeared to face an uncertain future. While the company was not included in the bankruptcy proceedings of its parent firm, it was forced to consolidate operations and cut staff in order to remain competitive in deteriorating market conditions. But things began looking up for the firm in late spring of 2002 when it was purchased by a group of several investors, including an investor in the NaviSite group of companies, for approximately $9.5 million.
At the time of the purchase, the company's new owners said they intended to take advantage of the opportunities a sagging European hosting market had created. Since the bankruptcy of its parent firm, the communications market has seen significant drops in pricing; picking up additional assets today is therefore much cheaper than it would have been several years ago. And less than a year after announcing its new strategy, the company appears to be following through on its intentions.
Gone are the days when PSINet, both in Europe and abroad, focused on consumer-based services; armed with an expansive network and several data centers strategically located throughout the continent, PSINet Europe's new focus is on providing managed network services for mid to large-sized companies. The company's customer base is already well-represented by most major industry sectors, and PSINet Europe feels that demand for outsourcing will continue to grow in 2003.
Realizing that organic growth is time-consuming and not always successful, the company has already started to orchestrate several acquisitions and alliances in order to accelerate its growth. That said, the company has also warned it will be selective in the companies it partners with or acquires. In late December, the firm purchased some of the business interests of Cybernet Internet-Dienstleistungen AG, a German firm that provides hosting, VPN and security solutions. The acquisition included its customers and some of its staff, boosting its customer base by about 3,000 clients (PSINet Europe currently has approximately 10,000 customers). More recently, the company announced it would partner with enterprise software company Oracle to implement and manage software for its Oracle Outsourcing customers in PSINet Europe's five data centers.
Aside from a new business focus, PSINet Europe's association with PSINet itself is now limited; most of PSINet's U.S. assets were eventually purchased by Cogent Communications, an optical Internet firm, following PSINet's bankruptcy. Although Cogent decided to keep the PSINet brand alive, the two companies do not work together - while Cogent and PSINet Europe jointly own the name, they will not use it to sell in each other's geographic market (PSINet Europe even introduced a new logo to differentiate itself). PSINet Europe is therefore fully independent, and heads in to the future with virtually no debt, its own private IP backbone network, and data centers in Amsterdam, Berlin, Geneva, London and Paris.
The company is complementing its re-launch with an effective media campaign that has seen it grab headlines several times since its re-emergence on topics ranging from partnerships and business strategies to studies on Web servers. PSINet Europe has also picked up on the fact that businesses and consumers are now beginning to realize the importance of security and uptime, and has introduced stringent SLA guarantees as a result. Will the company's new strategy ultimately work? While nothing is guaranteed, PSINet Europe now has a great deal of experience, virtually no significant debt and has seen many of its competitors falter; therefore, the company now finds itself in a prime position to succeed.
