According to Intel, the company will continue to provide service to existing customers during the period, no longer pursuing new customers, and will begin immediately working with those customers to ensure a smooth transition.

"While IOS has been successful in attracting new customers, market trends and financial projections for the hosting services industry lead us to today's decision," says Dalibor Vrsalovic, president, Intel Online Services Inc. "Our focus now will be to fully support customers and ensure a continued high level of service while we assist them in their transition plans."

Intel originally entered the hosting market with little services experience, but a great deal of experience with setting up and managing factories worldwide. As a result, the company operates data center facilities in the United States, Europe and Asia.

"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," says Vrsalovic. "These capabilities will be absorbed into Intel's worldwide information technology operations to support our goal of becoming a 100 percent e-corporation."

As a result of closing down its Web hosting service, says Intel, the company expects to take a pre-tax charge of approximately $100 million in the second quarter.