Europe’s Hosting Woes Accompanied by Silver Lining

Adam Eisner, theWHIR.com

July 10, 2001 - Like most other Web

hosting markets, Europe has seen its fair share of difficulties over

the past year. Several companies have closed shop, others have been

sold, and the WorldCom debacle is already having a negative effect on

the marketplace.

But while Europe’s hosting troubles have

been bad news for most, it has opened up a number of opportunities for

companies with a solid business plan and a bit of capital to spare. As

a result, several firms have decided that now is the time to bolster

their presence in Europe's Web hosting market. Some appear to be

choosing the path of acquisition, while others are focusing on organic

growth.

One firm that is likely to increase its

presence soon, albeit probably a little reluctantly for reasons of

pride, is Dutch telecommunications firm KPN. The company is reportedly

on the verge of purchasing a significant portion of KPNQwest, a

Pan-European carrier it helped start in 1999. KPNQwest was a joint

venture between KPN and US telecommunications firm Qwest, and went

through a great deal of well-publicized financial trouble before

finally going bankrupt in May.

While KPN would essentially be picking up

the pieces of its own shattered venture by acquiring any KPNQwest

assets, it also has a great deal to gain by doing so. The company would

likely acquire a world-class network and facilities for a shockingly

low price at a time when much of the competition appears to be fading

quickly.

Another European telecommunications firm

in for a few changes in the upcoming months is Norwegian

telecommunications firm Telenor, parent company of Nextra, a UK-based

managed services provider.

Founded in 1991, Nextra provides a wide

range of services including enterprise hosting, IP VPNs and managed

infrastructure services. According to reports, Telenor feels its brand

is currently less than recognizable the UK despite being a leading

European communications firm. As a result, Telnor is planning to boost

Nextra’s managed infrastructure and application hosting offerings in

the region during the next few months.

A Nextra executive recently told

vnunet.com that Telenor also intends to increase its recognition in the

UK by re-branding Nextra as Telenor Business Systems as of September 2

in order to bolster the company’ s brand. Vnunet also recently said

Nextra would back its managed infrastructure services by offering a

£1bn insurance policy against loss of business in the case of

significant downtime, and that the company is looking at bolstering its

ISP and IT service portfolios.

KPN and Telenor aren’t the only companies

poised for changes in Europe, however: several other firms in the

region have bulked up operations in recent months, including Host

Europe and its subsidiary firms, which have rolled out several

enterprise and managed-level services recently. Meanwhile, several

companies, including UK-based Web hosting firm Netscalibur, have

reported increases in business as a result of KPNQwest’s recent

troubles.

Terremark, which builds carrier-neutral

data center facilities, has expressed hope for an increase in data

traffic through Spain, having recently agreeing to construct a NAP

there. American firms like Chicago-based Hostway are moving full speed

ahead, as the company opened an office in the United Kingdom earlier

this year through a strategic acquisition; meanwhile, Rackspace Managed

Hosting continues to experience consistent growth through its own UK

office. And it is highly unlikely that Cable & Wireless have

completed making acquisitions, as the company is always reportedly in

the hunt for a good deal.

While Europe’s Web hosting industry may

be flagging, it is certainly not dead. And, like in North America, when

the dust settles, several leaders will emerge. Contrary to what many

may have believed even a year ago, however, the leaders will not be

smaller, nimble companies espousing terms like “first mover advantage”;

rather, they will be the larger, slower-moving corporate giants that

have always believed that slow and steady will eventually win the race.

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