Experts: Despite Sprint Closings, DellHost Strong

• By theWHIR.com , June 13, 2003

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Adam Eisner, theWHIR.com

June 13, 2003 -- (WEB HOST INDUSTRY REVIEW) -- When telecommunications giant Sprint announced it would shutter its E|Solutions unit and exit the Web hosting business earlier this week, it sparked an immediate debate among the Web hosting community regarding the future of DellHost, Sprint's shared and dedicated Web hosting brand. Several discussions emerged regarding what the future might have in store for the Web hosting firm Sprint purchased from Dell in 2001.

Melanie Posey, an analyst at research giant IDC (idc.com), said she expects that despite Sprint's exit from high-end hosting, little will change on the lower end. Posey said the closings pertain only to operations within the company's Global Markets Group, which includes Sprint E|Solutions - the firm's higher-end hosting unit. "I haven't heard that Sprint is planning to get rid of DellHost as part of the exit from managed hosting and co-location," she said. "The DellHost unit actually sits in Sprint's Mass Markets Organization and I think DellHost's shared and low end dedicated solutions may actually be key components of Sprint's SMB bundling strategy."

Posey also said she believed DellHost's financial performance was likely better than the rest of Sprint's hosting unit. "I doubt that DellHost is the operating cost sinkhole that the high-end hosting business was, so there's probably not as much management pressure to get rid of it."

Other industry watchers, however, believe a transfer of ownership at DellHost is likely. "It's safe to assume that Sprint has been in active discussions with other providers about its customers," said Rich Miller, editor of CarrierHotels.com (carrierhotels.com). "DellHost is attractive because it represents the chance to acquire a critical mass of customers who are likely to sit tight and see what kind of service the new ownership provides."

Several companies have been tossed about as potential suitors for the company, including Hewlett Packard and Computer Sciences, which recently purchased Genuity's managed hosting operations from Level 3 Communications, he said.

Regardless of whether the company is sold, experts agree that the DellHost brand will likely remain, with or without the backing of Sprint. The brand's staying power, they say, has impressive strength. "The fact that Sprint maintained the DellHost brand after it acquired the business indicates that the Dell brand name carries a good amount of marketing weight," said Shirley Siluk Gregory, senior analyst at ebi Group (ebigroup.com), a marketing intelligence firm for companies targeting the small to medium-sized business sector. She added that DellHost's brand was especially strong "among the target audiences of individual consumers and small business owners."

CarrierHotel.com's Miller expressed similar sentiments. "The Dell name has enough marketplace mojo that an acquirer would be wise to retain it at least for the near future - unless the buyer is a rival equipment maker like HP or IBM," he said.

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