European Hosts Look to New Services, Markets For Growth

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European Hosts Look to New Services, Markets For Growth
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Adam Eisner, theWHIR.com
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April 24, 2002 – Last year was obviously
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a tough one for Web hosting companies both in Europe and abroad. The
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collapse of the tech economy posed a difficult challenge to the
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business models of many hosting firms, which were already facing slim
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profit margins in an ultra-competitive business environment.
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As a result, some major players in
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Europe’s hosting market are investigating new markets and services to
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gain more clients and boost their bottom lines. This might be a more
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difficult challenge than in North America, as some consider Europe’s
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hosting market more difficult to penetrate because of its size,
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cultural boundaries and slower take-up of new technologies.
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One company that has made it clear it intends to tinker with its strategy is Host Europe,
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a major pan-European Web hosting firm. Unlike many other companies,
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however, Host Europe is not seeking new opportunities due to financial
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distress – rather, the company is looking to further solidify itself as
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a major player in Europe’s Web hosting industry by offering a wider
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range of services. To date, Host Europe has focused mainly on shared
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Web hosting, dedicated servers and domain name registration. But while
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it has experienced surging growth in all aspects of its business, the
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margins involved in services like shared hosting are thin. Therefore,
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while the company is not disposing of its shared Web hosting business,
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it appears to see a wealth of opportunity in the high-end, managed
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services sector.
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This was made clear earlier this week
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when Dedicated Servers, Host Europe’s dedicated hosting division,
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announced the availability of enterprise-level services. The company’s
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announcement was consistent with its 2001 annual report, in which it
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told investors the company had its eye on the high-end service roster,
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and that it believed Germany was a prime market for the company to try
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to penetrate. As a result, the company made a strong push in to Germany
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during the second half of 2001, acquiring 51% of One-2-One Advertising
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& Telecommunications, which provided a number of Internet services.
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“In Germany, we believe that the market
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for hosting solutions is less developed that that of the UK,” the
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company said in its annual report. “We see considerable further
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potential for growth in demand for our dedicated server range.”
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But while Host Europe is counting on
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Germany to help maintain its surprising growth levels this year (the
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number of domains under management, shared accounts and dedicated
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accounts all more than doubled in 2001), other companies have had mixed
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results. One example is Redbus Interhouse, a European carrier-neutral
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co-location company that maintains facilities throughout Europe.
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Like most other hosting firms, Redbus Interhouse
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was forced to react quickly to the tech downturn when it became
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apparent that the outlook for the entire communications sector wasn’t
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good. This meant placing less of an emphasis on underdeveloped
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facilities and services, which led to the company terminating the lease
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on its Munich data center at the end of last year. However, the company
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still has a bright spot in Germany: its Frankfurt facility is what
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Redbus calls one of its “three principal” facilities, along with one of
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its London facilities and one in Paris, where most of its clients are
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located.
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And although it has scaled down its
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efforts in the German market, the company recently opened a new data
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center in the Czech Republic, confident of future success in central
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and Eastern Europe. With the opening of its new Prague data center, the
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company now has 261,000 square feet of data center space across Europe
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in several different markets.
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In light of the current business climate, one company that felt a significant overhaul was in order was Denmark-based EuroTrust,
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formerly known as Euro909. As Euro909, the company provided a suite of
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Internet services that included domain name registration, Web hosting
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and digital security services. Since the company changed its name and
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ticker symbol last year, however, the company has chosen to focus on
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secure Internet services, including secure Web hosting.
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EuroTrust now offers a “circle of
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security services,” including trust certificates, Virtual Private
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Networks, remote data backup and payment processing. The company is
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also a major VeriSign affiliate in several European countries.
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In its 2001 annual report, EuroTrust said
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it had “transformed” the company “in to a leading provider of Internet
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infrastructure services through an aggressive program of licensing,
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acquisitions and joint ventures, while divesting and restructuring its
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media and telecommunications properties.”
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Whether the new ventures these firms are
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embarking upon will work out is yet to be determined. The success of
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these new services and markets will be more important to the bottom
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lines of some companies than others, but in each case, they have deemed
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the change necessary in order to sustain growth.