Europe?s Hosting Woes Accompanied by Silver Lining

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Europe’s Hosting Woes Accompanied by Silver Lining
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Adam Eisner, theWHIR.com
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July 10, 2001 – Like most other Web
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hosting markets, Europe has seen its fair share of difficulties over
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the past year. Several companies have closed shop, others have been
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sold, and the WorldCom debacle is already having a negative effect on
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the marketplace.
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But while Europe’s hosting troubles have
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been bad news for most, it has opened up a number of opportunities for
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companies with a solid business plan and a bit of capital to spare. As
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a result, several firms have decided that now is the time to bolster
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their presence in Europe’s Web hosting market. Some appear to be
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choosing the path of acquisition, while others are focusing on organic
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growth.
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One firm that is likely to increase its
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presence soon, albeit probably a little reluctantly for reasons of
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pride, is Dutch telecommunications firm KPN. The company is reportedly
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on the verge of purchasing a significant portion of KPNQwest, a
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Pan-European carrier it helped start in 1999. KPNQwest was a joint
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venture between KPN and US telecommunications firm Qwest, and went
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through a great deal of well-publicized financial trouble before
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finally going bankrupt in May.
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While KPN would essentially be picking up
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the pieces of its own shattered venture by acquiring any KPNQwest
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assets, it also has a great deal to gain by doing so. The company would
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likely acquire a world-class network and facilities for a shockingly
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low price at a time when much of the competition appears to be fading
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quickly.
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Another European telecommunications firm
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in for a few changes in the upcoming months is Norwegian
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telecommunications firm Telenor, parent company of Nextra, a UK-based
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managed services provider.
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Founded in 1991, Nextra provides a wide
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range of services including enterprise hosting, IP VPNs and managed
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infrastructure services. According to reports, Telenor feels its brand
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is currently less than recognizable the UK despite being a leading
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European communications firm. As a result, Telnor is planning to boost
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Nextra’s managed infrastructure and application hosting offerings in
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the region during the next few months.
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A Nextra executive recently told
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vnunet.com that Telenor also intends to increase its recognition in the
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UK by re-branding Nextra as Telenor Business Systems as of September 2
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in order to bolster the company’ s brand. Vnunet also recently said
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Nextra would back its managed infrastructure services by offering a
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£1bn insurance policy against loss of business in the case of
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significant downtime, and that the company is looking at bolstering its
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ISP and IT service portfolios.
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KPN and Telenor aren’t the only companies
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poised for changes in Europe, however: several other firms in the
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region have bulked up operations in recent months, including Host
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Europe and its subsidiary firms, which have rolled out several
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enterprise and managed-level services recently. Meanwhile, several
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companies, including UK-based Web hosting firm Netscalibur, have
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reported increases in business as a result of KPNQwest’s recent
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troubles.
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Terremark, which builds carrier-neutral
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data center facilities, has expressed hope for an increase in data
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traffic through Spain, having recently agreeing to construct a NAP
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there. American firms like Chicago-based Hostway are moving full speed
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ahead, as the company opened an office in the United Kingdom earlier
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this year through a strategic acquisition; meanwhile, Rackspace Managed
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Hosting continues to experience consistent growth through its own UK
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office. And it is highly unlikely that Cable & Wireless have
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completed making acquisitions, as the company is always reportedly in
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the hunt for a good deal.
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While Europe’s Web hosting industry may
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be flagging, it is certainly not dead. And, like in North America, when
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the dust settles, several leaders will emerge. Contrary to what many
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may have believed even a year ago, however, the leaders will not be
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smaller, nimble companies espousing terms like “first mover advantage”;
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rather, they will be the larger, slower-moving corporate giants that
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have always believed that slow and steady will eventually win the race.
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