And the Winner Is...? Rawlson King over at The Web Host Industry Review thinks the telcos will dominate web hosting for the next two quarters. "Predictably, the strongest firms will be the telcos, who will marshal their
vast resources to retain loyal customers and maintain scalable operating
processes. Leveraging their wealth, marketing and technology resources,
telecom behemoths such as Qwest (qwest.com), Worldcom (worldcom.com) and Cable and Wireless (cw.com) will continue to rollout significant competitive offerings."
I think he's half right. The key isn't telco-ness, it's financial strength independent of the web-hosting business. There are non-telcos that can and will weather this storm, such as IBM and EDS. They have the deep pockets that will keep them going until the supply/demand ratios for both bandwidth and data center space return to normal. Rumors have it that Exodus' data center assets will be re-valued downward in a restructuring deal, perhaps with EDS or Cable and Wireless. With data centers being valued below the cost to build them from scratch, the pendulum is swinging to the other extreme. I predict it will take about two years to come back to the middle (i.e., fair-market valuation), and web-hosting services must be able to stick it out that long in order to survive.
Posted Tuesday, November 27, 2001 2:14:32 PM