Exodus takes pole position in race for ASP Web hosting

October 4, 2000

Exodus takes pole position in race for ASP Web hostingData services firm set to meet explosive demandBetween the growing use of application service providers and the return to thin-client applications, the need for data centers and

Exodus takes pole position in race for ASP Web hosting

Data services firm set to meet explosive demand

Between the growing use of application service providers and the return to thin-client applications, the need for data centers and managed services is exploding in the healthcare field. While some companies, such as InSite One, are building and maintaining their own data warehouses, others are looking to outside vendors to provide the safety net for their ASP offerings.

At the top of their list these days is Exodus Communications. The Web hosting firm counts as clients 45% of the top 100 Internet sites (including Yahoo!, Lycos, eBay, and Merrill Lynch) and claims to lead the market in server traffic exchanged. Market research firm IDC estimates the value of the U.S. Web hosting market at $1.8 billion for 1999 and expects it to increase 10-fold to $18.9 billion through 2003.

"Exodus really has one business--we focus on complex, mission-critical Web hosting," said Prabakar Sundarrajan, vice president of technology for the Santa Clara, CA-based company. "Our fundamental service offering is data centers, or site services, meaning space of various kinds, including secure cages, cabinets, and vaults. On top of that we offer fault tolerance and a high-performance, high-capacity Internet network."

Exodus currently accounts for more than 10 gigabits per second of data exchanged over the Internet, according to Sundarrajan. The hosting firm is a peering partner with various Internet backbone providers, including UUNET, AT&T, and Sprint, and it plans to have 36 data centers up and running worldwide by the end of 2000. Although many of its customers are dot-coms, half of its customer base comes from the enterprise side, up from 20% in 1998. A large portion of its customer base is made up of ASPs, including Siebelsales.com and Oracle business online.

"The Internet does change everything," Sundarrajan said. "People who were never connected are connected and connectable. This doesn't mean that it will roll over everything done before; rather, the emergence of the Internet is being used as a mechanism to augment real-world relationships."

What does all this mean for healthcare? With the lack of available dollars for healthcare IT investment, the HIPAA regulations, and the rash of e-health ASPs hawking low-cost wares, staying competitive in the market now means making information and applications available over the Internet. Outsourcing to a Web infrastructure company is a fast-track way to get into the online marketplace and succeed.

Healthcare represents one of Exodus' biggest growth opportunities, and the company already claims a number of major medical device and systems companies among its clientele, including GE Medical Systems, Global TeleMedix, ComView, and Lumedx. One key reason for this is Exodus' emphasis on security--both physical and virtual--a feature that is quite attractive to liability-conscious healthcare clients. The firm employs more than 200 people in its security division alone.

"Exodus has recognized the need for security from day one, and we offer prevention, detection, and remedy," Sundarrajan said. "For physical security, we can implement biometric authentication in addition to the other measures. For electronic security, we have a managed firewall service as well as intrusion detection."

Exodus is also moving aggressively into data storage through several high-profile partnerships, including ventures with EMC, Sun Microsystems, and StorageWay. The company will be offering customized storage based on client needs, according to Sundarrajan. Although Exodus does not target vertical markets, its storage products can be configured to meet specific healthcare industry requirements for long-term storage of medical records, including images. In fact, GE Medical is relying on EMC and Exodus for its own ASPstorage.

"Industry trends are being driven by customers who are saying, ‘if I can get away with trusting someone like Exodus to house bits for me, why should I cart around disks and tapes?'" he said. "Managing storage in-house is a difficult problem. We offer on-demand access to data, so that primary storage access is instantaneous, and a second layer of online tertiary storage. Customers decide how to break out their storage requirements."

Despite its growing dominance of this market, however, Exodus faces stiff competition. AT&T and IBM have announced an agreement in which IBM will offer Web hosting through AT&T data centers. WorldCom is in the process of acquiring local exchange carrier Intermedia not for its phone lines but for its data center subsidiary, Digex. And these companies join a field already crowded with major players like Verio, Qwest, and Global Crossing.

Industry analysts consider mergers between telcos and hosting firms a good fit, with telcos providing the network, and data centers the Web server infrastructure. While Exodus has been in talks this year with competitor Global Crossing and was considered a potential acquirer of Digex, it is not looking to partner with a phone company.

"Telcos are interested in selling services, tiered like everyone else, and fiber companies want to make sure that their piece of the pie doesn't shrink," Sundarrajan said. "We utilize leased buildings and leased wires. As long as there are wires, vendors will be selling their use."