Data center 'survivors' feeling a resurgence

Companies that made it through dot-com bust are seeing profits rising.
SCRIPPS HOWARD
The Internet data center industry has gone from boom to bust and now appears to be on the rise again.
The centers, which provide secure locations for data storage and Web-hosting services, are reporting increased demand from companies seeking to outsource or back up their information-management systems.
Last month's announced sale of Denver-based Inflow to Pennsylvania-based SunGard Data Systems could be just one indication of a recovering market.
Inflow, which operates 14 centers nationwide and employs 235 people, had been doing well since closing four of its centers a couple of years ago and restructuring its finances, and it had become an attractive takeover candidate. Both Inflow and SunGard have earned good reputations in the post-Sept. 11, 2001, world for providing data backup or "disaster recovery" services.
Art Zeile, Inflow's chief executive and Denver telecom executive of the year in 2000, sees the sale to the much bigger SunGard as an opportunity to offer more services and enter additional markets.
"I'm certainly excited about our prospects," he said in a recent interview.
Growing demand
Around the country, much of the Internet data space built during the telecom boom has been mothballed or converted into other uses -- even fitness centers. That, in part, has helped the industry recover.
"We're now seeing the benefits of being a survivor in an industry where probably eight out of every 10 companies [nationally] either became insolvent or had to sell [centers] in some sort of distressed fashion," said Roy Dimoff, chief executive officer of ViaWest.
Dimoff adds that growing demand also is a factor -- privately held ViaWest alone projects that revenues are growing at about a 50 percent annual rate.
"What we're seeing at ViaWest is that almost 45 percent of the sales are coming from our current [customer] base, which means they're doing well and need more services. That's good news for us and the industry," said Dimoff.
ViaWest's customers include eCollege, which provides online learning services, and MapQuest.
Lee Woodward, chief executive officer of Data393, reports similar success.
"We managed to fill the 6,000 square feet we had and are working diligently to fill" the company's 6,000-square-foot addition, he said.
In the past, too many players were chasing too few customers. Today, Woodward says, "our real competitor is the closet that our companies keep their computer servers in. We provide a more robust and reliable place to put the server, but not as convenient. We provide power and cooling all the time, monitor (operations) 24/7 and provide multiple Internet connections."
Increasing revenue
Dimoff referred to a study by Massachusetts technology consulting firm IDC that predicts revenues from Web-hosting services in the United States will grow at a rate of about 14 percent a year.
In a study this year on IDC's Web site, analyst Melanie Posey stated "the U.S. Web-hosting services market has begun to recover from the multiple shocks of economic recession, Internet industry meltdown and supply-side turmoil."
Another IDC report released in Europe indicated that many chief information officers favor outsourcing the management of their communications infrastructure so they can focus on the company's core business.