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NETWORK WORLD NEWSLETTER: JEB BOLDING
on APPLICATION SERVICE PROVIDERS 10/17/01 - Today's focus: Relera pulls out of MSP market Dear Wincenty Kaminski, In this issue: * Another managed service provider exits market * Links related to ASPs * Featured reader resource _______________________________________________________________ This newsletter sponsored by Fujitsu Website Performance from Fujitsu Software. FREE Web site Performance Evaluation. Take advantage of our Budget Buddy Three for Two Offer. Try Fujitsu's QoEtient web site performance service for FREE to monitor your web site. Already familiar with the value we deliver? Sign up for Budget Buddy and stretch your dollars. Diagnose, address and solve complex web site issues with: performance and availability monitoring, SLA monitoring, transaction monitoring, security audits, alerts, and reporting of the quality of experience from the end user perspective http://nww1.com/go/3457582a.html _______________________________________________________________ YOU LOVE THE MAGAZINE. YOU'LL LOVE THE EVENT. Network World's popular annual BUZZ issue is now a LIVE event - Buzz 2001: Emerging Technologies for Your Network. This FREE, one-day seminar is the only place to find out breakthrough technologies about to hit your network. Tour starts in San Jose, CA on October 30 and New York, NY on November 1. Register NOW at http://www.networkworld.com/go/go24.jsp _______________________________________________________________ Today's focus: Relera pulls out of MSP market By Jeb Bolding It didn't make headline news in the Wall Street Journal, but about a month ago, Relera, a hosted service provider in the second-tier marketplaces, said it was getting out of the managed services business and laid off about 83% of its workforce. No doubt, the company is headed the same direction as Exodus. I know Relera, which now plans to offer customers space in its data centers, is joining an esteemed group of failed Internet businesses in the class of 2000-2001, but I felt this one particularly hard. Part of the reason is that Relera is located here in Denver, so the company is more part of my landscape than the firms in Silicon Valley, where I left a few years back. Relera's collapse as a managed service provider is tough because I'd spent some time visiting the company and got to know several of the people working there. I toured its brand, spanking 50,000 sq. ft. data center located just south of Denver. I'd been to the data centers of Exodus and Level 3, but the Relera facility was absolutely incredible. It boasted two substations, state-of-the-art security mantraps, the whole works - but it was also empty. No, strike that, it had one 6x6 cage filled with hardware. Another reason, and the most important one that makes Relera's failure seem so heavy to me, is that I actually bought into its business model. Relera's argument was that it was not going to go after dot-coms, which were dropping like flies at the same time Relera was opening its data centers. Nor was it going to target the top-tier cities in the world like London, Paris, New York, and San Jose, where they are saturated by the likes of Exodus, Level 3 and Abovenet. Instead, it was going to focus on selling facilities space to enterprises that were interested in developing e-business systems or collocating their internal infrastructure. Relera was targeting these enterprises in second tier cities such as Memphis, St. Louis, Denver, and Salt Lake City. It all seemed like a pretty good idea. In fact, it still seems like a good business plan, even with the excess capacity that the failure of some service providers, such as Exodus, and the disappearance of startups that were potential customers, are causing. Most of that excess is in the top-tier cities while the second and third tier cities are still strapped for local data center space. However, one thing I didn't know, though I should have guessed, was how much money Relera had spent on opening up these state- of-the-art collocation facilities. I suspect that the tens of millions of dollars Relera spent upfront, and the subsequent operational costs, killed it before it really had a chance to test its business model and target market. This situation reminded me of something in my past. When I used to move antique furniture, we'd inevitably break off a leg or damage a table edge because of dry-rot in the furniture. To this day, I will not sit on antique French chairs - give me a good ol' 18th century, boring English country furniture any day. When we did break something, our common mantra was "good enough for government work." I did work at the Voice of America so I don't feel too bad in saying something like that. The point is, and the lesson for Relera is, that sometimes just good enough is good enough. If it'd taken a few shortcuts in its data center implementations, and not tried to bowl prospective customers over with the complexity and obvious cost of its systems, it might have lasted long enough to really test out a business model that I think had a reasonable chance to succeed. _______________________________________________________________ To contact Jeb Bolding: Jeb Bolding is senior consultant with Enterprise Management Associates in Boulder, Colo., an analyst and market research firm focusing exclusively on enterprise management. Bolding has 10 years of experience in the network systems industry, most recently with eCollege.com, an ASP for higher education, where he was director of product development. He can be reached at mailto:jbolding@enterprisemanagement.com. _______________________________________________________________ RELATED EDITORIAL LINKS Relera http://www.relera.com/ Network World info on Exodus http://www.nwfusion.com/news/financial/exodus.html Breaking ASP news from Network World, updated daily: http://www.nwfusion.com/topics/asp.html Archive of the ASP newsletter: http://www.nwfusion.com/newsletters/asp/index.html ______________________________________________________________ FEATURED READER RESOURCE Audio Primers Are you behind on the basics of technologies such as ATM, IP Multicast and VPNs? Check out our library of audio primers - quick explanations of networking topics and technologies, including IPv6, SANs and DSL vs. cable. These less-than-10- minute primers will not only explain how these technologies work, but they'll also show you through slides and diagrams. http://www.nwfusion.com/primers/index.html _______________________________________________________________ May We Send You a Free Print Subscription? You've got the technology snapshot of your choice delivered at your fingertips each day. Now, extend your knowledge by receiving 51 FREE issues to our print publication. Apply today at http://www.nwwsubscribe.com/nl _______________________________________________________________ SUBSCRIPTION SERVICES To subscribe or unsubscribe to any Network World e-mail newsletters, go to: http://www.nwwsubscribe.com/news/scripts/notprinteditnews.asp To unsubscribe from promotional e-mail go to: http://www.nwwsubscribe.com/ep To change your e-mail address, go to: http://www.nwwsubscribe.com/news/scripts/changeemail.asp Subscription questions? Contact Customer Service by replying to this message. Have editorial comments? Write Jeff Caruso, Newsletter Editor, at: mailto:jcaruso@nww.com For advertising information, write Jamie Kalbach, Fusion Sales Manager, at: mailto:jkalbach@nww.com Copyright Network World, Inc., 2001 ------------------------ This message was sent to: vkamins@enron.com
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