Bigger may be Better but not always

Sat, 20th November 2010, 16:17

A week of evolving continued in the hosting industry with a few stories of bigger is better announcements.

Many pregnancies have a shorter duration than the “breaking” news that could only qualify as the worst kept secret in the industry. After months of speculation, and a leaked confidential email giving the whole world advance notice, the world yawned as SoftLayer finally “officially” welcomed The Planet customers into the SoftLayer fold.

The new welcome page on both companies websites appeared to genuinely express excitement about sharing the new opportunities that the merger brings the customers of both companies. Boldly proclaiming “Bigger. Better. Badder.

Along with a little video clip, the page extolled “Together, our two companies are stronger than ever, with expanded capabilities that will bring you increased opportunities and even more value. There is strength in numbers, and SoftLayer today is the largest private hosting company in the world, positioned to leverage our all-new scale for your benefit, including:

-Ten data centers nationwide

-25,000+ customer accounts in 110+ countries

-76,000+ deployed servers”

Certainly the merger will resolve a number of outstanding issues such as the ongoing litigation between The Planet and SoftLayer. It was only in August that Softlayer announced it had been acquired by GI Partners, a private trans-Atlantic investment firm that oversaw the 2006 merger of EV1 and The Planet. GI Partners appear to have an insatiable appetite for anything host or data center related.

Layered Technologies also announced that it has acquired dedicated and managed Web hosting specialist, GSI Hosting (GSI) to boost it’s growth within the enterprise managed services sector.

No financial terms were provided but Layered Tech did report in February 2010 that it had gained a significant amount of growth equity funding from a group of investors led by private equity investment firm, Accel-KKR.

Layered Tech benefits not only from a solid roster of customers in the consumer goods and financial industry but GSI’s wholly owned 77,000 square-foot data center based in Kansas City, MO. GSI also owns other facilities in Canada and Europe, Layered Tech stated in the release.

ServInt, a provider of managed hosting for enterprises announced it had completed a series of core routing upgrades and network additions resulting in an increase of more than 200 percent in overall capacity.(they tripled their network capacity!) ServInt achieved these upgrades with no customer downtime.

The press release states “This series of extensive network-infrastructure upgrades allows for optimum network stability and performance as ServInt’s customer base continues to expand. The upgrades are in response to recent rapid growth of ServInt’s customer base, as well as in preparation for upcoming projects. The upgrades enable an 8-10x increase in reserve network capacity, which is critical in an environment where clients increasingly require a network that can handle extreme demand spikes without network degradation.”

Each of these acquisitions and capacity upgrades can, and do bring a measure of increased service and stability to the hosting industry. At the same time, the concentration of ownership in the hands of a few Financial Equity companies that strive to return greater profits to their shareholders and investors, will not always be in the best interest of the consumers of these hosting services.

I believe the Softlayer webpage said it best.... "There is strength in numbers”

A historical glance to the past will likely confirm that for the consumer of goods, Bigger and Better is almost always Badder.

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