Cable & Wireless touts new hosting package amid U.S. market pullout

The hosting vendor said the best way for it to find a new buyer is to keep itself viable

Three months after its London-based parent company, Cable & Wireless PLC, announced its exit from the U.S. market, Cable & Wireless in the U.S. plans to unveil a new "business ready hosting" offering to customers to try to shore up its business holdings for a potential buyer.

The company was scheduled to unveil the new enterprise hosting package today but delayed the announcement at the last minute until later in the week.

The new hosting package, which will include collocation services, connectivity, security and backup and restoration capabilities, will tie together all of the company's main services for the first time in one bundle, said Jason Weisberger, vice president of product management and partner development at C&W in the U.S., which is based in San Francisco.

The new offering comes despite the announced U.S. market pullout in June (see story), when the parent company said losses of $1 million a day were forcing it to redraw business plans here. C&W was the knight in shining armor for many businesses in November 2001 when it paid about $575 million for former hosting vendor Exodus Communications Inc. and continued to serve that company's hosting customers, many of whom had been caught by surprise when Exodus ran into trouble and shut down (see story).

Just one year later, C&W said worsening market conditions were pushing it out of the U.S. market (see story). The company has been seeking a buyer for its remaining U.S. operations since then so its customers would have continued service.

Asked how prospective customers should view C&W's new product bundling in light of its past efforts to pull out of the U.S., Weisberger said: "We'll see how people will respond to it. Right now, we're not concerned."

Laurie Probst, vice president of marketing at C&W U.S., said the company will use the new offering to beef up its customer base to entice a buyer. "It's our job to retain the value of this company," Probst said. "C&W does see value in the U.S. business, and we continue to move forward."

One existing customer, Adam Lavine, CEO of wireless messaging start-up FunMail Inc. in Pleasanton, Calif., said he's satisfied enough with C&W's service that he signed on for the new business-ready hosting bundle.

"We were willing to give them a try," Lavine said. "It seems to me that they are trying to find a buyer" and that C&W's plan is to have a solid customer base to make it a more attractive buyout target. So far, he said, C&W's retrenchment plans have not negatively affected his customer service dealings or network reliability. "I would have to think they're motivated to do a good job here," Lavine said.

Analysts, however, said C&W is in danger of confusing potential customers with its mixed messages.

"It does seem kind of like a company in conflict there," said Laurie McCabe, an industry analyst at Summit Strategies Inc. in Boston. "It sounds like maybe it's a last-ditch attempt by people on this side of the Atlantic to resuscitate things."

For customers, McCabe said, "it's not that hard to find a hosting provider with similar services, so why would you go with someone who's waffling?"

Enterprise customers are concerned about the viability of their vendors today, she said. "You want to feel like the vendor is in it for the long haul." McCabe said. "They're giving mixed signals."

Stephen Lane, an analyst at Aberdeen Group Inc. in Boston, said the new product offering could be a tough sell to new and existing customers because "the company as a whole has shown [insufficient] commitment historically to really making a play for the U.S. market."

Meanwhile, Melanie Posey, an analyst at IDC in Framingham, Mass., said the new product bundle gives C&W a chance to continue with its business so it can find a suitor. "They kind of have to maintain the business they have in order to eventually sell it to somebody else. That's what this is about."

Copyright © 2003 IDG Communications, Inc.

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