With its $340m (£236.2m) bid to buy Digital Island last week,
telecommunications giant Cable & Wireless moved to expand its
IP and data services firepower by offering content delivery and
managed hosting services.
The move underscores the continued efforts of telecom providers to
take low-cost advantage of an ailing hosting market and reinvent
themselves with data and Internet services, analysts said.
According to Greg Howard, principal analyst and founder of the HTRC
Group, the acquisition reflects the growing importance of data
offerings in the telecommunications services mix.
"The focus now is on quality of customers, not the sheer number,"
Howard said. "C&W understands that value-added services are a
critical differentiation in the market."
San Francisco-based Digital Island leverages a global network of
datacentres and servers to speed Web content delivery and manage
Internet services.
Another company boosting its data offerings is AT&T, which has
quietly grown its own content delivery network service, AT&T
Intelligent Content Distribution, to complement a long list of IP
and data offerings.
"Having the hosting, content delivery service, and underlying
network is very important to us, for customer choice flexibility,"
said Rose Klimovich, director of AT&T's global IP network
services.
However, customers may prove reluctant to receive critical
applications from their network infrastructure provider, said
Warren Wilson, practice director at Boston-based Summit
Strategies.
Customers should field offers for their hosting and services needs
but must keep in mind possible integration headaches, he
added.
Citing Qwest's alignment with Hewlett-Packard and IBM, telecom
providers have a mountain of cash to spend to acquire IT expertise
beyond their internal grasp, said Lisa Perri of Aberdeen
Group.
Perri predicts that more acquisitions of hosting companies will
follow this year, possibly including big names such as Exodus
Communications.