Intel is closing its Web hosting business after less than three
years of operation and will take a $100m (£67m) charge in its
second fiscal quarter as a result of the move.
The company launched its Intel Online Services (IOS) Web hosting
business in 1999 but is now winding down operations due to a poor
outlook for the Web hosting market. Intel will support customers
who had signed up for the service for the next 12 months while it
works to move them over to a new hosting company.
"The bottom line was that future growth and financial projections
did not meet Intel's requirements," said Intel spokeswoman
Christine Chartier.
Customers of IOS include Sony, The US Army and the American Stock
Exchange. The services supplied include managing servers and Web
sites.
Intel's departure from Web hosting comes after many major providers
struggled in the business, most notably Exodus Communications,
which filed for bankruptcy protection late last year.
Intel once had grand plans for IOS, spending $150m to build a
facility that housed 10,000 servers, three 1.5 megawatt generators
and a 5,000-gallon diesel tank to fuel the generators. The company
once planned to open 12 similar centres around the world.
Web hosting is not the first business that Intel has pulled out of.
Earlier this year it said it would close its consumer products
division, which produced digital cameras, media players and similar
products. This move, along with the end of IOS, marks a trend at
the company to refocus its efforts on its core microprocessor
business, Chartier said.
"Obviously in the IOS situation, and I am sure with the consumer
products division as well, we did extensive research of the
business," Chartier said. "We are a large company and have certain
requirements for a business unit and looking at those and the
overall market trends that we were seeing, they were not looking
good for overall performance requirements."
Other companies such as IBM and Electronic Data Systems could
potentially take on some of the IOS customers, Chartier said.