Intel scraps Web hosting business

Intel is closing its Web hosting business after less than three years of operation and will take a $100m (£67m) charge in its...

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.

Read more on E-commerce technology