Mr. Mesniaeff: I would agree with Erik on that. I also think it's important to note, and I think it is evident from the points he made, that there is clearly a trend to outsource a lot of the IT infrastructure at large organizations, such as large banks, brokerage houses and Fortune 500 companies that were once handled in house. Add to that the huge explosion in storage resources that are now needed to warehouse data, and you have a perfect storm for a very nice growth outlook for this space.
TWST: Greg, do you have any thoughts on managed hosting versus the colocation
business model? Is one better than the other? Does one represent better future
growth prospects?
Mr. Suppiger: I don't look at the two industries as necessarily having
tremendous overlap between the managed hosting and the colocation. To a certain
extent there is overlap. If you're looking for somebody to host your Web site,
you could either go in the colocation and do it yourself, or you could go into
managed hosting. But to a large extent, at least if you're looking at the
neutral colocation players, there's a very compelling aspect of just leveraging
the community of service providers to get better bandwidth distribution. If you
look at somebody like Switch & Data, only about 5% of their revenues come from
outsourced enterprise accounts; 95% of their business comes from service
providers that are just leveraging the neutral access to other service provider
networks. So something like that doesn't necessarily have a competitive or
overlapping dynamic with managed hosting. Managed hosting is much more about
getting somebody that's going to operate your infrastructure or operate the
applications for you; that's not necessarily an overlap with the neutral
colocation providers.
Tickers included in this excerpt: CSCO, EQIX, INAP, LLNW, LVLT, RAX, SDXC, SVVS, T, VZ
For more information call (212) 952 7433. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.