Global web host on the prowl

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Global web hosting outfit Hostway Corporation has landed in Australia and will look to acquire local companies with similar services on the back of expected consolidation in this market over the next 12 months.

Positioning itself as the only web hosting company with a global services strategy, US-based Hostway claimed it one of the five largest pure play web hosting companies in the world and has not used any outside debt for capital funding.

Michael Farrell, GM of Hostway in Australia, claimed the company had been profitable since its inception in 1996 and has 100,000 customers worldwide, of which 350 are located in Australia. It provides services for the Bondi Surf Club and The Flight Attendants Association of Australia and has five staff in Australia, he said.

The company will compete heavily in this market with established hosting players like WebCentral with services such as domain name registration, shared hosting, ecommerce hosting, dedicated servers and complex hosting on Microsoft and Linux platforms.

Hostway will target Australian small and medium businesses – from two to 100 employees - that require low cost web hosting services, he said.

“We want to be the best value web hoster in Australia. We will invest in marketing our products and services – I don't see much true marketing of web hosting [going on] at the moment,” he said.

Farrell claimed Hostway can provide more disk space and data downloads at a lower price point than competing companies as it can share its overheads across a larger number of customers.

The company also “builds its own” hardware and does some software development work in-house, he said. Initially, Hostway will offer services predominantly out of its datacenter in Chicago. It will also look to use an existing datacenter in Sydney from a datacenter provider such as Fujitsu or Global Switch.

Lloyd Ernst, CEO at established web hosting company WebCentral, agreed that there needs to be some consolidation in this market as there are still several unprofitable companies still operating.

“You need a broad set of product sets if you're trying to grow the business organically, the smaller guys don't have that,” he said.

He said there was room for other players such as Hostway that have the right product sets. Hostway will face stiff competition from WebCentral in the SME hosting market. Between 40 and 50 percent of WebCentral's revenues in Australia are generated from businesses with up to 100 employees, Ernst said. WebCentral is also on the lookout for potential acquisitions, he said.

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