After The Fire, Opportunity

Two big stories have shared this week's headlines: intense wildfires burning in the West, and WorldCom putting an exclamation point on the telecom meltdown. In an odd way, one serves as a metaphor for the other. A wildfire is unrelenting and unpredictable, burning off dead wood as it advances. Yet it's also true that forests experience some of their most dramatic growth in the immediate aftermath of a fire, the scorched earth providing a fertile environment for new life. Is this possible for the data center business? A number of industry observers think so.

This week several analysts are saying the continuing bankruptcies and the abrupt departure of Loudcloud and Intel from the hosting sector are actually good news, clearing the playing field for newer players to establish a profitable niche. In its article Hosting Turmoil No Surprise, The WHIR summarizes sentiments seen in several similar media stories this week.

Some in the venture capital community are also focusing on potential opportunities in data centers. Kodiak Venture Partners today affirmed its focus on the data center sector, saying it sees opportunity in storage management. Meanwhile, Venture Wire has scheduled Data Center Ventures, a September conference designed to showcase opportunities for private equity investment in startups targeting the storage and security markets.

Some investment managers even think it's time to selectively shop for telecom stocks. In a story titled Trolling For Value in Telecom, Fortune outlines the case that it's a good time for investors to do some bottom fishing, citing SBC as a favored pick.

Do these reports provide mounting evidence that we've hit bottom? Not as far as timing is concerned. But they reinforce a belief held by most of us still working in this industry: there will eventually be a profitable business rising from the ashes.