The Re-Changing of the Guard

Is the web hosting industry in trouble? On the contrary. This week we've seen three large deals that suggest it's as healthy as ever - if you're a huge brand name company. Think of it as the re-changing of the guard. The implosion of the New Economy Internet infrastructure companies is nearly complete, with Global Crossing a scandalized ruin and would-be survivors such as XO and Williams preparing to join about 45 of their competitors in Chapter 11.

Meanwhile, IBM, WorldCom and Sprint are giddily swimming in huge piles of web hosting cash as they book megadeals. IBM won a web outsourcing contract from American Express that will be worth $4 billion over the next seven years. Meanwhile, WorldCom signed a hosting/colo cross-marketing deal with Compaq, and Sprint lured WeatherBug, one of the top 50 Internet properties.

The chief remaining question concerns the size of the crumbs that will fall off these giants' table, what size industry this remaining business can sustain, and what kind of companies (beyond IBM, Sprint and WorldCom) can earn customers' confidence and business.

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