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Rich Miller's Wired Space Weblog

October 18, 2001

Update on Exodus Centers

When Exodus filed for Chapter 11 bankruptcy protection late last month, the company made a point of reassuring customers that all its operating data centers would remain open. To save costs, the company was abandoning 10 data centers that were under construction, but would not be closing centers that housed customer equipment. "The filing will have no material impact on our current customers," Exodus stated.

If it sounded too good to be true, it was. In court filings and executive interviews, the company is now talking about "customer transitions" between facilities.

"In cases where we have very underutilized or inefficient data centers, we're evaluating whether there can be a customer transition plan," Exodus chairman William Krause told Tele.com magazine, adding that there "aren't many of those."

Meanwhile, bankruptcy court filings indicate that Exodus has "identified several foreign operations that may be closed" and has asked the court to allow it to spend $5 million to "transition customers from the closed IDCs to other operating IDCs," among other things.

At the time of its bankruptcy filing, Exodus said that 27 of its 44 operating data centers were profitable. Competitors are circling, offering migration programs designed to attract hosting customers who are anxious about Exodus' future. Some former Exodus customers, like Loudcloud, have publicly acknowledged their shift to other providers.

It's too early to say how these defections may impact Exodus' ability to reorganize. But customers whose equipment is housed in less-than-full facilities are left to wonder whether there's a transition in their future - and if there is, whether they want it to be to another Exodus IDC or another provider.

Posted by RichM at October 18, 2001 10:31 AM
Comments

I think that there are a lot more hosting options available now than there were back when much of the equipment that is in these underutililized facilities was placed there. Many of these companies have not moved because of the various involved costs. Given that they now have no choice I think many will pursue options they have been keeping on eye on elsewhere.

Posted by: B Shaw at October 19, 2001 11:58 AM

We will be moving our equipment to a much more financially stable competitor. Due to the help of the competitor, the move is not nearly as difficult as we had originally thought it would be. My suggestion: Take advantage of the situation with Exodus' competitors. Don't move to another Exodus facility - they are operating on skeleton staff and employee morale is hitting the dirt. You won't get the service or safety you need from Exodus.

Posted by: A Nields at October 20, 2001 07:39 PM

Here's a piece of advice for Exodus customers who may be weighing their options : evaluate the tactics that other providers use to try and get you to switch. Do they use manipulative or misleading information to make you apprehensive about Exodus?

Based on the responses to several items I've posted about Exodus, I strongly suspect that some of those posting comments are sales people for other providers, rather than customers with legitimate insight into Exodus.

Posted by: Rich Miller at October 22, 2001 09:38 AM

There's not exactly a plethora of comments here in which to couch a sales pitch! Speaking for myself, I'm neither a customer of Exodus nor a sales rep. for anyone.

Posted by: B Shaw at October 22, 2001 10:48 AM

B Shaw: I'm glad you followed up. In the interest of clarity, my reference was to other posts, both here and in several previous entries I've written about Exodus. You're one of the folks whose comments add something to the discussion! thanks.

Rich

Posted by: Rich Miller at October 22, 2001 11:10 AM

A Neilds: I find your statement about moving to a "more financially stable competitor" rather ridiculous. You appearantly haven't seen the market. Rich Miller makes a good point in saying to weed through the sales lies, they are desperate efforts of a non financially stable competitor.

Exodus will be fine without small customers (aka dot com die-outs), they can survive off the income they get from their 500 biggest customers who aren't going anywhere. It was what their Business Plan originally stated, and that is to only seek enterprise level clients.

Posted by: B Minst at October 23, 2001 11:54 AM

B Minst: I fail to see how you can claim the statement "moving to a more financialy stable competitor" ridiculous when he/she didn't name where they were going. Do you know where this person is going or are you the one randomly flaming the competitive landscape with pro Exodus sales lies? To be sure, most competitors probably are in financial straights but I would guess there are at least a few who are not (or are at least more stable than Chapter 11: AT&T, UUNET/Worldcom, Qwest to name a few of the top of my head)

Posted by: B Shaw at October 23, 2001 02:16 PM

The harsh reality for Exodus is that it has to offer its customers some real-world reassurance about the "end game" of its bankruptcy, or customers will jump ship. My grievance with Exodus' rivals is that they should be able to sell based on their own competencies, rather than simply waging a FUD (fear, uncertainty and doubt) campaign regarding Exodus. But every day Exodus spends in Chapter 11 without articulating a clear outcome for its customers serves as ammunition for the FUDmongers. Exodus said "everything is fine" often and then filed for bankruptcy. As a result, it doesn't have a lot of credibility when it offers a similar message now.

Posted by: Rich Miller at October 24, 2001 08:55 AM

I'm sure Exodus has probably spread their own versions of FUD w/r/t to their competitors in the past. It may not be fair to customers but its probably a facet of every industry from telecom to financial products. What intrigues me more is that choosing between the offerings of Exodus and some of their competitors is not necessarily a choice between two apples differentiated only by FUD. As choices such as MSPs, virtual hosting and neutral colo creep in, customers have more substantial criteria on which to base hosting decisions. This is not to say that any method is inherently better than any other - the perfect fit surely must depend on the unique needs of each customer. From what I've read elsewhere, I think many of the newer alternatives are less than well understood, by myself included. Perhaps this would be a good forum, with Rich's expertise and insights, to discuss these newer variants on plain ole vanilla hosting (not trying to imply Exodus is plain ole vanilla, rather trying to get away from EXDS bad, OTHERS good and vice versa diatribe)

Posted by: B Shaw at October 24, 2001 09:45 AM

While we hope Exodus, a long time market leader, grows stronger from this experience, our company has been working with other Internet Data Centers in terms of performing the actual server migrations.

Over the past several months we've seen PSI Net, Exodus, and even Verio (that while they recently cut staffing are still financially healthy) close Internet Data Centers in an effort to trim expenses.

We've even seen companies that have multiple servers consolidate to fewer servers as well as move to different operating systems in an effort to control costs.

Our hope is that most of these events point to market consolidation and correction; and, that in the near future the market will pick up enough for companies like Exodus to right themselves.

Posted by: We Manage Servers at October 24, 2001 03:47 PM
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