The future of E-mail

I live and work in towns just outside Trenton, N.J. And e-mail has never looked better.

That's easy to understand. Our regional U.S. post office facility is closed, with at least 31 anthrax "hot spots." Four workers there have come down with anthrax, including one with the potentially deadly inhaled form of the disease. The anthrax-laced letters to Tom Brokaw and Sen. Tom Daschle may have originated at a mailbox about five miles from my house.

So am I well-suited, at this moment, to offer a rational analysis of how the anthrax scare might affect the future of e-mail? Hardly. The "best advice" to local postal workers and residents has been a moving target. Mail-handling practices that seemed safe yesterday are being questioned today. I approach my mailbox with a sense of apprehension, and I wash my hands afterward.

Short-term, emotional responses like mine are not necessarily the seeds of a long-term trend. But I have to believe that the current anthrax challenge will fundamentally alter communications in our country, with e-mail becoming an even more important medium. Who benefits? What does this mean for demand for colocation and other Internet services that require data center space?

I don't have the answers just yet. But it's a key question for our industry. So I put it you, our readers, to offer your thoughts on the impact on the anthrax issue on the future of e-mail and data center services. Share your thoughts and comments below.

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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.

Rethinking Managed Services

I've grown skeptical in recent months that the analyst excitement about managed services would pan out. Back in July I put together a column for Colocation Network America that summarized my reservations.

On August 30, Relera did an about-face and abandoned the managed services market and shifted to a basic colocation model, saying there was more demand for colo than managed hosting - at least in the second-tier markets Relera was targeting.

Now, we have a similar turnaround from The Yankee Group, which in July issued a report declaring that colocation would become virtually extinct while managed services will be a $27 billion market by 2005.

This week Yankee Group analysts are singing a very different tune, as we read in Web Hosting Industry Review. "We do not see more companies adopting managed hosting next year, which was something that surprised us," Yankee analyst Courtney Quinn told The WHIR.

With many companies retooling their models to emphasize managed hosting, the data center and colocation industry can hardly stand any more surprises like this. If the analysts' crystal balls were looking fuzzy before, the events of Sept. 11 have further shattered expectations.

I'm not doubting the basic value of managed hosting. Down the line, managed services will evolve into a profitable business. But it won't happen nearly as fast as many analysts have predicted, and not nearly soon enough to rescue colo providers who are already in trouble.

Managed hosting isn't a life raft for drowning providers. It's a long-term play for providers with the cash to ride out the current downturn and patience to master lengthier process of selling to enterprise companies.

Do you agree? Or am I out to lunch on this one? Add your comments below.