SMBs

New deal could mean big savings on Web hosting for small and midsize companies

Verizon's deal with Interland allows it to sell Web hosting and other Internet services in the small and midsize market space. Here's what Gartner analyst Ted Chamberlin said about this move.


Verizon recently signed a three-year agreement with Interland to offer a range of Web hosting and other Internet services to the small and midsize enterprise (SME) market space. What does this mean for you?

Gartner analyst Ted Chamberlin said the deal could mean better service and better prices for small and midsize companies.

“They’ll get a hosting package similar to some of the bigger companies, just scaled down,” he said. “This is a really good channel for SMEs to go and actually get some competitive pricing.”

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IBM Corporation is the exclusive sponsor of TechRepublic's special series on Web Hosting. IBM's e-business Hosting gives you the freedom to customize an array of services into a solution that is shaped by your business, not ours. For more information, check out TechRepublic's Web Hosting Center, or visit IBM's e-business Hosting site

According to a Gartner report on the deal written by Chamberlin and fellow analyst James Browning, Verizon Communications and Interland signed a three-year agreement in October to sell hosting, consulting, and design services, as well as other bundled Internet services. The offerings will be targeted to SMEs in the northeastern and mid-Atlantic United States.

Gartner called the deal a tactical move by Verizon to regain some Internet services lost in some markets by the spin-off of its IP networking arm, Genuity.

Verizon will also capitalize on the deal to sell digital subscriber line (DSL) and other transport services to SMEs, Gartner predicted. The result will be price breaks on DSL prices for SMEs early next year.

Traditionally, SMEs rely on local Internet or network service providers and developers for services, according to Gartner’s report. SMEs also usually don’t issue Request for Proposals (RFPs) to obtain competitive prices. But by bundling these services, Verizon can offer SMEs cost savings and one-stop shopping, Gartner said.

The report states that the service “provides a new opportunity for enterprises to upgrade and extend their networks with Verizon's DSL offering while obtaining key hosting services, all on a single bill. It also gives SMEs another competitive option for buying Web hosting services, beyond having to obtain such services from their local Internet or network service provider, or their Web developer.”
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The Gartner report does offer one caveat: Verizon intends to regain control of Genuity by 2003, which is when the Verizon/Interland deal expires. Companies that sign up for the Verizon/Interland services should be aware that this may mean those services could be nonrenewable in three years. Gartner advised that SMEs:
  • Request a nondisruptive transition plan or exit strategy in case the partnership dissolves.
  • Avoid signing any deal that extends beyond the 2003 agreement.
  • Ensure that there’s a “single source of responsibility for support and service levels” for services bought from Verizon/Interland.
Do you think Verizon/Interland will have a competitive advantage in the SME space? Or will small and midsize businesses still prefer local providers? Share your thoughts by posting a comment below.

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