IBM's Web hosting business is booming. And Big Blue wants more. On Thursday the company announced that it will begin providing 30 new e-business Web hosting services, half of which are security-related.
The move will pit IBM directly against a host of incumbent managed security service providers like Counterpane Internet Security, Internet Security Systems, Riptech and others.
IBM's security announcement is the technology giant's latest foray into Web-related services. Just last week, John Joyce, the company's chief financial officer, told Wall Street analysts that the company signed up $1 billion worth of new Web hosting business over the first six months of this year. That's an enormous amount of new business in the hosting sector, which is seeing explosive growth. Gartner's Dataquest expects revenue in the Web hosting sector to triple, to $9.3 billion per year by 2004.
IBM has been in the Web hosting business since 1995. And while it's a new entrant into the security services business, its market heft will make it a dominant player almost immediately, said Zeus Kerravala, director of E-Networks and Broadband Access of The Yankee Group.
Some other managed security companies have "run into financial troubles and have struggled to support their core business," in recent months, said Karravala. The Yankee Group estimates managed security services will take in $1.8 billion in revenue by 2005, compared with $315 million last year.
"By using IBM you'd get a company with deep pockets that you don't have to worry about," said Kerravala. Plus IBM has good relationships with other security vendors, he said. So if an I-manager wanted to use a variety of different security products from different vendors, IBM would be able to support all of them.
Key among IBM's security offerings will be firewall construction and management, intrusion detection, virus alert monitoring and ongoing security checks. Key to those checks will be periodic ethical hacking tests to discover any new vulnerability.
The move toward security offerings is a natural one for IBM, said Paul Boulay, the company's program director for Global Application Hosting Services, a division of IBM Global Services. "Recently, we've seen major interest from large and small companies to have us become their application hosting provider," said Boulay. "As they are deploying new business applications like procurement, and CRM [customer relationship management], they are finding that the complexities become far greater than the basic hosting element. So companies are deciding there is faster speed to market and there's less risk in having IBM do the hosting on their behalf."
By offering security along with other Web hosting services, IBM can offer companies package deals starting at $20,000 per month, said Boulay.
Hosting services are a growth area for IBM. Last December, Chairman and CEO Lou Gerstner said Big Blue would build 50 new data centers to handle Web hosting. During the past three months, it has opened centers in Buenos Aires, Argentina; Hong Kong; and Taiwan. The company now has 37 data centers around the world. Next month it will open a new data center in Shanghai, China. An additional Tokyo site is expected to open within months.
IBM's trying to make its offerings as broad as possible. In addition to its ability to support almost any security need, the company has made it clear that it will be agnostic when it comes to software platforms, a move that should help it garner customers. "Gone are the days where everything was proprietary," said Boulay. Toward that end, IBM supports multiple server platforms, including AIX (IBM's proprietary version of Unix), Linux, Solaris, Windows NT and Windows 2000.
Although IBM will take business away from some managed security service companies, Kerravala also believes the company's entry could help the nascent sector. "IBM's entrance into this business legitimizes it," he said. "It might help the other vendors because it brings more attention to it and that might help everybody."