Data Center Shift Gets Internap Cloud-Ready

Since its launch in the mid '90s as an Internet route-optimization specialist, Internap Network Services Corp. (Nasdaq: INAP) has reinvented itself more than once, most recently focusing on data centers as a key strategic element. Over the past year, Internap has developed hosting services as well, building on its data center expertise, and now stands ready to capitalize on the cloud trend.

"We are using our data centers as the underlying foundation for all of our products," says Mike Higgins, senior VP of Data Center Services for Internap, which recently expanded its data center in Houston and opened a new center in Santa Clara, Calif. "Over the last 18 months, under our new CEO [Eric Cooney], we have retrenched our business and shifted our model very concertedly from the Point of Presence model."

Cooney, a digital video veteran who joined Internap from Tandberg Television after Ericsson AB (Nasdaq: ERIC) acquired that company, reduced the broad network of PoPs that Internap was operating in leased collocation space in favor of a small number of higher-value data centers, to support "as-a-service" offerings, video streaming, mobile applications, and more.

The shift took Internap away from lower margin business dictated by collocation agreements that constrained space and power, and toward a higher-value service portfolio built on its own data centers, Higgins says.

Internap had also hoped to get into the Content Delivery Network space, competing with the likes of Akamai Technologies Inc. (Nasdaq: AKAM) and Limelight Networks Inc. (Nasdaq: LLNW) through the acquisition in 2006 of VitalStream, but that move hasn't gone as planned, Higgins admits.

"We are not backing away from the CDN space," he says. "But we are repositioning. We thought we'd be on equal footing with Akamai and Limelight from day one, and that wasn't the case."

Internap is now pushing forward on a broad portfolio of services based on its data centers, including hosting, CDNs, collocations, and its original strength, route optimization based on its Miro (Managed Internet Route Optimizer).

"We think our competitive strength is the bundle of things we can offer, and the footprint -- we have a hosted offering in Asia, Europe and the US," Higgins says.

More than 50 percent of Internap's customers buy a combined set of services, and the majority of its managed hosting and colo customers use Internap's Performance IP route optimization. The target customers are firms launching Web-based content, whether it's video, gaming, or other applications.

"When a customer is capital-constrained or wants to get to market quickly, we can provide a hosted service over a global footprint, and give them optimization as well," Higgins says.

Internap is viewing the cloud as a major new opportunity, where demand today outstrips supply as most companies are just beginning to move away from hosting all of their own data internally.

"We want to be in that space, ready for the growth curve," Higgins says. "We are going to continue to expand our hosting portfolio of products and make that offering as robust as we need it to be. The opportunity you have is that customers going through various growth curves can take advantage of different services at different times. They can host in our data center, or collocate there as well."

Internap will continue to work with other service providers such as Equinix Inc. (Nasdaq: EQIX) that have long been partners, even though it competes with many of them in some ways as well. Further expansion of its data centers will be customer-driven, Higgins says.

"We've got 2,800 customers and most of them are using Internap services in many locations," he says. "Where Internap enters new spaces, we are going where our customers need us to go."

— Carol Wilson, Chief Editor, Events, Light Reading

takefour 12/5/2012 | 4:25:10 PM
re: Data Center Shift Gets Internap Cloud-Ready

Internap doesn't have a clue of what a "cloud" is.  They own no data centers and have IP technology that has long ago been passed by competition. The new CEO was supposed to get into CDN/video and that hasn't happened. He has structured the company for "sale", but I'm not sure what the asset would be.

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