European Web-hosting company launches US operation

FRAMINGHAM (10/01/2003) - European Web-hosting and domain name registration company 1&1 Internet Inc. has just launched its U.S. operations. and is offering a free, three-year Web hosting service to any customer that signs up between now and Jan. 14. The service would normally cost US$29 per month, said Sebastian Moser, director of technical development for 1&1 Internet, which will be based in Berwyn, Pa.

The move is designed to get people to pay attention to the company, said Joshua Beil, an analyst at Tier 1 Research Inc. in Minneapolis.

That's correct, said Moser. "The idea behind this whole thing is to get the word of mouth around to influence the decision-makers when it comes to deciding which Web hosting company to choose when we offer our whole portfolio," he said.

Since the service offer was first made on Friday, more than 4,000 companies have signed up, he said.

Some of the features included with the Linux-based shared hosting service include 500MB of Web space; 5,000MB per month of traffic; 12,000Mbit connectivity; a 99.9 percent uptime guarantee; no limits on simultaneous hits/bandwidth; and firewall protection.

According to Beil, 1&1 Internet, the largest Web-hosting provider in Europe, is coming to U.S. because it sees it as a more fragmented market than Europe's and thinks it can leverage its best practices in engineering and Web hosting in the U.S. market.

"Their offering is pretty eye-popping," Beil said. "They're basically giving away a $29 a month hosting package for free for the next three years to anybody that signs up. So the days of Web hosting and the Internet being free are not dead just yet."

Helen Chan, an analyst at The Yankee Group in Boston, said 1&1 Internet is being very aggressive in the marketplace. She said other Web hosting companies might offer a free 30-day promotion, but never for three years.

The move into the U.S. Web hosting market comes at a time when other companies have either pulled out or have revamped their operations. In June, Sprint Corp. said it would lay off 500 workers and end its Web hosting business, an announcement that came less than a week after London-based Cable & Wireless PLC announced it was leaving the U.S. Web hosting and services market too. Just last month, however, C&W announced a "business-ready" hosting service designed to shore up its customer base for potential buyers of the company.

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