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Chip Manufacturing Giant Moves Into Web Support Services

June 2000
By Maryann Lawlor
E-mail About the Author

Second-generation hosting centers reinforce e-business reliability.

Companies that have made their millions—and billions—in the guts and brains of information technology products are spreading their techno-tentacles into e-commerce through the gap between operation and application services. They are not leaving the world of hardware behind but rather are ensuring that their companies will continue to prosper by infusing their technical expertise into the space between the transmitter and the receiver of e-commerce messages.

E-business has been maturing in stages similar to the evolution of the computer industry. At first, customers relied on vertical suppliers who offered complete packages. At the time, it was unsafe, if not impossible, to purchase components piece by piece to build a custom system. Today, as a result of the prevalence of open standard building blocks, consumers can pick the best of breed in components, put them together and have the system that meets their specific needs.

While this evolution has reached considerable maturity in the computer industry arena, it is just beginning in the world of e-commerce. As it does, several holes in the process offer opportunities to companies that want to make their mark by offering excellent service alternatives to a spectrum of companies—from small start-ups to booming corporations.

Intel Corporation, Santa Clara, California, recently revised its corporate mission from being the building block supplier to the PC industry to striving to become a leading service supplier in the Internet economy. The recognized leader in chip manufacturing and computer, networking and communications products began its journey to this new market in 1990 by investing in many e-commerce and related technology companies. The company currently sports an $8 billion portfolio and more than 350 corporate investments.

In 1996, Intel established relationships with content developers, a move that grew from its semiconductor business and the desire to use the information superhighway to promote the company’s new products. Two years later, Intel began using the Internet to do business. By April 1999, the firm was ready to announce its own entry into the Internet services arena and opened a research and development center in Folsom, California. Last September, the first Internet data center opened its doors in Santa Clara, and the company announced its intent to open similar sites in Virginia, the United Kingdom, Japan and Korea. The Virginia center opened in April.

According to Michael A. Aymar, president, Intel Online Services Incorporated, the centers provide customers with more than just the cabinets for their equipment. “Co-location hosting is first-generation hosting services. Intel Online Services is taking a second-generation approach. Intel provides the infrastructure—a ready-made infrastructure—so that the customer only provides the content,” he explains.

The centers will be involved solely in company information that faces the World Wide Web; they will not support a firm’s internal processes such as personnel, payroll or inventory management.

Aymar describes the current Internet and emerging e-business environments as a pyramid. Network services, offered by such companies as GTE and Cable and Wireless Communications, are at the base of the pyramid. These services include providing bandwidth and network routing for connection to the Internet. Intel Corporation specializes and continues to be committed to operation services such as providing the environment for data to be processed and managed. This is the second layer of the pyramid. Application services are laid on top of operation services to manage applications in an optimized environment. The top layer is solution services, where e-business solutions are developed for the customer.

According to Aymar, this configuration leaves a value gap between operation services and application services—a gap Intel Online Services plans to fill. “Solution service providers don’t care about infrastructure, but they need it so they have to build it. Application service providers want to have a complete system to plug into the operation services, but no one is doing this and that leaves a value gap,” he explains.

When companies that provide these two levels independently work to fill the gap, it results in lower developer productivity, reduced reliability in operation, higher hosting costs, and longer time to market. First-generation hosting service-level agreements, which include co-location and managed co-location hosting, extend only to the network and host facilities operations.

“First-generation hosting provides power and network only, but companies still have to have their own IT [information technology] staff. This is still the foundation of second-generation hosting, but Intel’s vision is a guarantee for 99.99 percent reliability for applications and a library of applications that can be used by application providers,” Aymar offers.

Rather than offering customers only cabinets for their own equipment, Intel Online Services provides a variety of service options. In addition to equipment, centers include high levels of physical and network security as well as redundant power, cooling and network connectivity in an ultradense server environment. Standard industry-accepted hardware and software are integrated, validated and managed by Intel Online Services personnel. Operating system software and basic applications also are available.

The company’s goal is to offer reliability and flexibility to its corporate clients that are involved in e-commerce. Intel ensures that the customers’ windows to the Internet remain open, and that they have the versatility to meet the needs of their growing businesses or address sudden influxes of business. “If a company has hosted itself and it becomes more successful than it thought it would be, it could have trouble keeping up. With the Intel facility, once a company is deployed here, Intel knows the needs and can meet them within days because we already have the equipment and the staff,” Aymar explains.

This versatility extends to the types of services the company offers, which allow customers to determine the level of service they need to meet their business requirements.

Dedicated Web hosting services include platforms such as Microsoft Windows NT 4.0 with dual 500-megahertz Pentium III processors; Linux RedHat 6.0 with a 516-kilobyte cache memory, 1-gigabyte memory and two mirrored 18-gigabyte disk drives; Sun Solaris 2.6 that features a 400-megahertz SPARC processor; and the Netscape Enterprise Server 4.0 with a 256-megabyte memory, a 9.1-gigabyte disk drive and dual power supplies. Platform services include maintenance that ensures that all mission-critical components are fault tolerant and systems continue to operate despite any single hardware failure.

A variety of performance and maintenance services also are available. Data backup is conducted daily on an incremental basis, and full weekly backups are performed. The frequency of backups can be increased depending on the level of service a customer purchases. Staging servers provide intermediate holding areas for proving content prior to publishing it to production Web servers. Managed Web servers are monitored 24 hours a day, seven days a week and include the processor, file systems, memory, hard disk utilization and Web availability. Web site analysis allows customers to view statistics about site traffic, user traffic patterns, most requested pages, visitors’ geographic locations and page errors. Incoming Web traffic loads are dynamically distributed among servers running common applications. This makes the group appear as one server to the network.

Intel Online Services’ database hosting service provides a turnkey approach for content support. Available platforms, maintenance and backup are similar to those used in the Web hosting service; however, Internet services also include privately allocated Internet protocol addresses for managed database servers, customer network interconnectivity using standard telephone lines and engineering support for escalating technical issues and difficulties.

Although Intel Online Services specializes in second-generation hosting, the company also offers enhanced versions of the traditional co-location hosting. Customers can place all or only a portion of their own systems in the centers. Clients can select specific services such as remote management, tape media management, data backup and restore, network services, monitoring and virtual private network options.

The centers have been designed to facilitate ongoing service but are opening with adequate room for growth as new clients are added. The Santa Clara facility is the prototype, and all future centers will be duplicates of the California design.

Both physical and information security has been given high priority in the buildings’ scheme. Lobbies feature lock-down capabilities that prevent intruders from exiting. A monitor, located in the lobby area, can be used for marketing purposes but doubles as a means to photograph people in the room. Entry into every room requires a security badge, a personal identification code and biometric hand scanning. Video cameras monitor activities in all areas.

The heart of the facility is the control room where technologists monitor customers’ systems as well as activity around the world. Rear-projection screens fill one wall of the room with displays of network activity and information flow. Analysts also monitor television news programs to keep abreast of world activity that could cause an influx of Internet traffic. Two war rooms are available for client conferencing and for use as crisis action centers. Redundant power, heating and cooling systems ensure that customers’ Web sites will remain up even during outages.

The centers’ network capabilities are scalable in network bandwidth, storage volume and transactions processed per second. In addition, a dual connection has been established to Internet access providers. The Santa Clara facility sits astride an optical carrier (OC)-48 synchronous optical network (SONET) ring and provides direct peering to Tier 1 network carriers. A pair of OC-3 fiber rings with innate redundancy handles center traffic and includes a capacity expandable to the OC-192 level. Bandwidth can be allocated at a fixed rate of approximately 10 megabits per second or in dynamic bursts during which it is switched to a higher rate immediately on demand.

Intel has formed alliances with several companies to provide their customers with expanded services. Among the firms supporting the Intel offerings are iXL, PricewaterhouseCoopers, Proxicom and US Interactive.

According to Aymar, Intel chose the Northern Virginia area for the second online services site because of its proximity to government agencies and to high-speed Internet connections as well as its pool of technical personnel. The 73,000-square-foot facility can house up to 10,000 servers.

By the end of 2000, the company plans to have more than 10 Internet data centers dispersed throughout the United States, Europe, Asia and Latin America. Aymar allows that Internet activity in some countries is still limited to browsing and participating in chat rooms. Because the centers’ capabilities are expandable, they will be able to accommodate requirements as businesses in these nations begin to increase their participation in e-commerce.

Company officials have been talking with U.S. government agencies to determine if a fit exists between Intel and agencies’ goals. However, since the firm primarily focuses on supporting organizations that use the Web for providing more than information, extensive work with the government is not yet underway.

Aymar predicts that the need for Internet business service centers will continue to grow during the next several years. “Right now, the market is about 70 percent co-location hosting services and 30 percent managed services. But by 2002, this will flip, and the majority of customers will be in the managed services area,” he says.

By the end of 2001, Intel will have invested $1 billion in online services facilities. During the next five years, Intel Online Services will develop into a significant part of the Intel Corporation but will not overtake the company’s semiconductor business because that sector will grow as well, Aymar predicts.