Exodus set to close Ontario hosting facility

It may not have Biblical significance, but it appears another Exodus of sorts has begun.

Two months after announcing it had filed voluntarily for U.S. bankruptcy protection, Santa Clara, Calif.-based Exodus Communications Inc., an Internet outsourcing solutions company, said it is closing some of its 44 data centers for operating cost reasons.

A spokesperson at Exodus Internet Canada Inc.’s Brampton, Ont., location confirmed that its data centre will be closed at the end of January 2002.

“After careful evaluation and consideration, we’ve determined in each case it makes good business sense to close them,” said Bill Krause, chief executive officer at Exodus in a conference call with customers on Wednesday.

It is estimated Exodus lost over 1,000 customers from June to September. For Toronto-based dealerAccess, an independent online provider of financing and management systems for automobile dealers that signed a deal with Exodus in July to host its Internet data, and which is now talking of a contingency plan, the timing couldn’t be worse.

“It’s an intense time right now. (Our) whole Internet portal is going live on Monday. It’s really delicate timing,” said Rick Perkins, spokesperson for dealerAccess.

He said they have been aware of the Brampton closing for over a month and have subsequently engaged in talks with the company to address what steps will be taken, but added he wasn’t sure who would now become responsible for managing its data. Nor was there any mention of the financial ramifications, considering the deal was only consummated in July. Perkins said these issues were all currently under review.

While it initially believed that Exodus would close 10 non-operational data centres, burning through more than US$4.5 million a day has increased the likelihood that more sites will be closed. And for one analyst, the outcome was predictable.

“Exodus really didn’t have a contingency plan in place for the softening of the economy. They were about two quarters too late in trying to cut back and conserve cash. They’re paying a big price for their lack of vision,” said Ted Chamberlin, networking research analyst for Gartner in Stamford, Conn.

With the sudden and near collapse of the dot-com industry, so went the fortunes of the company, he said. And, coupled with customers who are referred to as “non-paying”, the losses began to mount.

In the case of the Brampton location, Chamberlin speculated that of the over 100,000 square feet of space available, only 25 per cent is being used in a productive manner. The goal now is moving away from being a data centre provider and more toward the collocation provider market, where the company would provide managed services such as security and storage and ultimately become an extension of a company’s internal IT department, Chamberlin said.

Exodus in Brampton, Ont., can be reached at http://www.exoduscomminications.ca

dealerAccess in Toronto can be reached at http://www.dealeraccess.com

Gartner in Stamford, Conn., can be reached at http://www.gartner.com