Peer 1 looks to spread its wings

There’s a new kid on the Canadian collocation block, but one analyst warns that the market for its services may not be around much longer.

Peer 1 Network has decided to take a different approach than some other companies in the collocation space by simply offering bandwidth and physical space – nothing else. While most collocation or hosting facilities in Canada offer space combined with the option of retaining services such as management or monitoring, the Vancouver-based firm has declared that is simply not the model it wants to follow. Peer 1 opened a new facility in Montreal at the beginning of July and has other facilities in Vancouver, Toronto, New York and Seattle.

In fact, according to the company’s President and CEO Geoff Hampson, Peer 1 has no intentions right now to move into any other areas down the road. The company’s decision to be focused on delivering these bare offerings, combined with the fact that it is a smaller operation, means that that it is able to be more responsive to customers’ needs, and offer more flexibility when it comes to issues such as pricing, he said.

“That’s what really makes us different,” Hampson said.

Peer 1’s target customer is not as high-end as some other firms in the space, which is in part why add-on services are not as big a requirement.

“No one else is going after the same market,” Hampson noted. “We are more Web-centric.”

In fact, less than a quarter of the firm’s overall revenue is derived from the enterprise space, according to Hampson.

But without any services, such as the ones being offered by others in this space, what value does Peer 1 bring?

“Access and uptime. The Internet is not going away,” Hampson offered.

One company, also based in Vancouver, is finding Peer 1’s style to be meeting its needs.

“We’re a Web hosting company and domain name registrar, and we primarily use them for bandwidth,” noted George Muenz, vice-president, business development at NetNation Inc. The company also uses Peer 1 to do some mirroring with its Seattle location. NetNation deals with various other providers, and Muenz said the attention he receives from Peer 1 is different than what is dished out by the others.

“They have an excellent network. It’s surprising,” Muenz said. “They’re not as big as the telcos, but they have a superior network sometimes. And we find that we can get very quick response from them. The telcos can be a little heavy and difficult to deal with.”

Despite Peer 1’s confidence in its offerings, one analyst said the market for collocation services may not be as strong as Peer 1 would like to believe.

“(The) real growth seems to be around dedicated and shared facilities. Collocation is, based on our research that we have done, the end of the business that is probably going to disappear, so that makes me wonder why [Peer 1 is] so intent on going with collocation,” said Dan McLean, director of outsourcing and IT utility research for IDC Canada Ltd. in Toronto.

With shared facilities, the customer uses the service provider’s premises and equipment, but may be utilizing one server and sharing that equipment with a bunch of other customers. In dedicated hosting, the customer is still using the service provider’s facilities and equipment, but the equipment being used is dedicated to a single customer. It is this ability to hand off these responsibilities that is becoming more and more appealing to customers, McLean said.

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