Imminent death of ISPs exaggerated

Reports of the imminent death of half the industry's internet service providers could be a massive exaggeration, according to a supplier to the web hosting market.

Reports of the imminent death of half the industry's internet service providers (ISPs) could be a massive exaggeration, according to a supplier to the web hosting market.

Vikram Mehta, vice president of marketing at US vendor Ensim, hit out at claims that the ISP market would soon be dominated by a few large players.

Earlier this month, Forrester Research reported that over half of today's ISPs would be out of business by 2001. Mehta maintained that these predictions are based on flawed arguments and that technology breakthroughs will enable smaller service providers to compete on a level playing field.

"These predictions are based on the premise that smaller service providers don't enjoy the economies of scale of the bigger players," he said. "They were right, but only half right. Smaller companies were not as profitable, but that was for technical reasons."

According to Mehta, smaller players could not sub-divide their IT as easily as bigger ISPs. Subsequently, sources could not be managed as well.

He also claimed that technology such as Ensim's Server Xchange, unveiled this week at a London technology briefing co-hosted by Cisco, Hewlett Packard, Sun Microsystems and Planet Intra, will enable smaller companies to do the same.

Market analysts have not given smaller service providers a vote of confidence since the ISP market started.

Researcher IDC has given gloomy predictions for the market, suggesting that two thirds of all application service providers in existence today will have gone by 2003. This is despite figures that predict growth in the European web hosting sector from $907m to $5bn by 2004.