Hosting market 'ripe for consolidation'

By Brett Winterford, ARNnet |  Business

North American hosting company Hostway Corp. has acquired its second Australian company in three months, snapping up the Web hosting, co-location and managed services businesses of Dedicated Hosting Pty. Ltd.

Dedicated Hosting offered these services, and was a reseller of several others from rented space in Optus' Ultimo data center. The company served more than 1,000 customers.

Its acquirer, Hostway, established its Australian operations in April 2003, initially as a sales and marketing organization, referring customers to services offered by its U.S. data centers. The company made its first acquisition in Australia in July, buying the infrastructure (the network and data center equipment) of hosting provider GlobalHost as well as its dedicated and co-location customer base.

GlobalHost operated from rented space in another Ultimo, Sydney data center that is owned and operated by Global Switch. GlobalHost has also sold off its virtual hosting customer base to the OzHosting.com business owned by ASX-listed company Destra.

The two acquisitions have given Hostway's local operations enough capacity to migrate those Australian customers being hosted in its U.S. data centers back to Australia, said Michael Farrell, general manager for Hostway Corporation in Australia.

Aneel Gupta, founder and managing director of Dedicated Hosting, said that the Hostway merger "yet again signals more consolidation in the market."

Farrell said that he expects his company to make several more acquisitions while the price is right. "The Australian hosting market is ripe for consolidation," he said. "When we came to Australia, we could not justify the cost of building a facility because it is still a buyer's market when it comes to data center space."

Farrell refused to disclose the value of the acquisitions.

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