Luis Navarro, CEO of iNNERHOST, has firmly planted the company’s web hosting flag in Latin America. But unlike many other companies eyeing the potential goldmine there—IDC estimates the $80-plus million dollar hosting market in 2001 to climb to more than $800 million in 2004— his company’s strategy is different.Luis Navarro, CEO of iNNERHOST, has firmly planted the company’s web hosting flag in Latin America. But unlike many other companies eyeing the potential goldmine there—IDC estimates the $80-plus million dollar hosting market in 2001 to climb to more than $800 million in 2004— his company’s strategy is different.
iNNERHOST partners with the leading infrastructure providers in the region giving the company immediate market penetration as existing distribution channels are targeted.
“We enable the leading telcos in the region to act as aggregators for us and bring in their client bases – thereby funneling our existing services to these markets, ” said Navarro.
Deals with Cable & Wireless (Panama), CANTV.net, Dedalus, and Verizon Communications subsidiary, Codetel, has enabled the company to offer its hosting services— bundled in a telco package— in El Salvador, Guatemala, Venezuela, Brazil and Dominican Republic. A deal in Mexico is currently being negotiated and will be announced soon, said Navarro.
This quick deployment strategy has served the company well, when one considers the extensive capital outlay required to set up Internet data centers in the region.
However, that hasn’t deterred companies such as Washington D.C.-based Diveo Broadband Networks Inc., who have built data centers in the major markets such as Buenos Aires, Mexico City and Sao Paulo. As well, another Maryland firm, OptiGlobe, has invested close to $100 million to build a 160,000 square-foot data in Sao Paulo and announced plans to invest an additional $1.5 billion in 13 facilities by the end of 2002.
Navarro is unfazed by the competition. “Our operation and deployment phase is complete. Sure, two or three firms will try to replicate what we have done in the region, but we’re ahead of the curve by 9 to 12 months. We are in demand generation phase.”
iNNERHOST has been growing revenues by more than 300 per cent a year since gaining a foothold on the US market in 1998. With more than $1.2 million in monthly recurring revenues, a global presence with more than ten thousand clients and a Gold Certified Partner status from Microsoft, the company garnered venture capital from Spire Capital Partners and Waller-Sutton Media Partners.
The company used a major part of this funding to build a data center in Miami to shore up its managed hosting capabilities as well as to serve as “a gateway to the Americas.”
“Miami is strategically located. This is where Latin America and the US meet and transact to do business,” Navarro added.
Besides the stringent security and surveillance gear, the 100, 000 sq. ft. data center is built 25 ft. above the ground to avoid flooding and contains walls that are designed to withstand 50 mph projectiles or winds up to 165 mph, commonly referred to as Category 5 compliance.
A deal with Intel forged in September 2001 will see between 8 to 20 thousand servers managed at the facility by 2004. Navarro said that 500 shelves with 20 thousand servers is feasible in this space because the Intel processors are small in size and with the advent of blade server technology, much data center space will be conserved.
Navarro expects the Latin American market, particularly Brazil and Mexico “to explode” in the next six months ensuring his company’s plan to grow revenues there from ten per cent to twenty per cent by the end of 2002.
According to research group IDC, Brazil’s hosting market will reach $382 million by 2004 compared to $41 million in revenues recorded in 2000. The shortage of skilled IT professionals, the prohibitive costs of managing web operations in-house and the continued surge in Internet use are among the factors that are driving the growth of the web hosting market there.
Interestingly, the number of Internet users in Latin America is expected to reach more than 75 million by 2005. The Brazilian and Mexican market together accounted for 63 percent of Latin America?x2019;s estimated 22 million Internet users in 2001.
But Navarro emphasizes that although the company’s Latin American strategy is important to the company’s growth, iNNERHOST is still laser focused on the North American market.
“We have an aggressive US strategy in place. A lot of our hosting brethren have gone by the wayside, closed down or have been acquired. Things that required customization have been cut out of budgets. Microsoft technology is now coming to fruition and we mean to capture a huge part of the hosting business.”
