By Hays Goodman
Associate Editor
Savvis
Communications’ acquisition of Wam!Net Inc.’s commercial business will
provide newspaper customers with new services, according to a top Savvis
executive.
Savvis,
a publicly traded managed network service provider headquartered in Herndon,
Va., and St. Louis, on July 30 purchased Wam!Net’s commercial operations for
$3 million, with additional payments to be made in 2004 based on Wam!Net’s
future revenues.
For
Savvis, buying Wam!Net was a natural extension of its existing business, said
Robert McCormick, Savvis’ chairman and chief executive officer.
 |
Robert
McCormick |
“The
combination of the two companies gives their (Wam!Net’s) technology much
broader distribution, because we’re in 45 countries with thousands of network
customers, and it also allows us to build on that technology,” he said.
Savvis,
founded in 1995, initially made its mark by providing data transmission services
to the financial services industry. But it has branched out to serving the media
and entertainment industries.
Those
services include transcoding (typical example, taking a video AVI file and
turning it into QuickTime and Real Media), video-enabled networking (shipping
compressed or uncompressed video from place to place), and dedicated
transmission using private network access points that bypass congested public
Internet exchange points.
Tremendous
growth
“What
we see is a tremendous push across print publishing, media and entertainment,”
said McCormick, on the growth of the $100 million digital file delivery market.
“All
these guys are looking to get rid of tapes and FedEx and all of the other ways
they do things, so the market today, in terms of what is being spent, is
reasonably small,” he said. “Our impression, based on talking to (industry)
people and analysts, is that there is a huge demand for this type of service if
it’s packaged correctly.”
Some
of those potential services might revolve around JDF, or job definition format.
Wam!Net last month joined CIP4, the Swiss-based organization whose purpose is to
encourage the computer-based integration of process and standards that include
JDF.
Savvis
said it expects to partner with graphic arts and printing vendors to develop
Wam!Net-delivered JDF-compliant services such as preflighting, automatic file
transfer and other user-based operations.
Private
network proponents tout the benefits of using dedicated file-transfer networks
as opposed to sending files over the public Internet using FTP servers.
Costs
are often lower, since users no longer have to purchase and maintain expensive
servers and software. In addition, clients don’t have to learn the somewhat
complicated FTP setup process, since file-transfer services frequently need
nothing more than a Web browser to operate.
Not
only did Savvis’ purchase extend Wam!Net’s reach, it also solved Wam!Net’s
enduring capitalization problem. The company never could find the funds to
support the extensive addition of features that would drive expansion of the
subscriber base, said Richard Metcalf, managing director.
Couldn’t
expand
“Because we had to build a global network to carry these
services, it became very costly,” Metcalf said. “We were one of many
companies carrying infrastructures that become too expensive and it was a
classic case for a consolidation play where we started looking for a company
that would allow us to leverage some cost efficiencies.”
Metcalf
and Mike Williams, Wam!Net’s chief executive officer, put together a list of
potential acquisition partners, using IP-based services, level of customer
support and palatable service-level agreements as criteria. They also wanted the
partner to possess customers outside of Wam!Net’s existing vertical market in
media and publishing.
About
three company names ended up on that list, and Savvis “was the most excited
about the opportunity,” Metcalf said. “Here was a telco that was looking to
take the next step up on the value chain, which meant not only providing hosting
and network services but also application services that are very
industry-specific.”
Services
to come
Initially,
Wam!Net will remain a division of Savvis, operating as a subsidiary for
practical purposes, although the legal structure won’t reflect that.
Long-term,
Savvis may split into two operating divisions: one providing telco and Web
hosting; the other industry and vertical-specific telecommunications offerings.
Although
Metcalf said existing Wam!Net customers won’t notice any changes in customer
service and support, competitors took advantage of the sale to woo concerned
clients.
Group
Logic, for example, offered to move any Wam!Net users to its MassTransit
Enterprise application for a special price, citing the 2001 shutdown of network
provider Vio as an example of what can happen if a supplier suddenly disappears.
Group
Logic reinforced that message after Wam!Net shut down 4Sight ISDNManager, a
niche component of its transfer network used to shuttle files over dedicated
ISDN connections.
Group
Logic President T. Reid Lewis said Savvis’ purchase could affect the
file-transfer industry if it isn’t willing to invest in expanding Wam!Net’s
software and services.
MassTransit
is a server-based app that permits users to ship files over a wide variety of
network protocols. Unlike Wam!Net or Savvis, there are no monthly contracts or
user fees.
That
approach makes it possible, Lewis said, for users to send all of their files via
the software, not just the ones where it might be “cost-justified given the
usage fees.”
