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C&W Bails Out
norskode writes "Not much to go on yet, but it seems that Cable & Wireless is bailing out of their US operations. This is a big provider of IP pipes, and they run the data centers they bought from the failed Exodus folks. There are a LOT of sites that live in their data centers, but no word yet on the disposition of those facilities."
C&W pulling out, UUNet/WorldCom not doing real well, BBN getting sucked up by GTE... not much of the original backbones left it seems. Wonder how long until the US Internet is just an interconnection of all the telcos?
Chris -- http://www.bitter.net/
A traceroute to google shows it's using cw.net and exodus.net
This could be bad...
Those data centers have nothing to worry about. Some company is going to buy all of that infrastructure & equipment for pennies on the dollar. It makes sense for them to leave it as is and transfer the existing customer base. Why would they reinvent the wheel if everything is already in place? No need to panic.
The reason Ellen and her gang couldn't keep this running seemed to be they kept building new data centers. Capital costs were HUGE.
But C&W bought exodus. After the fallout. For very very cheap.
How could they not make a profit off this? Is maintaince costs still so high even with no expansion? They were CLOSING data centers not buiding them.
This worries me, because if after the initial build up is done, you still can't make money off a colo then that means prices are WAY too low and for the 2 or 3 colo's left, we are going to see prices sky-rocket to come up to meet expenses.
Sad day.
(all the porn that will be lost in those defunct datacenters)
We must establish a plan of action, and organize to save the porn.
Someone get a list of sites on their servers, so we can Slashdot them as a fairwell gift ;-)
"Much work is lost, for the lack of a little more." -Edward H. Harriman
It is an interesting problem that faces IT. The hospital I work at uses a mainframe on another site. We are planning to return it to on-site because we had downtime because the company moved their mainframe 'just because' from one side of Atlanta to another.
There is also the fun of who really owns your data? If the site just gets shutdown, how will you get data? (I know they should give it to you in tapes, but then you must find something they will work on.)
In God we trust, all others require data.
I know C&W controls a lot of connectivity throughout the US so this could be huge for a lot of corporations. It says they will honor their SLAs until they decide upon further action, but how well will they uphold the SLA? And more importantly does this come with a huge reduction in staff, as I would assume it will, and how can they uphold SLAs that are already being strained. Hopefully this will not result in any major down times. The beauty of the internet is its ability to adjust routes and optimize connections but loosing a big backbone provider could result is some serious revenue loss for some businesses.
"Reality is a crutch for people who can't handle drugs" - George Bernard Shaw (1856 - 1950)
The £6bn loss includes write-downs on the values of some of their purchases; they haven't actually lost that much cash.
It's official. Most of you are morons.
What's next rap? Heavy metal? Opera . . . well, it was never that popular.
Well, there's spam egg sausage and spam, that's not got much spam in it.
Here's one...
C&W does a wide range of things in the US, including operating colocation facilities, providing connectivity to businesses, operating dialup POPs, and running a major backbone. As a whole, these operations are losing $1 million a day (according to the article), but is it possible that one or two of them might actually be profitable? Will C&W completely pull out of the US, or will they keep a much more limited presense?
:-)
Another thing: will some operations be sold to other companies (and their customers transferred without loss of service), or will everything be turned off and each piece of equipment sold to the highest bidder?
I doubt anyone has the answers, but these are my questions.
Do I remember that Slashdot is/was hosted by Exodus? I'm too lazy to investigate.
$x='S24;r)>63/* h@<5+oZ)32"5cz';$me='phroggy'x$];
$x=~y+ -xz+\0-Tx+;print$_^chop$me for split'',$x;
According to Netcraft, slashdot.org itself is using IPs owned by C&W.
Nothing to see here. Just move along. Ignore the smell of burning monkeys. Flood? What flood? Keep moving, you looky-loos.
Isn't Mae-East located in one of the C&W buildings in the Tysons Corner, Viriginia, USA area? I thought that was where the NSA had installed all of their Echelon sniffers. I bet there is some real back room skullduggery going on if this is true.....
"And we need to concentrate on those markets that are sustainable ... "
Sustainable here means that you're collecting enough revenue (cash is good) to pay for all the inventory you're building. The first sign of trouble is a cashflow shortage.
Unmanaged growth is a temptation that's caught so many telecoms. Maybe they were thinking of achieving economies of scale or putting too much weight in the "grow or die" paradigm. Or maybe their CEO's were making pride-based decisions.
It's human to be overly optimistic about a venture that you're starting. Business plans quite often anticipate large profits in the future to pay for current excess spending and growth.
There's a Burmese saying "Big tiger, big paws", the analogy being that a large entity needs a lot to keep it upright - has big expenses and maintenance needs. This is even more significant when it's growing.
Esteem isn't a zero sum game
Sorry, someone had to say it.
Is that Exodus and other hosting centers are having trouble because they're players in a shrinking middle market for the business of hosters that are:
The price/capability ratio of dedicated hosts (probably Linux/BSD on x86 hardware with really fat pipes) is falling. The difference in total cost between hosting something at Exodus and just building a good server room somewhere on a corporate campus or two is falling. (Initial build-out is expensive, but property is a pretty safe place to sink money these days, plus you can expense it and keep expensing the depreciation.)
I'm not saying there's nobody that needs Exodus-type services, but it's mostly folks that don't fit into one of these other (growing) categories.
"There is no night so forlorn, no mood so bleak, that it cannot be infused with pleasure by tender meat..." - R.W. Apple
Check out their corporate site cw.net.
The footer at the bottom says:
© Cable & Wireless, 2003
Updated January 1, 1970 GMT
IE Webmaster: webmaster@cw.net
Talk about staying on top of things...
The article in todays' WSJ (sorry, no link,
I read the dead-tree version) cited the
basic problem in the telco industry as being
overcapacity, but then goes on to quote
the C&W prez as saying that they're going
to try to resell excess capacity to make
up losses.
The're also going to try to "hang on to
existing revenue streams" while exiting
the US Market (so, exactly what valuable
assets are you selling, and who, exactly
is buying ?)
Also says that the blulk of their revenue
comes from web hosting...there's a winning
1998 market (I just left a large recently
renamed telco doing securtiy for web hosting).
It's corporate "leadership" without a clue.
---eludom
You left some out: GE/Viacom/Disney/Microsoft/AOL/TW/Fox/MPAA/RIAA
My journal has hot
Good riddance. Clueless and Witless has been one of the worst spam supporters that ever been.
As a current C&W employee..
I have to say there really isn't any suprise to this. While its hard for any business to make a profit off of low-margin web-hosting, C&W was an ill-suited company to try and do so.
During the past ~2 years since it acquired both Digital Island and Exodus, C&W business model has been to lay-off people who knew what they were doing, and promote those who didn't (usually to the VP level).
The whole business is run by a very top-heavy management structure who have no interest whatsoever in doing what is good for the company. Instead upper management have only been concerned with building their own empires, even if duplicate functions existed elsewhere in the company.
There is only so long a company can exist with such an attitude, and C&W has hit the end of the road.
You must be in my general area.
C&W cancled the remaining three years of our contracts on our lines (Which they also stated they could do with no repercussions), and told us to either find a new provider or sign a contract with New Edge Networks.
Everyone in our company throught C&W was going to get sued for the contract thing. I wonder if any other companies have thought about it.
They didn't leave us much time to get new lines in. I'm really grateful for the work AT&T pulled for us. Based on all estimates, we were going to have our new Ts in only days (2 at most) before C&W pulled our old lines. Not much time to might 9 Class C's of DSL customers, dial-up users, and dedicated T customers.
I am now left with a very bad taste on how NewEdge treated us ("No, you *have* to sign at least a 1 year contract, we can't give you any less, because that's the deal we have with C&W" -- Each T1 from NewEdge was over 1100$ a month..Not a good deal), and how C&W treated us. Given the choice, I'll never do business with either one of them again.
...when all of your data centers are unoccupied by paying customers.
...
I used to work for a customer of Exodus/Cable Wireless, and saw the exodus from Exodus. I remember the boom years when I only went in on Sunday because that was the only day I could get a parking spot and not have to park across the street. I remember when you could see Dell and Compaq and Gateway and Sun systems in every cage, wall to wall. When you could sit in your cage and have conversations with two or three other customers and learn some really neat stuff. Where the soda and chips were only 25 cents. Where security walked you to your cage and unlocked it for you.
The last few years saw the datacenter become a ghost town. Granted, it was a 62 degree ghost town, but still a ghost town. Where every cage around ours became empty, and we even went from a full cage to a half cage thanks to faster and smaller equipment. The parking lots are never full, soda and chips are now priced the same as everywhere, and no one to talk with. And now security gives you the key to your cage and you walk past rows of empty plastic-coated wire mesh cages.
How do you lose money?? Because you have to run a gazillion foot data center, with all of it's associated infrastructure needs, and you don't have any customers in it. Compare it to the cost of running an apartment building if it is only half occupied. There are still maintenance costs, but now you only have half the tenants to cover it. You still have to heat and cool the empty apartments, although not the same as the rest, and you have no one to pay for it.
Don't get me wrong though. I loved the facility. It was clean and well maintained. I could get away from the home office and work without being interrupted. I didn't have to worry about AC and power and network outside of our cage. If C&W was still a viable company, there would be no hesitation about using them for a data center.
But the 90's are over
I rarely read replies, it's my opinion and if you thought about your opinion a little more, I'm OK with that.
I worked at CWUSA from 94 to 2001 and I have been predicting their demise for years now. Around 96 the executives were complaining that they were only making 3 cents of profit for every 6 cent call. Having had experience in a mature sector(retail) I recognized immediately that they were spoiled by huge margins. I knew that once the telecom industry became saturated and they actually had real competition that they would either adapt or change. Management did change but instead of concentrating on their core business, telecom services and custom billing for small businesses(which brought them to the Billion in rvenue mark), they decided to buy MCI's crappy internet backbone and become an internet company. Nevermind that they had no experience in this market and the executives didn't know what they were buying. Internet was sexy and they could market that much easier than boring old long distance. Their long distance service was an incredible cash cow.
New offerings were brought up and provisioning and billing systems were rushing into place(sometimes). Often a new product would have to be provisioned manually and there was no way to tell if a customer wasn't paying their bill for well over a year after they first started selling the product.
Then to top it all off the mothership(PLC) decided they were going to become a global organization and they ended up picking up the biggest inept blowhards in CWUSA to help create the global organization. While all this was going on they were still having their yearly layoffs, which they did even when they were making a billion a year. Management would lay off the workers and keep the management around. It was not uncommon to know of managers and directors with no people.
Not long after I left they decided to lay off all the techincal people and outsource the work to IBM. Many people were gone for good and many were tranferred to IBM. But the funniest thing about this grand plan was the first task of the plan-- assign a senior management team to organize the layoffs(to them management teams were the "magic pixie dust"). Those people were so management happy that they have a few building in Vienna Virginia stocked with managers, senior managers, director and AVPs that are quite adept at bullshitting, creating powerpoint documents and dodging bullets but they can't manage a damn thing. I could write for hours about the shenanigans that went on in that place but I'll just end with something an old relative who has been a businessman since WWII told me. "Anyone can make money when times are good, it's when times are tough that you find out who the real businessmen are." They were poseurs and it was only a matter of time before their hubris coupled with reality bite them in the ass. The sad thing is these same losers will end up getting nice cushy management positions at Verizon, Worldcom or AT&T and probably for more money.
It's very simple: there are no customers.
I've walked around a bunch of the old Exodus datacenters in New York City: even the "older" ones (ie the former GlobalCenter colo on 8th avenue, and the original NJ1 at Exchange Place)) were like ghost towns: row after row after row of empty racks.
The colocation "boom" of the 1990s was a pyramid scheme: VC-financed colo companies selling space at completely fictional rates to VC-financed startups. As soon as the venture money dried up, the small customer vanished...and then the big customers vanished...and then the behemoths themselves began to die off.
No matter how much you cut your costs, you can't make a profit if you have no customers.
My completely off-the-cuff guess is that even if C&W mothballed 90% of their colo facilities in the US, and all of their competitors (UUNet, AT&T, Globix, Level3) did likewise, there would still not be enough customers to keep them afloat. Colo is expensive, and there just aren't that many companies who actually need six-sigma uptimes. (Not that any of the colo providers ever came anywhere near their promised reliability numbers in practice, but that's a whole different rant.)
News for Nerds. Stuff that Matters? Like hell.
The signs were theee in the fall of last year. I wrote about it, and why hosting businesses tend to fall part, earlier this year.
. ht m
http://www.practical-tech.com/network/n04172003
Long story short, stupid business plans and lousy management equals failure. C&W's US business had both in spades. The real question, from where I sit, is will C&W continue to survive in the UK? That was unthinkable only a few years ago, but they've made so many bad moves recently and bleed out so much capital you really have to wonder.
Steven
We got this letter from our account rep at C&W this morning.
---
I'd like to take this opportunity to summarize Cable & Wireless' =
announcements today. I look forward to discussing this with you in more =
detail and please either call, or let me know a good time to reach you. =
The recent speculation in the media may have been unnerving to you and =
other customers, and we're excited to deliver our message today. I want =
to assure you that our business is not going away, and there is no need =
to seek an alternative provider for your services.
The bottom line is that C&W PLC intends to withdraw from the US market. =
CWUSA is a composite of three primary, and incredibly valuable assets =
including Exodus, Digital Island, and the former MCI Internet Backbone. =
CWUSA has made excellent progress against our November 13 =
re-organization announcement, however, the internet centric business of =
CWUSA does not fit with CW PLC's new strategic focus on national telecom =
companies with strong positions in their primary markets.
C&W PLC will continue to fully fund and support CWUSA until a buyer or =
investor is found for the business. There are no new changes to US =
headcount, or data center facilities, aside from reductions that were =
outlined in our November 13 re-structure announcement. We, as well as =
you (I'm sure) hope for this to be a swift transaction.
Frankly, for myself, and my US colleagues, this presents an =
extraordinary opportunity to grow a new brand on our strengths of the =
combined legacy industry leaders, and continue to provide you, and all =
our customers with exceptional service, and a range of product offerings =
that is unparalleled in our business.
---