Planet / EV1 Planning Merger

May 10, 2006 — (WEB HOST INDUSTRY REVIEW) — With a couple of quick announcements this week, the balance of power in the dedicated Web hosting market shifted, or rather coalesced, into the hands of one new, and very big, organization.

On Saturday, it was reported that investment firm GI Partners (gipartners.com) had acquired controlling interests in two of the dedicated hosting space’s most prominent players, Everyone’s Internet (ev1.net) and The Planet (theplanet.com).

Shortly thereafter, the two companies announced that they had merged, creating the largest dedicated Web hosting provider in the market, with more than 20,000 clients and 50,000 dedicated servers under management.

Executives from both companies say they don’t see the deal ushering in any big changes in the dedicated hosting market. But the significant resources, scale and stability of the new organization will likely enable the two brands, already leaders in the dedicated hosting field, to set the tone for that particular segment of the Web hosting business.

The companies have said they intend for EV1Servers and The Planet to continue to operate as separate brands, but the new potential for the sharing of intellectual property and business practices has obvious benefits for both sides.

Jeff Lowenberg, vice president of operations at EV1, and his counterpart at The Planet, chief operating officer Will Charnock, have begun discussing the ways in which the companies can share resources and ideas.

“The way that I look at it,” says Lowenberg, “we will certainly share technologies that the two companies have developed, and Will and I will be looking at different ways that each company does things, and whoever does it best we’ll start adopting that technology to the other company. But the two companies will continue to have their own identities and their own brands.”

And, in addition to sharing technologies the companies have developed, or are developing, the new organization will benefit from the potential to combine technology resources.

“There is that opportunity,” says Charnock. “And some of the things that we’re kicking around internally are some products that kind of leverage the two different physical locales for some products and things like that.”

The doubling up of engineering staff and resources has the potential to immediately impact the speed and confidence with which the post-merger organization can develop new products and bring them to market. Rather than fundamentally changing anything about the dedicated hosting market, the merger, say its participants, will have its most immediate and most profound effects on the way they do business, and their ability to do so. The significant boost in financial solidity, for instance, could be of considerable interest to customers.

“From my perspective,” says Charnock, “if there are going to be any changes, they’re going to be for the better. I think for the customer, as a whole, combined we’re a very strong company. We’ve seen some of our competitors disappear overnight. And when you look at us now, you have to know that we’re going to be around for the long haul. And you can feel secure when you take your services to us.”

There is plenty of overlap in the partnerships held by the two companies, and while the deal may not immediately create any new vendor relationships for either company, it may have the potential to change their existing relationships.

“We share many of our vendors,” says Charnock. “So it’s hard to pick Microsoft and say ‘that’s an immediate benefit,’ because we already have essentially the same relationship with Microsoft that EV1 does, I believe. So in that respect, I think the benefit is that we’re now a much larger entity, and we can leverage that into maybe having a little more input into features going forward, helping them develop some of their products to suit what our customers are asking for and things like that.”

Interestingly, given the nature of the Web hosting business, the similarity of the two companies in terms of their products and general approach to the business make it very easy for them to slip into a collaborative relationship. It is no big surprise that two companies succeeding in dedicated hosting are operating very similarly.

“We didn’t have a working relationship [prior to the acquisitions and merger],” says Lowenberg, “but it was good competition between us, as it was two of the biggest, if not the biggest in this particular section of the market. We drove each other to improve our service offerings, and we’ll continue to do so. Only now it won’t be so much one against the other. We’ll be forcing the rest of the market to keep up with us.”