Announcing EarthLink Business Solutions

For years, EarthLink has been losing webhosting customers, but the recent acquisition of New Edge Networks allows the company to build on an area that has been a corporate weakness for many years.

by Alex Goldman ISP-Planet Managing Editor [May 1, 2006]

Today, Monday, May 1, 2006, Atlanta, Ga.-based EarthLink announces a new business division whose mission is to create bundles for and sell services to small business customers.

The division was created in October, 2005, and has been conducting market research, examining bundling and packaging possibilities, and building an offering for a VAR channel.

In articles such as Follow SonicWALL To A Professional Internet Industry, ISP-Planet has been arguing for some time now that ISPs should acquire VAR skills, and has been suggesting that vendors look to ISPs for skills that the vendors lack.

Webhosting revival
One skill that EarthLink has appeared to lack over the past several years is the skill of selling hosting services. It has lost customers over the past two years.

The company had 166,000 webhosting customers as of December 31, 2003, 153,000 webhosting customers as of December 31, 2004, and only 136,000 webhosting customers as of December 31, 2005.

That's not good. In businesses such as dialup, where the market may be shrinking, it's okay to lose customers, but the webhosting market is growing. EarthLink can do better.

And Linda Beck, executive vice president and general manager of the new EarthLink Business Solutions division, says EarthLink will do better because it now has a lot to offer, in part thanks to the recent acquisition of New Edge Networks (see EarthLink Means Business).

"Hosting was treated as an extension to the consumer product line in the past," she says.

"With New Edge Networks, we have new paper processing skills, a big footprint, and a comprehensive set of products for small- and medium-sized businesses. We can enable a business to grow from SOHO (where they use consumer products for the most part) to a medium-sized operation with many employees," Beck adds

The company will be selling through a VAR channel that has four levels, Bronze to Platinum, and allows companies with as few as five webhosting customers to participate. It will offer 24 x 7 technical support, and marketing assistance. Gold and Platinum level VARs will get free domain registration. Discounts are up to 60 percent in the top tier of the program.

The new network
Beck says that New Edge Networks gives EarthLink a particularly powerful offering for companies outside the largest cities. "New Edge Networks cover 9,500 of the COs that offer business access. No one else has coverage as big. It includes 582 unique COs outside Covad territory."

In addition, New Edge Networks had developed solutions for retail operations with many locations, such as gas stations, hotels, fast food, and stores, from Wendy's [.pdf] to Speedy Stop [.pdf].

Retail solutions incorporate site to site VPN networks and direct connections to payment processors that go over New Edge's network, not the public internet, among other features.

EarthLink operates its own data center in Atlanta, maintains the MindSpring data center in California, and uses a Level 3 data center in Dallas for disaster recovery. We have argued that companies should be on all three power grids (which are, roughly: East, West, and Texas) to avoid catastrophe in any one of them. We commend EarthLink for doing so.

Beck is confident of demand. "Retailers are upgrading from dialup credit card swiping machines to broadband payment processing, but there are still a million and a have retailers that have yet to migrate to broadband and IP-based payment processing. And if you're buying broadband for your business anyway, broadband payment processing allows you to take out the extra phone line."

She says analysts' predictions agree. Citing EarthLink's presentation to investors, December 13, 2005, on the acquisition of New Edge Networks (slides 5 and 6, both JPEG), she points out that the small business IP VPN market is expected to be worth $3.6 billion by 2009, with a 23 percent compound annual growth rate (CAGR) between now and then. IP VPNs is just a piece of what EarthLink Business solutions is offering.

It's good business.

— End