Web Hosting News

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Otherwise, fasten your fun-belts!

Cisco’s TechWise TV is set to “air” an episode called “Energy Efficiency in the Data Center,” this Thursday, August 21 at 11:00 a.m. Eastern, which ought to be enough of a reason for a blog post.

It took a little bit of digging for me to figure out exactly what TechWise TV is, and apparently I’m a little bit behind on the subject, because it’s been running since September of 2006.

It’s a TV-show style web broadcast produced by Cisco and covering a range of technology topics. Most of the time it deals with Cisco products, but apparently not always.

I think I was tipped off about this particular episode because it’s especially relevant to the hosting community. Anyone who reads the WHIR regularly knows we’ve put a lot of energy into covering green technology and its place in the data center - with our “green issue” of WHIR magazine, among other things.

Cisco is keen to get its energy efficiency message to hosting providers, which could be good news for hosting providers, depending on how effective that message is.

There’s a lot of information on offer from the company regarding energy efficiency, and part of the episode is given over to a discussion of the company’s efficiency assurance program, which includes planning and assessment tools for determining the efficiency of your facilities, as well as a ton of video content relating to efficient data center design. There’s a lot of material on this section of the company’s website, but check the “access interactive tool” link in the far right column of the page to pull up most of it.

There’s a trailer for the episode hosted on YouTube. It’s short, but it gives you a sense of what to expect from the episode.

In particular, the episode (I’ve previewed a good chunk, but haven’t had time yet to watch the entire thing) discusses the fact that energy efficiency is a goal in IT operations not simply for altruistic reasons, but for the sake of its bottom-line impact. We’ve discussed this before - server power and cooling together make up most of the ongoing cost of operating a data center. And employing more efficient technology can reduce that cost considerably.

The program covers some key steps that data center operators can take to increase the efficiency in their businesses immediately without an overwhelming amount of investment - virtualization (in the network, in the storage area and of course on the server) being a key element in efficiency.

Overall, it’s good advice, but nothing you haven’t already heard if you’re attuned to the problems of energy efficiency you face as data center operators. The real value in the episode has to do with some of the specific solutions (from Cisco, and from a variety of other companies) that are addressed. Might give you something to think about.

Of course, nothing is specifically for sale at this point. It’s a free presentation. And along with the “live” airing next Thursday morning, there will be experts on hand answering user submitted questions via the website.

You can sign up for the session by visiting this link.

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As mentioned in a recent post by David Snead, managed hosting company Rackspace has gone public. The company began trading on the New York Stock Exchange last week under the ticker symbol ‘RAX’. A complete financial overview can found at Google finance.

The IPO shares were distributed via a Dutch Auction mechanism – made famous by Google when it went public in 2004. The stock was issued at $12.50. From the Rackspace press release regarding the IPO: ‘’ Rackspace announced the initial public offering of 15,000,000 shares of its common stock at a price of $12.50 per share. Rackspace will offer 12,700,000 shares of its common stock in the offering and the selling stockholders will offer an additional 2,300,000 shares of common stock in the offering. Rackspace and the selling stockholders have also granted the underwriters a 30-day option to purchase up to an additional 2,250,000 shares to cover over-allotments. Rackspace's common stock will begin trading on the New York Stock Exchange under the symbol "RAX" on Friday, August 8, 2008.’’

Almost immediately after trading began, the stock price dropped around 20% and has hovered in that range ever since. As of the publication of this article, the current stock price is $10.37 yielding a market capitalization of $1.2 billion.

However, an important question remains unanswered: “Is Rackspace worth $1.2 billion?”. The current market price seems to indicated yes. Despite that, there remains the issue of future performance and earnings expectations to solidify the current market cap. A nagging thorn in the side of the company’s valuation is the Price to Earnings ratio.

At the current market price, RAX is trading at over 58 times earnings – that is, the P/E is 58.26. This is pretty high by any analysis, indicating an expectation of torrid growth in the coming quarters. However, when compared to other market leaders in the online space, Rackspace begins to look seriously overvalued – even at the 20% discount to the issuing price. For comparison:

Google – P/E = 32.75
Microsoft – P/E = 14.81
Yahoo – P/E = 27.44
Cisco – P/E = 18.75

It is possible that Rackspace justifies the current valuation and that the company will shock and surprise investors with incredible upside when they next report earnings. That’s just what Google did when it went public. However, if the first earnings reports are anything less than spectacular – it’s likely that Rackspace won’t be worth $1.2 billion anymore.

This content is provided courtesy of the managed dedicated server experts at HostMySite.com.

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If you follow my blogs, you already know I have a personal web site, www.words2u.net, which I am trying to coax into making money. Sadly, this personal site is not that appealing to people other than myself, and this limits its earning potential.

The site is harassing me, its owner and designer, to pander to the perceived taste of my anticipated public, and is demanding changes.  It tells me this is marketing, not pandering. Either way, once I decided the site has to earn its keep, it has taken a life of its own, and wants to go places without me.

For example, my blog (blog.words2u.net). Originally a platform to vent, rant and rave, it has become politically correct (or rather, non-politically correct), because strong opinions might  offend people. Now the blog is G-rated, and I have very little to say to it.

Then there is the site design. Until today, the side bar, the navigational tool common to the whole site, was equally divided between my content and PmWiki's links. Content is diffuse - tracks include walks, short car rides and long trips; points of interest include malls, parks, dining spots, and so on. Only bus routes is a tight group (note: I have recently started adding categories such as 'stores' and 'miscellaneous' to the side bar).

The home page spends valuable real estate to explain the site structure, because of its lack of intuitive segmentation and its use of Wiki links and GPS terminology (a GPS device captures tracks and points of interest). In order to be more appealing, it must relate to things that interest my presumed public.

Which leads to another question - who should the site target? Tourists? Costa Ricans? Should I try and reach a particular demographic?

To target locals, I have to use Spanish, which, considering my mastery of that beautiful language, is a bad idea. So for now, it has to be English speakers - tourists, expatriates, and educated natives. Further segmentation will have to wait till later.

So what is a tourist, visitor or foreign resident be looking for in a web site? To find out, I looked at Fodors and Lonely Planet web sites, and print guides, as well as a bunch of sites from and about Costa Rica. I am going to pay them the most sincere form of flattery by breaking up my content the same way they do.

I also plan to make more efficient use of the navigation side bar, and to use the home page to make the case for the site's uniquness, added value, and 'wiifm'.

If you look at the site now, and visit again in a few days, you will see what I mean.

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Having an association to call all our own isn’t a new idea in the hosting industry, especially since we’ve seen various attempts at achieving this uber challenging goal in the last few years, all of which have, rather quietly, disappeared.

The last time I remember hearing about an initiative like this was in June 2006 when a gentleman by the name of Tony Holloway became one of the driving forces behind what he hoped would be the first official industry-wide association (the tentative name for it at the time was the International Providers of Internet Technologies and Hosting Association).

There seemed to be some definite interest and discussion stirred up at the HostingCon that year (yes, this was the one in Las Vegas) but after all was said and done, from what I gather, there just wasn’t enough overall support from ALL the different players that would have to be on board for such an organization to effectively work. And as Liam pointed out in his blog post “earlier efforts at forming hosting associations have also been determinedly and unmistakably small-potatoes.” The association has to not only be there to serve the needs of the smaller players, but of the giants in our industry as well. Of course, this all goes without saying, though.

This brings me to the present HostingCon 2008 that just passed a few weeks ago. We took a moment to have a chat with Paul Hirsch about a new initiative he and a couple of others (specifically Dan Garon, who does marketing and PR work for hosting providers and Michael Yablonowitz, CEO of Uplinkearth) have been working on to help create, what could be, our very own industry-wide association. More specifically, the Association of Internet and Hosting Service Providers.

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One of the issues that came up in the metrics that matter panel at HostingCon was the Rackspace IPO. Rackspace's Red Herring estimated a $12-$16 price.  Lou Honick believed that the IPO would price out in the higer range ($14 to $16) Elliot Noss in the lower range ($12 to $14).  Each bet $500 on their position.  Based on a final price of $12.50 (and falling), I say that Lou needs to fly up to Toronto and deliver the novelty check in person.

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