RealTime IT News

Reputations On the Line in IBM, AT&T Deal

IBM Corp. Tuesday took more than several hundred thousand square feet of floor space in Internet data centers operated by AT&T Corp.

The $450 million multi-year deal allows IBM Global Services to tap into AT&T's networking capabilities and grow its Web hosting centers for e-business services.

Initially IBM nabs key Net real estate at AT&T's Internet data centers in New York, Chicago, and Phoenix. The deal also allows IBM to take a room in six additional AT&T data centers by this time next year.

IBM expects to fill its Web hosting expansion with content from large companies setting up businesses on the Web, dot-com companies, e-marketplaces, and application service providers.

Doug Elix, IBM senior vice president and group executive of IBM Global Services said demand from businesses born on the Net necessitated the deal.

"As enterprises sharpen their focus on core competencies the demand for outsourcing will continue to grow," Elix said. "This agreement will strengthen our ability to meet customers' outsourcing needs for basic collocation facilities, Web hosting, and everything in between."

Rick Roscitt, AT&T Business Services president, said its ability to deliver guaranteed performance over AT&T's IP network and data centers brought IBM to the table.

"Our Internet Data Centers are the next generation central offices for e-businesses," Roscitt said. "This $450 million, multi-year deal enables IBM to provide its e-business customers with the services they need for their mission-critical business applications."

IBM's e-business hosting clients gain access to AT&T's fat pipe connections through its OC-192 IP network that is capable of providing the performance and bandwidth required to operate in a Web-based world. IBM e-business customers can also contract for Asynchronous Transfer Mode and Frame Relay services from IBM, as delivered by AT&T.

Managed Internet access from AT&T also allows IBM to gain data transport over the top telecom firm's existing peering agreements. Additionally, IBM can up its ante and extend AT&T's service level agreements to its clients, guaranteeing Internet access and data transport for mission critical e-business services.

AT&T and IBM plan to join forces to bundle and market Web hosting solutions. The Web collaboration agreement expands both companies' existing relationship enabling customers to leverage the networking, tech expertise, and reputation that AT&T and IBM maintain in the market.

The first service offering from the two firms is designed for small and mid-sized businesses that want to add streaming media functions to their Web sites. AT&T will incorporate IBM's Netfinity 4000R Web servers into the streaming media hosting solution and RealServer Plus streaming media software from RealNetworks, Inc. .

AT&T will sell the streaming media hosting service through its direct sales force, value-added reseller channels, its Alliance Channel, and other partners.

With more than more than 80 million voice, video and data communications customers, IBM is almost guaranteed an immediate return on its investment in AT&T.

AT&T continues to work on expanding its OC192 IP infrastructure with a massive buildout to construct 44 global Internet data centers with allies by 2003. It's a sure bet that IBM will set up house in several AT&T global data centers over the next three years.