InterNAP: A Company with Backbone

Like all good businesses, InterNap
was started out of frustration — that is, the existing Net infrastructure. Anthony Naughtin,
the CEO and co-founder, has spent years dealing with the bogged Internet
infrastructure. This is also the case with Christopher D. Wheeler, a
co-founder. Wheeler has spent 10 years architecting and implementing
advanced TCP/IP networks. In fact, he created Cisco’s OSPF and BGP4 routing
protocols.

However, Naughtin and Wheeler did not want to create a new network
(obviously, it would be hugely expensive). So the solution was to make the
existing network faster. The result was a virtual Internet backbone, known
as P-NAP (Private Network Access Point). Basically, the P-NAP directs
customer data along the fastest paths on the various backbones of the Net
(such as UUNet, Sprint, Digex, AT&T and so on).

Part of the P-NAP solution is old-fashioned capitalism. That is, InternNAP
pays the backbone providers. It is this financial incentive that provides
for a high-degree of quality of service.

For faster and more reliable Net services, customers are willing to pay
InterNAP a premium. Customers include such heavies as WebTV, Datek Online,
Mindspring and Amazon.com.

With the growth in its customer base, InterNAP has been growing its revenues
nicely. They were $8.9 million in the prior quarter, which was up from $1.2
million in the same period a year ago. The sequential growth rate was 62%.
In the past quarter, 92 new customers were added. In all, the company has
339 customers. The average monthly revenue per customers is increasing. It
was $10,400 per customer, which was a 20% increase from the fourth quarter
of 1999.

InterNAP is also growing via acquisition. Yesterday, the company announced
it is purchasing CO Space, which is a
leading co-location service provider (the price tag is $244 million).
With the acquisition, InterNAP will provide
a more complete solution to its clients (InterNAP will have 275,000 gross
square feet of co-location space in 13 locations).

Although losses are still large, with $20.6 million in the last quarter, the
company is aggressively building a strong infrastructure.
There are 16 P-NAP facilities deployed already. With consolidation hitting
the industry (such as with the purchase of Verio), the infrastructure of
InterNAP should be very appealing indeed.

News Around the Web