Cyber partners: Qwest, IBM team to construct Internet data centers

Qwest Communications and IBM joined forces last week to build out Internet CyberCenters to capture the rapidly growing e-commerce market with a wide range of services, including co-location, Web hosting and application service provider platforms.

Under the seven-year agreement, IBM will plan and build 42 CyberCenters for Qwest. Fourteen of those are expected to be completed by the end of the year. In turn, IBM will become an anchor tenant at the centers, providing its customers with direct connections to Qwest's network.

Qwest and IBM hope to gain up to $5 billion in revenues by providing end-to-end services to their customers. Revenues from the partnership will be split almost evenly between the companies.

Forrester Research predicts the e-commerce marketplace will reach $1.5 trillion in the next three years. Qwest and IBM hope to take advantage of the demand for network services and applications that will support that trend, said Lew Wilks, president of the Internet and multimedia markets division for Qwest. "The ability of IBM, combined with Qwest, will give end-to-end control of applications, services, network infrastructure and the hosted environment as one managed resource - as opposed to five or six disaggregated elements that most providers try to assemble."

IBM will use Qwest's transport network and network management facilities. "Our customers will have access to the most advanced Internet network and a flexible environment where they can buy as much or as little as they need on the hosting spectrum," said Jim Gant, vice president of Internet outsourcing for IBM Global. The relationship with Qwest will help IBM expand its e-business and hosting services. "We elected to form a partnership with Qwest because of their network capabilities, locations and the services they offer and the speed at which they move," Gant added.

The linkage to build out the CyberCenters is a "kind of necessary evil for both companies," said Melanie Posey, an analyst for IDC. Although Qwest had plans to build out its data centers, under the IBM partnership, it can proceed more quickly. "It's good to go with somebody who knows how to build the centers and who needs the data center space for its own hosting services," she said.

A hitch in the partnership could develop when the two rival hosting service providers set up shop together. This reflects a growing trend in the industry, Posey said. "If you need a partner to do something, you're probably going to be partnering with your competitor, and there's not much you can do about it," she said. But the fact that IBM focuses on system integration and Web hosting while Qwest has a more net-centric focus should keep the two from butting heads, she added.