A whole new provider: CenterBeam beams the Net and more to small businesses

For some, working with computers is as easy as walking. But others have no desire to know how to manage the machines or are just technologically challenged. CenterBeam recently was formed with this in mind. Its mission is to make technology accessible to non-technical people, providing small businesses with everything that the Internet demands - from access to equipment and support. Although the company offers businesses an alternative for access, it is unclear whether it poses a threat to traditional ISPs.

The company will provide its business customers with all the necessary hardware, software, Internet access, backup, security, support and service components in a single package, which it hopes will eliminate typical technology headaches, such as computer crashes, printer problems or lost e-mail.

CenterBeam's investors include CrossPoint Venture Partners, Accel Partners, NEA, Microsoft and US Web/CKS, which CenterBeam CEO Sheldon Laube co-founded. "We think we [have] the first true PC in business [to be] free of hassle," he said.

Like car manufacturers, computer companies come out with new models every year, Laube said. It's a rare person who feels the need to upgrade his car, and the same could be said for computer users, he said. People need a new computer when it no longer works, not when a new model comes out. "This is where the computer industry has bamboozled the public," Laube added.

In addition to providing all the technology for a single fee, per PC user, the company provides high-speed data connectivity and remote management. It also stores data in a secure center so that anything lost can be retrieved. The company will start offering service to its initial customers by mid-September, with advertising to launch on Sept. 22.

According to IDC, small businesses spent roughly $57 billion on technology in 1998. By 2002, that number is expected to reach $114 billion. With the importance of technology growing and the cost to support it rising, CenterBeam is confident that its rate of $165 per month per PC user will win over small businesses.

"It is difficult for small companies with limited resources to coordinate three different parties to serve [technology needs]," said Robert Rosenberg, president of Insight Research.

It is hard to categorize Center-Beam, said Glenn Ricart, the company's chief technology officer. While it is an ISP in some ways, it is an application service provider in others.

CenterBeam calls itself a business Internet infrastructure provider, Ricart said. It becomes a business' IT manager, virtual chief Internet officer on top of arranging the bandwidth, providing the back up and offering DSL and LAN connectivity.

"It would be a mistake to put CenterBeam in the ISP category because [it is] more of a surrogate IT department," said Tim Bajarin, president of Creative Strategies. "While it is an ISP with a gateway to the Net, [it offers] more than that."

"It is very much an ISP alternative," said Ray Boggs, an analyst with IDC. While acknowledging that companies such as CenterBeam pose a competitive challenge, Boggs does not believe ISPs need to adopt such a strategy to compete.

"[CenterBeam] may serve to increase broadband in general, and anything that raises awareness will help," Boggs added. Covad Communications, which has common investors with Center-Beam, provides the company with a private network. CenterBeam also resells Covad's services, with exception of the Internet.

Rosenberg also does not expect ISPs to embrace CenterBeam's model. "The only way ISPs will change is by competition from the big phone companies that get into the Internet business," Rosenberg said.

However, some ISPs might start considering alliances with equipment manufacturers to create a channel for providing enhanced business solutions.