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E-commerce spurs servers
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December 28, 1998: 4:33 p.m. ET
As online merchants grapple with growing traffic, Web servers fill vital need
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NEW YORK (CNNfn) - In the aftermath of their most frenzied holiday shopping season ever, online vendors are discovering that electronic commerce can be a bit like grandma's old party-pooping platitude: It's all fun and games, until someone loses an eye.
In the virtual sense, 'losing an eye' is what can happen to hapless cyber-merchants when their online ambitions collide head-on with the technological limitations of their fledgling Web sites.
The downside can be ugly. Thousands of eBay (EBAY) customers learned just how ugly last week when a "hardware error" caused the site's database server to crash for about 90 minutes, the cyber-equivalent of a television broadcaster yanking regular programming from the air due to "operating difficulties."
Another big-ticket Internet vendor, Barnes & Noble (BKS), reported debilitating slowdowns on its Web site as its servers heaved under the weight of heavier-than-usual traffic.
And such snafus are merely a sampling of what is to come as wayward Web sites grapple with a looming Internet bonanza that pushes the parameters of their capacity, say Internet analysts.
Industry watchers see a burgeoning business in the not-too-distant future for companies that offer the "backbone" servers that provide digital off-ramps and on-ramps to thousands - and potentially millions- of Web surfers.
"A site that wants to prepare for rapid traffic expansion will want to make sure that it has internally all the systems it needs to handle that traffic when it comes," said Seamus McAteer, an Internet analyst with Jupiter Communications.
Needed: lots of technical TLC
For a big company, like an Amazon.com - the world's largest online retailer - or an America Online - the world's largest Internet services provider, with 14 million subscribers - maintaining a presence in cyberspace means lots of technical tender-loving-care.
"Maintaining a big e-commerce Web site," McAteer said, "they will be redoing their back end (or server network) once every year to 18 months. They will be rebuilding a whole new back end."
While Internet giants tend to use their own in-house server, smaller and medium-sized companies rely on outside providers to supply the hardware and software applications needed to keep a viable e-commerce site humming along.
For most Internet sites, the key motivation in beefing up server capacity, is one of "scalability", or the ability to seamlessly integrate hordes of visitors into a cyber suite that may be no more than a few "pages" deep.
At the high end of the marketplace, a failure to successfully scale visitors - usually due to software constraints or server limits - can mean the difference between disgruntled customers and devotees who will keep coming back for more.
"What we're seeing now is so many companies that are coming out and hitting those limits," said Adam Twiss, the director of Zeus Technology, a privately-held software company based in Cambridge, England whose clients include Cable and Wireless Plc, Intel Corp., Lycos Inc., Sony and WorldCom MCI.
Zeus specializes in writing service software that companies use to host Web sites, whether a search engine like Lycos (LCOS), or a broad-based corporate cyber-headquarters such as Sony's.
Twiss said Zeus's revenues increased 40 percent in the first fiscal quarter ended Nov. 30 over the prior quarter. This quarter, he is forecasting a 100 percent increase. About 60 percent of the company's customers are U.S.-based.
"It's a combination of several things," Twiss said, explaining the two-pronged phenomenon he said is driving the demand for software and server providers. "There's "the huge increase worldwide in people using the Internet…and in the amount of time that people are using the Internet."
Internet IPOs boost server demand
Twiss noted that the recent wave of multi-billion-dollar public stock offerings by Internet-related companies has also propelled demand.
"They're prepared to spend a lot of money," Twiss said, referring to some of the recent IPOs, such as Earthweb (EWBX) and Broadcast.com (BCST).
With this in mind, companies like International Business Machines (IBM), Sun Microsystems (SUNW), Compaq (CPQ), Hewlett Packard (HWP), Silicon Graphics Inc. (SGI), and Unisys (UIS), to name just a few, have begun jockeying fiercely to curry favor in the market for computer information and networking services.
At IBM, spokesman Glenn Rossman said web servers are one of the six strategic "focus areas" that the computer giant has singled out for long-term growth, along with e-mail support services, e-commerce, and other segments.
Rossman said about one-third of IBM's business is currently devoted to its Unix servers, a sort of industry prototype originally used in academia and which later evolved into a sought-after server used by Internet sites looking to deploy a variety of applications on a single platform.
Even at Unisys, an information technology company whose customer base is comprised predominantly of large financial service firms, the dramatic inroads of electronic commerce have not gone unnoticed.
Barbara Babcock, the vice president of marketing for Unisys information services, said she had not seen a sudden surge in network requests due to surging holiday sales on the Web.
Rather, Babcock pointed to a general trend in which Internet sites are seeking greater raw capacity, or the tools needed to fine-tune existing servers to render them faster and more efficient. In industry parlance, these requests fall under the rubric of "business solutions."
"There are things happening in the e-commerce area where retail is what everyone is thinking about," Babcock said. "There is a fair amount of long-term and sophisticated activities going on in e-commerce."
In recent developments, Oracle Corp. (ORCL), a database software provider, reiterated its support for Sun Microsystem's Java Developers Kit 1.2 across Oracle's Internet platform.
Oracle's platform includes Oracle8i Lite, a mobile component that allows developers to build mobile applications using the Java programming language. The product will enable Internet users to disconnect themselves from their servers and maintain a Web browser presence on network systems and on mobile devices.
In another recent deal, the Lexington, Mass.-based Segue Software (SEGU) said it would test business-to-business e-commerce systems for Tech Data Corp. (TECD), a distributor of personal computer products.
People like McAteer, at Jupiter Communications, believe these developments herald a broader shift to online commerce as the core pursuit of Internet site sponsors.
"As the e-commerce market matures, you're going to see more software package solutions," said McAteer. "Even Oracle is getting into the applications business. There is much more packaging on the software side to facilitate seamless scalability."
Even traditional Web portals such as Yahoo! and AOL, analysts note, have begun aggressively signing on retail partners, bringing one mouse-click shopping to millions of subscribers through icons on their home pages. "Everyone's looking for a bit of the transaction spike," McAteer said.
-- by staff writer Douglas Herbert
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