Intel is to invest $50 million building server farms to host Internet based applications. The service will debut by the end of 1999.
The chip giant will construct server farms or what it describes as 'bit factories', in various locations worldwide, starting at the company's Santa Clara home base.
The area which Intel is targeting is still relatively small, but analysts are predicting huge growth. A recent report from analysts IDC expect the market for outsourcing Internet based applications will grow at a compound annual rate of 91 per cent to reach $2 billion by 2003.
Intel said the new activity is complementary to Intel's core processor business: "The Internet economy today is being driven by ecommerce, and in order to grow the overall Internet economy, more companies have to come online," explained a company spokesperson.
He said the Internet Data Services (IDS) will host all kinds of applications, including ecommerce storefronts but also outsourced enterprise resource planning (ERP) applications.
One of the first services to be hosted by Intel's server farms will be the ecommerce site that is being codeveloped by Intel and Excite.
Part of the services offered on the new server farms, will be based on software that Intel obtained in the acquisition of Icat, announced last November. The Icat software creates ecommerce storefronts for small and medium businesses.
The server farms are likely to consist of systems based on Intel's Pentium III Xeon processor running multiple operating systems. Intel said it would probably purchase the servers from several of its OEMs.
A year ago, Intel launched a division called the New Business Group, headed by executive vice president Gerry Parker. IDS is the first new activity to come out of the division. But according to Intel, more announcements from the New Business Group are expected.
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