Application Service Provider makes pigs fly

Hostopia handles all technology and its clients share in profits

By Risha Gotlieb

Special to the Star
November 27, 2000

Although conceived a mere 17 months ago, today boasts some 150 wholesale clients around the globe, and has become one of the most closely watched com­panies in the burgeoning Appli­cation Service Provider (ASP) industry.

The Toronto-based ASP in­troduced a revolutionary technology that allows tele­phone companies, cable com­panies and Internet Service Providers to automate and run a private-label hosting, email, and applications business without any investment in technical staff or equipment.

To date, the company has ac­quired customers in North America, the United Kingdom, Israel, Australia, Mexico, Saudi Arabia and Egypt.

Indeed, Hostopia has emerged as one of the fastest growing, most innovative com­panies in an industry that is ex­pected to skyrocket in the next several years. Industry analysts estimate the market for Web hosting alone to reach $20 bill­ion (U.S.) by the year 2004.

The driving force behind is its president, Franc Nemanic, who co-found­ed Internet Direct.?? The other two founders of iDirect, now known as Look Communications, Bill Campbell and Colin Campbell, are also part of the Hostopia team.

When Nemanic was searching for venture capital, Neman­ic found many investors thought the concept behind Hostopia was great but techni­cally impossible. During one meeting, a technical analyst retorted that would be able to deliver on its conceptual technology when ?pigs could fly?.


Nemanic took that as a challenge, and today Hostopia uses the image of a winged pig as their logo. It seems to symbol­ize the tenacity of the people behind the company.

Vice-president of R&D;, Todd Burroughs, says one of Hostopia? s strengths is its break­through proprietary technologies, which have allowed the company to unify Windows NT and UNIX hosting seamlessly into one platform.

In addition, their programming drastically reduces operating costs by simplifying and automating many of the tasks that at one time could only be performed by highly trained technical support staff.

?With the use of templates and an easily navigated format, end users can get their Web sites and email solutions up and running with little or no technical experience,? says Burroughs.

In short, al­lows Web hosting companies to side step what has become the major stumbling block in the industry ? staggering start-up costs. Hostopia takes care of all the technical aspects of hosting, from the servers and bandwidth to the infra­structure and administration.

?We?ve built a system that eliminates the need for techni­cal su ort staff which is the Number 1 cost of Web host­ing,? Nemanic points out.

Furthermore, their technology is such that as their customer base grows they virtually need only flick a switch to increase the system?s capacity ? without any additional fixed costs to either their customers or themselves. ?This makes the potential for growth extraordinary,? notes Nemanic.

Hostopia?s sales pitch offers a 50/50 profit-sharing pricing formula whereby the costs of servers, bandwidth and programming is borne by In turn, the customer ? or partner ? shares its Web hosting profits.

At the same time, Hostopian customers retain full owner­ship and control of their cus­tomer base and brand identity. This means that the Hostopian name is invisible to the end user. The end user sees only the name, logo and colours of the Hostopian customer.

The Hostopian model isn?t exactly revolutionary in the business world. A parallel in the automotive industry is Magna, which supplies parts and components to various au­to makers. Buyers of a Ford or Chrysler don?t see the Magna name on their car ? although half the car might have been made by them.

It?s precisely the ability to provide technology and appli­cations in a specialized fashion, while creating substantial cost savings for users that industry analysts say makes the ASP model the most promising of the new Internet business mod­els. The model also suits to­day?s outsourcing philosophy.

Both large and small Web hosting companies are turning to companies like Hostopia be­cause they can experience sav­ings as high as 80 percent, according to a study conducted by the Gartner Group.

Indeed, Hostopia?s customers can?t say enough good things about them.

Tim Rignold, president of WebHost, Australia?s leading Web hosting company, talks about the ?true partnership? he has with Hostopia. ?We know that they are committed to helping us aggressively grow our business, and the input and customer information we pro­vide helps them grow theirs.?

And Matthew Guiste, director of business development for eNIC Corp., the largest registry and registrar of country code top-level domains in the United States, says Hostopia offered a solution that ?fit readily into our existing technical infrastructure.?

Nemanic says that while the majority of his clients are cur­rently in North America, he ex­pects that in the near future Eu­rope and Asia will contribute upwards of 60 per cent of the company?s revenues. According to his projections, Hostopia will be a billion-dollar company within five years.

Contact Info: Anton James
Director of Marketing
(416) 239-6987 ext. 7604
(416) 726-8577