Intel Folds Hosting Business

The company expects to take a $100 million pretax charge in the second quarter related to write-downs of capital assets and other costs associated with shutting down Intel Online Services, which the company launched in 1999.

Intel also said it would support existing customers over the next 12 months.

Hosting service providers said Intel realized hosting isn't core to its business.

"They're a chip maker," said Jim LaBelle, vice president of marketing at San Mateo, Calif.-based NetLedger, which participated in Intel's hosting program. "Hosting is not germane to its business. I don't think their departure from hosting reflects the overall hosting services space. This month we did 10 times the amount of business compared to this time last year."

But other companies that signed on with Intel aren't faring as well, including US Interactive, which filed for bankruptcy protection in January 2001.

Conxion, a managed hosting provider with its own network, often competed with Intel Online Services. Greg Quinn, vice president of sales and strategic alliances at the Santa Clara, Calif., company, said he isn't surprised by the move, given that the hosting market has been hit particularly hard by the economic slowdown.

"Intel, like many that got into this space, decided to go back into the business they know, understand and can control and manage," he said.