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1&1 Internet AG

German Web Host 1&1 Internet AG Expects to Increase Capacity and Decrease Costs Tenfold with Windows Server 2003

Posted: September 25, 2002

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Solution Overview

Company

1&1 Internet AG

Business Situation

Large-scale Web hosting company provides Web services based on the Microsoft® Windows® Server platform to provide competitive, first-to-market services, and achieve market leadership.

Benefits

Reduces TCO

Enables extremely competitive pricing

Provides secure, reliable mass hosting

Provides a highly scalable, condensed data center that reliably hosts 10,000 customers per server

Provides more compatible services for customers using SQL Server and Exchange

Microsoft®-based messaging system automates new customer services and billing, and interoperates well with other infrastructure systems like Sybase and SAP

Improves Return On Investment (ROI) by

Software and Services

Active Server Pages

Clustering Services

Microsoft Active Directory

Microsoft Exchange 2000 Server

Microsoft FrontPage 2000

Microsoft Internet Information Services

Microsoft Internet Security and Acceleration Server 2000

Microsoft Outlook Web Access

Microsoft SharePoint Portal Server 2001

Microsoft Terminal Services

Microsoft Visual Studio 6.0

Microsoft Windows 2000 Advanced Server

Microsoft Windows Server 2003 Standard Edition

Hardware

Compaq Proliant with RAID 5 in custom configurations

Vertical Industries

Information Technology

Country/Region

Germany

Audiences

General Users

Germany’s 1&1 Internet AG has become one of Europe’s leading Internet providers by aggressively marketing its premier Web hosting services at highly competitive prices. With the development of Microsoft Windows Server 2003, 1&1 can now offer customers the interoperability and dependability they expect from Microsoft® products at prices that make Windows a compelling new Web-hosting option, along with the company’s established services. 1&1 expects at least half of its new business to come from customers who want the new Windows offerings ?C more than 20,000 new customers per month.

Situation

1&1 Internet AG is the leading Internet applications provider in Europe, with more than 1.7 million customer contracts, 2.7 million hosted domains, and annual revenue of 118 million euro in 2001. Specializing in high-powered Internet applications, hosted in one of the most modern and powerful computer centers in Europe, 1&1 Internet AG has focused on the dial-up consumer and SOHO (small office-home office) markets. With the acquisition of Schlund+Partner in 1998, 1&1 Internet AG moved into the mid-size market as well. 1&1 Internet AG offers full service Web hosting: Web sites; domains; online retail; e-commerce solutions; mobile Internet solutions, including Unified Messaging and Personal Information Management via the Internet; and third-party products, including telephone equipment (DSL, ISDN) and software tools.

In the 10 years since its inception, the company has developed an aggressive marketing plan that combines the best products, based on advanced R&D, with highly competitive pricing. Andreas Gauger, 1&1’s chief executive officer, explains: “For 4 euros per month, we offer a complete Web-hosting plan. For 9 euros we offer Web hosting plus an ASP program. It’s a complete package price with no hidden costs―that’s our strength.”

Business Challenge

“Our main goal in adding Microsoft® Windows® Server 2003 to our business was to give our customers a choice between Windows and Linux hosting, and a broader range of services overall,” Gauger says. “We want to make it possible for the customer who has Microsoft SQL Server™ and Exchange Server to choose Microsoft Web hosting because it just fits their needs better, providing seamless integration with products they’re already using. We also have the goal of being first-to-market in providing .NET Web services to our customers as they roll out.”

In addition to being first to market with new technology, 1&1 Internet AG stays ahead of the competition by offering dependable service. Windows Server 2003 and Internet Information Services (IIS) 6.0 offer significantly improved scalability and reliability, which will give 1&1 Internet AG the capability of hosting up to 10,000 customers per server with absolute confidence. Thanks to the New Process Model in IIS 6, errors by one customer site will not bring down the server or leave other customers without service.

“With Windows Server 2003, we now have a way to offer dependable and highly scalable Microsoft Web hosting at competitive prices,” Gauger says. ”Our challenge is to be the first company in Europe offering very low-cost Microsoft hosting plans (about 4 euro per month), which will give us a market share that we haven’t seen before.”

Making that happen involves teamwork between 1&1 Internet AG and Microsoft. As the only European Web-hosting company that is a member of the Microsoft Windows Server 2003 Joint Development Program, 1&1 has its developers working closely with Microsoft consultants not only to implement Windows Server 2003 with IIS 6, but also to create special filters and tools to enhance its services and offerings. “This is truly a joint development effort to get as many customers as possible on our machines,” Gauger says. “It will give us the market advantage.”

Why 1&1 Internet AG Chose Microsoft

“We are a company that specializes in low-cost Web hosting and hosting services aimed at consumers and small- to medium-sized business,” Gauger says. “We chose Windows Server 2003 because it allows us to maintain very condensed server centers; we can get many customers on one server because it’s optimized for hosting. This enhances our reputation for quality service at highly competitive prices.

“In addition, Microsoft is focusing more and more on Web applications, and we think these applications will run well on Windows Server 2003. We want to be one of the first companies in the world to offer large-scale Microsoft Web hosting services with Windows Server 2003, because that will give us an advantage when new Microsoft products are developed. We are learning how this new Microsoft technology works and what we can do with it, so we can utilize other Microsoft products as soon as they come to market, and even before they come to market.”

Although many of the company’s current Web hosting services are based on Linux, Gauger says Windows Server 2003 with IIS 6 will make Windows Web hosting a rapidly growing business for 1&1. The reasons are many: innovative new features and capabilities such as SharePoint Team Services (STS) and ASP.NET; increased reliability and scalability; and seamless integration with widely used Microsoft applications such as Outlook®, FrontPage® and MapPoint®.

“Straight out of the box, Windows Server 2003 is an outstanding product for Web hosting,” according to Achim Weiss, 1&1’s chief technology officer. “That’s an advantage for 1&1, because it allows the company to offer its customers a rich array of services without the kind of extensive additional development we’ve always done with other platforms. That, in turn, allows us to get to market faster with new services and with less cost.

Weiss says Windows Server 2003 greatly increases the stability and scalability over earlier Microsoft offerings, which he expects will lower the cost of Windows Web hosting services tenfold. In addition, Windows Server 2003 offers customers easy integration with other Microsoft products they’re already using, which helps keep their costs even lower because they don’t have a steep learning curve as they would with new technology. Web hosting on Windows Server 2003 also positions both 1&1 and its customers to take advantage of the Web services and new technologies Microsoft is creating as part of the Microsoft .NET platform.

We chose Windows Server 2003 because it allows us to maintain very condensed server centers; we can get many customers on one server because it’s optimized for hosting. This enhances our reputation for quality service at highly competitive prices.

Andreas Gauger

Chief Executive Officer, 1&1 Internet AG

Solution

The Datacenter

With a technical staff of 100 employees, 1&1 Internet AG operates its own high-availability data center in Karlsruhe, Germany on a 500 square meter complex, maintaining 3,000 servers with approximately 43 terabytes of disk space. The company uses mainly Compaq Proliant servers with RAID 5, providing a mixed environment of operating systems. 1&1’s data center is connected to the Internet using several network providers with an overall 5 Gbit/s connection, and achieves 200 terabytes of traffic per month. Currently, 1&1 is building a new 2,000 square meter data center, which it plans to begin using in December 2002.

Robust, Web-Oriented Email

Following the addition of Microsoft Exchange 2000 and its Outlook Web Access (OWA) technology in 2001, 1&1 is able to offer a range of Web-based email solutions, from basic email to collaboration, that were formerly found only in desktop-based applications. Microsoft Exchange 2000 and Outlook provide knowledge workers with the rich functionality of email, calendar, contact list, collaboration and offline availability. With Outlook Web Access, 1&1 offers a Web-based client with functionality levels that can be tailored to fit customer needs.

Streamlined Communication

1&1 Internet AG and Microsoft have partnered to create cost-efficient new Windows .NET hosting solutions, which enable business and private users to network their computers via the Internet. Because Microsoft .NET Web applications are stored on central Internet servers in 1&1’s computer centers, customers can access these services from any location around the world.

SharePoint hosting allows collaboration on projects from a password-protected Web site, where documents, graphics and video libraries can be stored and edited. Automated email is generated when any member makes an edit, and members also participate in online discussion forums without leaving their desks. Business customers appreciate this solution because it eliminates the need for costly intranets and the time-consuming management of team meetings.

FrontPage hosting and Web design offers numerous features that include statistics, search engines, interactive tables and diagrams, design templates for forums, and a variety of animation features. Unlike Linux, FrontPage allows the integration of Active Server Pages (ASP), ASP.NET and FrontPage Server Extensions (FPSE), widely used by developers worldwide. FrontPage also offers the choice of seamless integration with Microsoft Access databases or FTP uploads.

Outlook hosting enhances Microsoft Outlook Web Access and provides the functions of an Exchange server, but at a lower cost. One significant enhancement is the automatic synchronization between Microsoft Outlook on the PC and data on the Web server. Along with email, the address book, contacts and appointments are automatically updated, simplifying the coordination of business teams by providing both―online and offline functionality.

Automated, Interoperable New Customer Services and Billing

With a back office based mostly on Java, 1&1’s technical solution is “done the old fashioned way,” according to Chief Technology Officer Achim Weiss. “When someone orders a Web-hosting plan, the order goes into our system from a couple of different points; either the customer orders on the web, sends a postcard, or calls our phone representatives.

“The customer’s order ?C for example Web hosting, FrontPage services, SharePoint Team Services, and three email addresses ?C gets entered into a Sybase database, which holds all customers information. We have a message-oriented system based on Microsoft technology, so when a new customer is added it triggers a message in the middleware, which creates an Exchange account at the Web space to a server, gets an IP address from the IP system, provisions everything, and triggers the billing system.

“This Microsoft-based messaging system coordinates all the different Microsoft systems, and finally initiates billing. We have developed our own billing system, which is integrated with SAP R/3.”

Secure Mass Hosting

As a Web-hosting company, 1&1 Internet AG also faces special security issues. The company chose Microsoft’s ISA Server because it performs the dual tasks of providing high-level security for the hosted network and allowing the secure publishing of hosted services. For example, ISA Server has application-level packet inspection and filtering that allow 1&1 Internet AG to publish Exchange Remote Procedure Calls (RPCs) and helps provide customers with secure access to its back-end Exchange servers. That, in turn, allows customers to use full Outlook functionality across the Internet. The ISA Server is also applied as a firewall, monitoring traffic between clients and the server, and helping to protect the hosted network from intrusion. This interoperability between ISA Server and Exchange provides valuable benefits to 1&1 Internet AG and its customers.

Weiss explains: “One of our key questions is: how do we isolate one customer from another? With some of our competitors, it’s easy to walk through other companies’ directories―everybody else’s files―and that’s definitely not what we want. We are developing additional filters, which will enable us to offer secure mass hosting. We tested it with Microsoft and it worked very well. ”

Benefits

“We are in front, in both functionality and pricing,” Gauger says. “We were the first company in Europe to offer Exchange hosting, and we’re now the first to offer Windows .NET hosting―a product that’s not even released yet. This is one component of image and branding: if you want to get something cool and new, you obviously want to get it from us first.

“On the pricing side, we hit our competition very hard,” he continues. “For example, we introduced dedicated Web hosting six months ago in Germany, and in six months we sold 2,000 servers. We are now the leader because we are able to continually lower prices. In this area, we have no competition―no one is able to match our level of pricing.

“Now we can offer customers a choice between Linux and Microsoft hosting at essentially the same price,” Gauger says. “Windows Server 2003 gives Microsoft an opportunity to compete with any product out there―and win. That’s a big step for Microsoft.”

Weiss, 1&1’s chief technical officer, explains: “We feel that Windows Server 2003 with IIS 6 will be a tremendous improvement, because we will be able to fit many more customers on one machine with increased dependability.”

“Windows Server 2003 with IIS 6 will improve our return on investment [ROI] by reducing customer-service costs,” Weiss says. “It’s hard to quantify the cost savings this early, but we know that happy customers save us money. They don’t call customer service; they recommend us to their friends; and we get more business. Performance and stability are two key points in any server, and there are some real improvements here. We expect Windows Server 2003 to be better than everything else before, with higher levels of manageability, which will help us with overall system administration. That’s very important.”

As Andreas Gauger looks forward, he sees increasing demand for the kind of Web hosting services 1&1 provides, including both shared and dedicated hosting on Windows Server 2003. “At the moment we are gaining 60,000 new customers a month in Germany, which is about 40 percent of the total market,” he says. “Between 35,000 and 38,000 of those want Web hosting, and the rest are Internet access customers who always get bundled Web hosting, too.”

“We plan to offer Windows Server 2003 hosting concurrently with our existing products, and we anticipate that 50 percent of our new customers will be in the Microsoft space, which would equal about 20,000 new customers per month,” Gauger says. “ Because Windows Server 2003 is so much more efficient, we will be able to drop the price of dedicated Windows hosting from 300 euros per month to 69 euros, and dedicated hosting is currently the fastest growing part of our business. With the higher scalability and dependability of IIS 6, there’s no limit to how much we can sell. If the load on Active Directory gets too heavy, for instance, we can easily install another machine.”

In only a year, 1&1 Internet AG captured 4 percent of market share in the United Kingdom, which now accounts for about 8 percent of all new 1&1 customers that sign on every month. Gauger expects the addition of Windows Server 2003 hosting to help 1&1 expand its market share in the UK. “I think in the UK we’ll be the first company to offer Windows .NET Web hosting for a good price, and I think it will drive the market very hard,” he says.

“Windows Server 2003 was built with Web hosts in mind. We will start with 5,000 customers on one machine and then add more, up to 10,000 customers per machine.” Gauger says. This positions us perfectly to meet the demand we expect to get from customers who prefer Microsoft Web hosting, without having to invest heavily in additional hardware now. As we need more machines, we’ll add more. There’s really no limit."

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