Logicworks Managed Hosting Solutions

NEW YORK – March 6, 2002 – Carter Burden, President & CEO of Logicworks™ (formerly known as Digital Telemedia), ponders its success, September 11, the importance of customer service, and where he thinks the industry is going.

Who is Logicworks? How did it start?

I started Logicworks in 1993, which was then known as Digital Telemedia. We provided Internet infrastructure services to small and medium size enterprises, which mostly consisted of access and hosting. We’re based in New York. Naturally most of our clients were also local at the time, but we’ve since expanded to serve clients on a global basis, with facilities in both New York and Los Angeles. We now focus almost exclusively on providing managed dedicated server hosting and related services.

Sure. That’s when we own and fully manage servers in our data center on which our clients run their Web sites and software applications. They never have to worry about the hardware or operating system, so what we provide is more hassle-free and cost-effective than traditional co-location or self-hosting in-house.

Why have I never heard of you before?

We’ve never done any promotional marketing on any large scale, and never to a mass market audience. Our sales efforts have been largely fueled by word-of-mouth from satisfied clients who were happy to refer clients to us when their friends in the industry needed hosting services. We hope that continues, but the market opportunities warrant a more systematic marketing operation, so we’re building the Logicworks brand with a focus on reaching technical decision makers.

Why did you change your name to Logicworks?

For a couple reasons. First, our business has changed. We’ve recently exited the access business to focus more on managed hosting, and we wanted a name to better reflect that change. Second, we wanted a more memorable name to better represent our brand identity. I think Logicworks represents a more forceful presence and is suggestive of the principles with which we’ve built this business -- a measured and rational approach to growth and service.

Providing access services was lucrative, but focusing on hosting--and exiting the access business--afforded us greater control over quality. For access services, our dependence on telcos for both quality of service and responsiveness to problems meant there was little we could do to protect our clients from the telco’s general lack of accountability. In the hosting business, we have more complete control over our clients’ experience.

What markets do you serve? Who are some of your typical clients?

We serve primarily small-to-medium sized enterprises across a wide range of industries, including many media, high-tech, and professional services concerns. Clients are generally US-based, but many are globally-based. They range from established companies to up-and-coming firms. Typical clients include Digitas, BBC Worldwide, Court TV, Simon & Shuster, Paper Magazine, and Thomson Financial.

While some clients typically use us to host their Web site, database, and e-mail servers, other clients also use our servers for financial and accounting software, and virtually any software application for which they would want secure, remote access.

Many, but here’s one. BBC Worldwide facilitates the search of their News and StockVisions Archive through their site, www.bbcfootage.com, which had been housed on a co-located server they managed in our facility. Once they recognized the advantages of managed hosting, specifically the ease and capacity for seamless scalability, we worked closely with their developer to transition their site to our dedicated servers. They’ve never had to visit our facilities since. The success of their site has recently prompted additional upgrades to even faster, more robust architecture.

First, we excel at providing personalized customer service. Second, we’ve grown organically where most of our competitors have grown through massive infusions of capital. We’ve always had to rely on service as our key differentiator, since our lack of marketing meant we were more dependent on positive word-of-mouth. Almost all of our technical staff have been on the job solving problems for years at Logicworks. The more experienced customers become, the more they realize service is what matters most.

Okay, you focus on customer service. But doesn’t everyone claim that?

Agreed. All of the providers that recognize this industry is driven by service and not price make claims about the level of service they provide. However, this is an industry where the buyer should beware: they’ll never know if those claims are for real until it’s too late. Customer service doesn’t just mean picking up the phone quickly. In a highly interconnected technical environment, our clients need a problem-solver, not a finger- pointer. Our technical staff has the experience and right ethic to be critical allies for our clients when they need us most.

With so many bankruptcies in this sector, isn’t this a bad time for Web hosting companies?

The bankruptcies of our competitors -- who were willing to lose hundreds of millions of dollars to win business -- is good for us and for the industry. For years lavishly funded competitors promoted the perception that being large and public translated to better service and viability. With their financial troubles thoroughly debunking that myth, we are in a much better competitive position. The dinosaurs of this industry are rapidly going extinct the companies like Logicworks who grew rationally and cautiously are the mammals who are inheriting the market.

Okay, but hasn’t the recent industry down-turn proven wrong earlier predictions for huge growth?

No, those research reports correctly predicted that millions of small and medium-size enterprises would need hosting. This is still the case. The down-turn we’ve seen is mostly due to failing dot-coms businesses without sustainable models funded by venture capital rather than revenues. The Internet and the Web are so thoroughly ingrained in how we conduct business we almost take it for granted. Any company that needs to communicate with its customers or its vendors benefits from a Web site, and a Web site is necessary in most cases to even compete. As businesses start to examine how they can operate on the Internet more securely, more cost-effectively and with fewer resources, they’ll immediately recognize the efficiencies of Managed Dedicated Server Hosting as an alternative to co-location.

First, as companies increasingly recognize the many advantages of managed dedicated server hosting over co-location or in-house hosting, we will continue to see more businesses demanding greater levels of service for their hosting needs. Second, I think businesses are just starting to understand the repercussions of September 11, and how managed hosting helps provide continuity of operations in the event of a disaster.

For example, while many companies have already taken the prudent steps of making sure their data is backed-up and stored off-site, most have not yet considered what they’ll do if they lose access to their office for an extended period of time. Moving critical business functions like e-mail out of their office and into a managed server environment will let businesses continue to operate as usual with employees working from home, or from multiple remote locations.

Finally, I think the trend for businesses to move their core business functions to the Internet is well demonstrated by Microsoft’s .Net and Sun’s Web services initiatives. Logicworks will be there as an essential strategic partner to meet both our clients’ current needs and whatever needs the future may bring.