Despite SCO Deal, Growth at EV1Servers Continues

Do the heated opinions surrounding The SCO Group's legal case translate to the bottom line for Linux-powered businesses? Apparently not in the case of EV1Servers, whose continued growth has defied predictions that the web hosting company would lose customers due to fallout from its dealings with SCO.

On March 1, EV1Servers became the first publicly identified company to have paid SCO to settle its disputed legal claims involving Linux. More than three months after the deal was announced, EV1Servers has weathered the initial storm of criticism and continues to show a strong gain in Linux hosting-based hostnames, adding more than 80,000 Linux-based hostnames since the SCO deal was announced. With more than 770,000 hostnames on Linux, EV1Servers is the fourth-largest Linux host, trailing only 1&1 Internet, and domain registrars Go Daddy and Register.com.

Linux-based Hostnames at EV1Servers

There's been no meaningful exodus of Linux customers from EV1Servers, despite a wave of online forum postings and media articles predicting the Houston company would be ostracized by the Linux community for its dealings with SCO.

The initial analysis suggested two business challenges for EV1Servers: existing Linux customers might switch to other providers, and prospects might be deterred from hosting with EV1Servers in the belief that doing so would amount to indirect financial support of SCO's legal case. Both scenarios were widely discussed on the company's customer forums, but neither appears to have been enough of a factor to impede the company's growth.

Instead, EV1Servers has added more than 85,000 new hostnames on dedicated Linux machines since March, while holding its own in head-to-head switching with competing web hosting providers, with a net loss of just 2,694 hostnames in the last three months. About 43K hostnames switched from EV1Servers to other hosts in March, followed by outbound switches totalling 37K in April and 45K in both May and June. Those numbers marked a modest increase from 28K in January and February, but any upward tick in departures was nearly offset by an influx of Linux customers from other providers to EV1Servers.

Why didn't the strong response to the SCO deal manifest itself in a visible impact on EV1Servers' long-term business? While the deal sparked strong rhetoric and concerns from many customers, it does not appear to have been a key decision-maker for most of EV1Servers' Linux hosting customers or prospects. While forum postings are quick and free, the same can't be said for switching providers.

While thousands of web site operators switch hosting companies each month, migrating a complex site remains a non-trivial undertaking, and generally requires a compelling rationale. The resistance to migration was amply demonstrated during the wave of bankruptcies by colo providers and web hosting firms in 2001-2003, during which many large customers kept their equipment with providers who filed for Chapter 11, hoping a buyer or reorganization would spare them the cost and headache of migrating to another provider.

A major factor is that EV1Servers hosts more than 3,300 site operators with more than 20 domains, who collectively represent nearly 60 percent of its hostnames. Most of these are web hosting resellers, who compete fiercely to carve out profits in a business in which key product offerings are largely commoditized.