New Hosting Service Targets Small Businesses

XO Communications Inc. is moving beyond telecommunications services, with hopes of becoming a one-stop IT and communications provider for small and medium-size businesses.

On Wednesday, XO said that later this year it will start offering customers a range of hosted applications, including Microsoft Exchange e-mail, BlackBerry hosted services, McAfee security for small businesses, Microsoft SharePoint and Arsenal Digital Solutions desktop backup.

While the operator already offers an array of hosted applications, they have focused on telecom and Internet services such as Web site hosting or virtual private networking.

XO's small and medium-size business customers "typically wear many hats," said Charlie Cary, vice president of small business services for XO. "As technology changes, a lot of them are frustrated with having to invest in new servers and spend time with it," he said. "We're thinking they're going to embrace the opportunity for a one-stop shop to handle all this."

XO will target customers and prospective customers with under 100 employees, he said. It will sell a variety of packages and promotions with prices ranging from US$2 per application per user per month to $15 per application per user per month.

XO expects to add additional service offerings, potentially including those from WebEx, an online conferencing service, as well as Salesforce.com applications, Cary said.

Cary is choosing services to offer XO customers from an array supported by Jamcracker Inc. Jamcracker sits between companies like XO that want to offer applications to end users and companies that physically host the applications, handling billing and provisioning and serving as a single source for a range of hosted services. Jamcracker announced on Wednesday that it partnered with XO to deliver the services to end users.

XO's decision to offer hosted IT applications harks back to a time when competitive telecom providers began offering many different types of services to customers. "I can recall some pretty aggressive missteps in years back when the telcos and ISPs were trying to jump way up the value chain in one swoop," said Steve Crawford, vice president of marketing for Jamcracker. The services that XO plans to offer, however, are relatively simple applications that aren't very different than the types that XO already offers, he said. "It's not like they're offering hosted SAP," he said.