USinternetworking

» see usinternetworking.com as it lived, on the wayback machine

~ the last words ~

USi sold to companies and never to people. Its sales call was a phone call to somebody with a budget for enterprise software, in a country where that budget existed. In 1999 the software on my machine arrived on a disc and stayed there, and the notion of paying a monthly fee to use Oracle down a wire would have read as a joke about the future. That is the whole distance here. i was on the consumer internet and this was the other one, the one with contracts and account managers.

Christopher R. McCleary founded it in january 1998 in Annapolis, Maryland. Chris Poelma and Stephen McManus came in with him, and Grotech and US West put up early money. The pitch had a name that has since been forgotten on purpose: application service provider. USi bought the licenses, ran the servers, kept the thing patched, and charged an installation fee plus a flat monthly rate. In february 1998, a month after it existed, it went after PSINet and was turned down.

It went public on 9 april 1999, in the middle of the bubble, and the shares closed the first day up 174 percent at $57.50. The offering raised $86 million. Later that month it was certified as the first BroadVision application service provider, which is the kind of sentence that only means something inside an industry. The fact that dates the whole idea came in november 1999, when USi announced it would rent Microsoft Office 2000 as an online service.

~ the record ~

~ what they were actually selling ~

The products USi ran for other companies were the heavy ones: Oracle, PeopleSoft, Siebel and Ariba, plus IBM WebSphere and Microsoft's server stack. None of that software was designed to be operated by a stranger over a network. Installing it took months and a consultant. USi's argument was that you should never see the installation at all, that you should get a login and an invoice and let somebody else own the problem.

That argument was correct and roughly a decade early. The bandwidth was not there, the browsers were not there, and the software vendors had no interest in a licensing model that cut the price of a seat. What USi had instead was a data center full of other people's applications and a monthly bill, which is a hosting business wearing the clothes of a software company.

~ the year the category died ~

McCleary resigned as chief executive in july 2000 and Andrew Stern took over. In august the company bought EnableVision. By july 2001 the shares were trading at a dollar. The application service provider category went down with everything else, and it went down harder than most, because its customers were the startups that stopped existing and its costs were data centers on long leases.

It filed for bankruptcy in january 2002. Wikipedia records that it emerged in may 2002 with financing from Bain Capital and a merger with Interpath. The trade press of the time wrote the same event up as Bain Capital acquiring the company out of bankruptcy in january 2002. Both descriptions are of the same money and the sources do not agree on what to call it, so both are here.

~ the last four years ~

The second USi was smaller and dull in a way that worked. It bought CoreHarbor in june 2003 for the Ariba practice, then Appshop in june 2004 for somewhere between $40 million and $50 million to get the Oracle side, along with a consultancy called Strong3. By 2006 it had a client list of around 150 and a business AT&T wanted.

The Washington Post reported the agreement on 12 september 2006 at $300 million in cash and assumed debt. AT&T closed it on 20 october. The announcement said USi would stay an independent subsidiary with its management intact, which is what every announcement says. The name lasted a few years inside AT&T's hosting division and then stopped being used.

~ what it became ~

usinternetworking.com still resolves. It redirects to dongfeng.com.ph, which serves an Indonesian online slots page under the name BASKET168. The address a telephone company paid $300 million to own now points at a gambling site in a language nobody in Annapolis was working in.

The idea survived the company by a wide margin. Renting software by the month, patched by somebody else, reached from a browser, is now the default way business software is bought. USi had the model and the customers and the data centers, and it had them in 1999, which turned out to be the wrong decade to be right in.

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