Melbourne IT looks to social media for growth

Consulting services around social media, virtual desktops and hosted cloud services to drive growth in 2H 2010

Listed services company Melbourne IT (ASX:MLB) will turn to social networking, cloud-based hosting and desktop virtualisation to help it grow its business over the next twelve months.

In a conference call following the release of its 2010 half-year financial results, Melbourne IT chief executive and managing director, Theo Hnarakis, said despite social networking tools being freely available to the market, there was a revenue opportunity around consulting on social media best practice.

“We are not helping them take direct advertising, but are providing the direct consultative services around what verticals they need to go after, because a lot of small business now understand what PPC (pay per click advertising) and SEO (search engine optimisation) is all about, but social media is still not very well understood.”

“What we are positioning ourselves is as a consultative service. Once a small business builds their website and starts thinking about how to promote it they can think about PPC, SEO and social media.”

Hnrakis said the company was beginning to see evidence among medium businesses that desktop virtualisation was also becoming a genuine option for providing added cost savings, greater redundancy, and security.

“The sweet spot is at the medium size… they are becoming aware of the cost advantages of a hosted solution and most medium size businesses haven’t thought redundancy in the past…” he said.

The company is currently trialling the hosted desktop service with a number of partners and their customers.

“For cloud-based solutions, the pay as you grow option is a growing trend among a lot of our customers,” Hnrakis said. “Bandwidth capacity as well as storage capacity or from a campaign management point of view where you run a campaign for three months then dissemble it without having to have a commitment over a long term.”

The chief executive said the company would be looking toward a launching managed Exchange hosting service, releasing FTR Touch – a digital recording product designed for use in courtrooms, and offer the whole range of Microsoft 2010 product upgrades. It would also launch new .IDN and .Co domain names.

The comments follow the release of Melbourne IT’s financial results for the half-year to 30 June 2010 which saw the company record revenues of $98.1 million, down six per cent on the corresponding half’s $104.4 million.

EBIT was $10 million, up eight per cent on the corresponding half’s $9.3 million, while net profits after tax were $7.0 million, up 11 per cent on the corresponding half’s $6.3 million.

Hnrakis said the results had come despite challenges posed by the commoditsation of its core products and services, delivering growth in its digital brands and enterprise services, and managing the company’s transformation costs.

During the last half-year the company had also aligned itself with EMC’s storage, upgraded its data centres, and closed its east-Brisbane data centre.

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