Web hosting: Survival of the fittest


By Margaret Kane
Staff Writer, CNET News.com
June 21, 2002, 9:45 AM PT


This week's departure of two well-known names from the Web hosting business is the latest sign that only the strongest will survive in the rapidly consolidating market.
On Monday, Loudcloud, a 2-year-old company led by Netscape Communications co-founder Marc Andreessen, said it will sell its Web hosting business to services firm EDS for $63.5 million.

Then, on Wednesday, Intel said it was shuttering its Web hosting division, which had such Web heavyweight clients as eBay, and would take a charge of $100 million to exit the business.

.....

http://news.com.com/2100-1033-938311.html?tag=fd_top

Fewer and smaller. hah.

This is still based on the old critical mass concept where eventually there won't be enough new business to get new players into the game. That works in the auto-industry because drivers tend to keep and then resell their cars so new companies can't sell new cars right away. Web hosting is different, it's alot more like renting an apartment than buying a car.

I'll validate my reasons in a later post. These cooked up analogies by CNet are most likely bankrolled by companies like IBM and EDS just to pickup a couple clients. It's corporate spam and drives me nuts.

Sincerely,

-Matt

That news release only really is talking about the providers of capacity in the market. The barriers to entry are high if you want to create capacity and sell it - but for the majority of hosting companies - the barriers to entry are exceedingly low - capacity is freely available to buy from the companies that spent millions building datacenters etc & the costs are almost all variable.

There is a lot of over-capacity in this commodity market = losses for any player with high fixed costs, but for the majority of hosting companies - they sell a service wrapped around the commodity (capacity) & can only benefit from the pain of the big guys who have all the overhead, risk & also the lowest ability to provide personalized service effectively.

ability to provide personalized service effectively
I think that is the key. As the hosting product becomes more homegenous, small and medium sized companies will pick up customers with superior service. Excellent service being the most difficult aspect of a company to maintain, there will always be room for new players. One sees this in banking.

Oh, and way to go with FindMyHosting Andrew. The only honest directory. ;)

Same 2 companies came up on every search I did...
And they have some outrageous pricing's!!!!
What they seem to offer and price's just seem impossible! :rolleyes: :puke:

we considered selling, the number of new hosts entering and giving away accounts to get started has become very frequent.


then we picked up a few resellers with large blocks of accounts from xo- seems xo has issues and these guys bailed out prior to any potential problems.

they loved our support during the conversion, imediately referred biz...

so in the end you can get pizza from dominos which can be a rubber frisbee at times or the small mom and pop which is usually better.

THERE WILL ALWAYS BE A PLACE FOR THE SMALL GUY WITH A BETTER PRODUCT--IE SUPPORT......

dos centavos

Good article on the role of specialized hosts (as opposed to humongous corporate conglomerates):

http://www.thewhir.com/features/independants.cfm

The question "is the business saturated" is most often answered "No, but if you have to ask then it probably is for you". ;)