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  1. #1

    The bubble may be about to burst


    I have been looking at our stats as it is the last day of the month. Although we are continuing to grow a trend is developing among the accounts which we lose.

    Until recently almost all customers not renewing or cancelling were because they considered us to be too expensive or because they no longer needed a web site.
    Of those who no longer needed a web site most were relatively new sites.

    However, over the past two months there has been a growth in the number of established sites (2 or 3 years old) which are not being renewed. They are also not going to other hosts.

    Having examined these, a good number belong to "bricks and mortar" businesses and voluntary organisations who no longer appear to want a web presence.

    The numbers are of course very small, but percentage wise these make up a large (and growing) part of our account losses.

    Its possible they are all going to reappear on other hosts at some point, but its certainly an interesting trend of people shutting down established sites which did have a purpose.

    Last edited by GordonH; 03-31-2004 at 09:35 AM.
    Formerly: Managing Director, Ltd & Marketing Director, Ultraspeed UK Ltd
    View my Professional Profile:

  2. #2
    Join Date
    Aug 2000
    Tacoma, Washington
    I kind of agree actually. The last few close-outs we've had have been 'real world' businesses with a website. I personally think it's just due to tax time.

    Older websites (3-4 years) that drop out tend to be due to changing CC inforamtion. For the most part they then go and sign up again once they know their information is no longer valid.
    Former Webhost... now, just a guy.

  3. #3
    Join Date
    Sep 2003
    I am sure alot of people are moving back to bricks and mortar but I have a good feeling that this year will be a good year for new e-business startups which should see an increase in clients to compensate - lets hope anyway

  4. #4
    Join Date
    Jul 2002
    Pittsburgh, PA
    Too many 14 year olds are getting their first VPS / Dedicated server and becoming a 'web host' selling 1 GB of space and 50 GB of bandwidth for $2.99 <G>.

    I wouldn't worry. I had a few people leave me because I was too expensive, but they came back within weeks once they learned their new $4.99 place won't give them 24/7 phone support or even personal cell phone numbers like I do.

  5. #5
    Thats an old issue.
    The point I was making was that people are not leaving to go cheaper, they are just stopping having web sites.
    Formerly: Managing Director, Ltd & Marketing Director, Ultraspeed UK Ltd
    View my Professional Profile:

  6. #6
    Join Date
    Jul 2002
    Pittsburgh, PA
    I find the opposite. Many brick and mortar that I deal with want web sites now just for info. They do not sell anything on it, but they use it just to publish their contact info on the internet.

  7. #7
    I think you're spot on Gordon, we've been hearing the same thing from a number of customers lately.

    Whereas in the past we'd always lose some at renewal time
    ( most went off to a cheap host and were soon back ) Now we do hear people saying they're just not having a web site anymore.

    Fortunately there are always more signing up to replace them but it's something we just never heard a couple of years ago.
    Invectis - Windows 2000, 2003 and MS SQL Server web hosting

  8. #8
    Join Date
    Mar 2001
    Seattle, WA
    Gordon, I know exactly what you mean. I'm not sure that this points to the bubble bursting, per se, but I have noticed that our cancellations in the past 6-12 months have been overwhelmingly due to the customers no longer needing their website (going out of business, feeling that a web presence is not that important, etc.) or customers letting their domains expire and therefore have no need for hosting anymore. You mentioned business customers specifically, but I have also noticed a number of personal customers who seem to have simply lost interest in the Internet.

  9. #9
    Join Date
    Aug 2002
    Atlanta, GA
    I see a shift in hosting not really a loss. What we are seeing is more domains moving to reseller accounts from virtual accounts. What I mean is more of the smaller brick and mortar companies are moving to accounts that are handled by designers and developers and not trying to do it on their own. I think it has more to do with smaller companies not having the skills or time to manage their sites and trying to job everything, including the hosting, to the designer/developers.

    While our virtual hosting has dropped slightly in the last 4-5 months our reseller accounts are up about 32% in the same time. Also, many of our resellers have added quite a few new sites under their accounts in that time.
    Atlanta, GA and Las Vegas, NV. Colocation

  10. #10
    By watching the Pending Delete information on domains the trend I see is that in the past 2-1/2 years there were a lot of one year wonders. The Pending Delete status for domains so far this year at only 400. Obviously this isn't the litmus test for the hosting industry as domains can come and go regardless of hosting. However it does suggest to me that a large portion (if not all) of those people had an Internet experience that didn't work for them.

    Here are my opinions on the trends with small business oriented web hosting.

    The "Gold Rush" of the Internet is over, it is not as powerful a sales tool as it once was. I think many small businesses that leave the Internet are doing so because they have not been shown the advantages of the Internet as a tool. They have been told (or just believed) that the Internet was going to give you world wide exposure. While that may be true it can be more expensive to actually achieve that exposure then the results are worth.

    We have never promoted our services to drive sales for small businesses, and the small business is 90% of our client base. What we do is show them how they can save money using their web sites as tools.

    Some examples:
    We had a flower shop that opened a new site with us. The reason they did was not to sell flowers nationwide, it was to allow their local clients to see their current inventory and place orders online. We showed them with dollars and cents that they created more sales advertising locally and using their web site to show inventory than by keeping people on the phones all day long asking and answering questions about what flowers they had available that day.

    Another case involves a service company. They were able to reduce their work force by 20% simply by keeping a current set of step by step instructions online and up to date. The choice between employees and a web site is a no brainer for companies to choose between.

    I don't think anything is changing for the worse, what I believe is that marketing the Internet as a magical sales tool has gone the way of the dinosaur.

    Companies will purchase services from you if you can clearly demonstrate a substantial savings for them. It's not that hard to do really, you just need to think outside the box a bit....

    Just my thoughts on the matter...

  11. #11
    The last 2 years had the biggest domain name registrations ever, I don't know the exact stats but it was a hudge margin of increase from 2000.

    So I guess if you look at it from a real estate perspective, less property (dot coms) available = less homes beeing built (websites that need hosting.)

    I wouldn't be discouraged if a few businesses dropped thier plans. Most businesses that have moderatly succesfull stores, and plan to sell online wont do well to begin with. I would consider most of these types of businesses as a liability, as they are bound to fail. They lack internet knowledge, and expect a website to immediatly drive in revenue.

    So in reality thier bubble was burst, and you just caught the aftershock . There will always be a steady stream of these types of businesses though, so I wouldn't put to much emphasis on the thought of them beeing a permanent asset.
    Last edited by aeyo; 04-01-2004 at 04:03 AM.
    -Robert Rivard

    aeyo webmaster forums

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