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U.S. Web Hosting Markets
Frost & Sullivan, Dec 2003
Awareness of Vertical Market Needs Spurs Growth
Web hosting providers possessing a sound understanding of the specific requirements of vertical markets will be able to offer improved services for end-users and ensure sustainable revenue growth. As this industry enters a mature growth phase, only competitors that develop aggressive business plans and conduct thorough market research will be able to stay ahead of the escalating competition. Tactics such as competitive intelligence studies, third-party market research, and trade journals will provide strategic insights to determine the specific hosted application offerings and other higher-margin value-added services that can ensure greater profits.
This new research service from Frost & Sullivan examines the current state of the U.S. Web hosting market and addresses issues surrounding the right sizing of hosting operations that will be necessary to compete and achieve profitability. It analyzes market shares based on revenues earned and discusses measures that must be taken to reduce overhead costs and increase profit margins. Forecasts based directly upon revenue drivers and restraints as highlighted by Web hosting industry executives offer valuable insight. In-depth strategies to aid market penetration and address each individual challenge are also included.
Service Automation and Authenticity Certification Expands User Base
Companies that will be able to command higher prices and earn better profit margins are those that automate the provisioning of hosting services and acquire third party certifications required by specific market verticals, says the analyst of this research service. End users that have been resistant to outsourcing hosting operations in prior years can be persuaded to opt for services by offering improved business processes and certificates that testify to the provider’s authenticity and high standards.
Although in the past few years a few processes were standardized, service problems were dealt with at random. Hosting companies are now viewing certification as an attractive value-addition that can be used to increase market share. Large and small enterprise hosting accounts have shown increased attention to standard certifications such as ISO 9001, SAS70, HIPAA certification as well as Six Sigma process improvements, notes the analyst.
Web Hosting Market Enjoys Stability as the Industry Reaches Maturity
The U.S. Web hosting market is expected to register slow but sustainable growth as the industry progresses into its maturity phase. The effects of excess capacity and over-saturation can be successfully overcome by reducing overhead costs through the decommissioning of unprofitable data centers and increasing the utilization rates of others.
Market participants employ strategies such as automating the provisioning of hosting services and catering to vertical markets needs to combat competition and establish market share. Additional attention must be devoted to the outsourcing of services that are not the core competency of some hosting providers and to achieving the best balance between customer service, price, and additional fixed operating costs.
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