No matter how large or complex your Web hosting requirements, there's someone willing to take them off your hands. But how do you choose?
While hardware sales are slumping and ISPs are finding their services increasingly commoditised, Web hosting providers are looking forward to a profitable future.
Local companies are expected to spend over AU$700 million on Web hosting in 2005, up from AU$106 million in 2000, according to market researcher IDC's report The Australian Web Hosting Market 2000-2005. "That's a compound annual growth rate of 46 percent," says IDC analyst Lisa Shishido.
Why is hosting becoming so popular?
"The biggest reason is companies are moving to e-business, from simple static Web sites to transactional Web sites that are integrated at front and back end," says Shishido.
"There's also a greater acceptance of outsourcing; people are more comfortable with it. Especially as hosting a Web site becomes more complex, companies want to focus on their core competencies. Also, there can be great cost savings from leveraging a hosting provider's economies of scale. It can help improve your time to market." In addition, hosting providers can make it a great deal easier to scale up if your requirements suddenly expand.
However, the market is still very immature. "Companies are still coming up with standard offerings," says Shishido. "For that reason, they can be very cagey about releasing their pricing details."
Co-lo or managed?
The essential difference between co-location and managed hosting is the degree to which the hosting provider takes care of management and administration tasks.
Ben Joseph, Asia Pacific sales director for Intel Online services, says there are several levels of management that can be provided. Bare bones co-location services provide rack space in a data centre, an Internet connection, and will ensure the physical wellbeing of the machines. Everything else is left to the customer.
Managed co-location services provide additional shared infrastructure, such as firewalls, VPNs, load balancing, and staff to perform maintenance tasks. A managed service provider will take care of the entire hosting equation, including management of the operating system, Web server, databases, application servers, and the customer's applications.
"If you keep this in mind, there aren't many true MSPs in Australia, mostly co-location or managed co-location services," says Joseph. Obviously, co-location is more suited to companies who already have technical staff capable of managing the systems, and just require an Internet connection and the space to host their servers.
On the other hand, companies that need to develop a Web presence can outsource to a managed hosting provider without having to hire technical staff. This is one of the reasons there's a strong trend away from co-location to managed hosting.
"Co-location providers are shifting more into managed hosting because it's a way to provide value-added services," says Shishido. "When people look at MSPs, they don't look at them in the way outsourcing is normally seen. People look at them more like a utility or telco. Rather than oursourcing a whole business process, they can maintain some responsibilities where they feel they might have a vested interest or core competency. It's like a utility company where you can pick and choose your services.
"Co-location has a small share of the market compared to dedicated hosting and shared hosting. That's small in terms of customer base and revenue."
Dalibor Vrsalovic, president of Intel Online Services is more blunt. "Co-location is a loss leader, it's always covered by some other part of the business. "Companies that tried to do co-location alone have failed. There's not enough value-add, and the customer still bears the cost of the overheads."
