The Web Hosting Industry In Review

Tuesday, July 24th, 2012

Web hosting industry bloomed in the early 2000s when the broadband penetration increased and the use of internet based products sky rocketed. Web hosting is basically an internet hosting service where the service provider rents server space to a website so that it can be made accessible over the World Wide Web. Websites cannot be operative without web hosting services. Web hosts not only provide server space for the sites but internet connectivity as well.

The internet hosting industry comprises mainly of web hosting, application hosting and cloud computing services. IBIS World evaluates that web hosting industry will improve performance in the coming years because of increased spending in the IT sector. Moreover, this advancement is also attributable to the increasing trend of outsourcing the hosting services to specialized service providers. Mergers of software houses with hosting companies have also contributed to industry’s progress.

The annual increase in the demand for hosting services was marked at 17% in 2009 and revenue earned was $3.8 billion in the same year. IBIS World further estimates that in the coming years to 2017 the value addition on hosting industry will grow at the rate of 3.1%.

Fragmented Web Hosting & Data Management Industry

Industry growth has been fueled by small businesses developing their websites, and this demand is expected to grow in the future too. However, the industry is highly competitive and fragmented with several small players striving for market share. According to the largest provider of Market Research Reports & Analysis in the U.S, there are no major players in the data processing & hosting services in the US industry. In U.S alone, the number of hosting service providers exceeds 19000. This increase is owing to the advancements in technology and the reduction in its costs that have made it accessible to every other person. To optimize the industry and market share, many hosting companies have undertaken acquisitions and mergers to consolidate smaller service providers in the current setup.
Webhosting Types
Among different types of web hosting options are free hosting, shared hosting, and dedicated servers and email servers. Free hosting is used primarily by beginners or individuals looking for setting up a personal website. Sites like blogger.com and wordpress.com offer free hosting for their users. However, free hosting has limited options. The most commonly used server is the shared hosting; the service provider allots space to multiple clients on one or more servers so that the overall space is shared. Shared hosting works fine with usual websites and most businesses use common servers. Dedicated server is a special type of hosting used by companies having millions of users and a heavy website. In it, a company pays for the entire server space and purchases all the hardware along with the infrastructure. Dedicated servers allow high speed and optimal performance.

Another type of web hosting servers is reseller servers. These are large servers used by web designers and internet marketers. Web hosting servers can also be classified on the basis of their management; the two types are managed servers and unmanaged servers. With unmanaged servers, all the control and server management is transferred to the client. It is then the customer’s responsibility to update the software, apply patches, installs software and monitors the system. On the other hand, in managed servers, the hosting company keeps the control and provides extra services of updating, installation and monitoring.

Unmanaged servers are usually provided to the clients who have a working knowledge of handling and maintaining the servers and managed servers are provided to the amateur customers. In addition to web hosting services, the internet hosting industry also provides cloud services.GoDaddy In 2011, the cloud service industry in the U.S was valued at $15.1 billion. Moreover, it is expected that this figure will move up to $24.3 billion by the year 2014. Cloud services are the most advance IT solutions aimed at improving the productivity of the customers at highly affordable rates. Even the web hosting rates have dropped significantly over the past few years owing to the high competition and market fragmentation.

 

As a result of competitive environment, many mergers and acquisitions have taken place; one of the market leaders, GoDaddy, has sold majority of its shares to its financial partners KKR, Silver Lake and Tech Crossover Ventures. Similarly, Okley Capital acquired 51% equity shares of a German web hosting company Intergenia AG. Major market players are providing hosting services at low rates but, however, many small vendors compensate their low rates with poorly managed server services.

Located in Arizona, GoDaddy, a web hosting and domain registrar company, was founded in 1997. Currently it has more than 52 million domain names registered under it and it is ICANN’s number one accredited domain registrar company. Most of the websites we come across daily are registered with GoDaddy; it is one of the cheapest and best hosting services provider. Along with internet hosting services for various blogs, podcast and wordpress, GoDaddy also offers many useful software programs, SSL security and online marketing.

Similarly, another web hosting services provider is Hostgator. It was established in 2002 and by 2006 it had more than 200,000 registered domains under its name. In 2008, it was recognized as one of the fastest growing companies in the U.S. Based in Houston Texas, the company accounts for 2% of the worldwide internet traffic. Like GoDaddy, Hostgator also offers high quality services at affordable rates.
Hostgator Infrastructure

Hostgator distinguished services include VPS, dedicated servers and reseller servers. The 24/7 support and the use of six servers make Hostgator an unbeatable web hosting service provider. In addition to this, the company also has to boast a hassle free transfer service.

Services from both these vendors can be ordered online via their official websites. The ease of shopping online and convenient accessibility has truly revolutionized the user experience. People tend to shop online more rather than going out to local brick and mortar stores. This is partly because of the convenience and partly because of the cost savings online shopping has to offer. It not only saves time but also enables the users to buy desirable products at cheaper rates. The availability of coupons and discount deals has further motivated the users to shop via virtual market place.

GoDaddy and Hostgator too offer amazing discount deals for their online customers. With companies like these two, the industry has significant future growth to boast.


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