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Web hosting trends 2009: the experts' views 2009-01-22

Ever looking for insightful views on the topics of internet technology and business, HostReview conducted an exclusive head-to-head interview with executives from two major web hosting companies. Our topic was web hosting trends 2009: what does the year hold for the web hosting industry and its clients? We talk to John Lee, Senior Vice President of Small Business Hosting, with Hostway, and Urvish Vashi, General Manager, Dedicated Hosting, with The Planet. Both companies have strong, and well deserved, presence in our Annual Web Hosting Awards listings. John Lee is a co-founder of Hostway, together with CEO Lucas Roh and two other University of Chicago alumni. His role at Hostway is to ensure that the company communicates its products and services to customers, in order to enhance their web hosting experience. John Lee is a co-founder of Hostway, together with CEO Lucas Roh and two other University of Chicago alumni. His role at Hostway is to ensure that the company communicates its products and services to customers, in order to enhance their web hosting experience. Urvish Vashi serves as The Planet’s general manager for dedicated server hosting.In this role, he oversees the development of the product and marketing strategies for the company’s self-managed dedicated servers.He previously served as director of product management with The Planet. Urvish Vashi serves as The Planet’s general manager for dedicated server hosting.In this role, he oversees the development of the product and marketing strategies for the company’s self-managed dedicated servers.He previously served as director of product management with The Planet. In your opinion, what were the defining characteristics of 2008 in terms of business and technology trends? What was different from previous years? John Lee: Mobile web, mobile email, and mobile everything.iPhone definitely accelerated the trend towards more computing power being delivered through the mobile network and mobile devices.

SaaS is picking up steam.This time around (first round was ASP), we have the right model.

Cloud computing is picking up steam.Amazon is the most innovative here.

Google has come to dominate the search space in all of North America and Europe.Yet China marches to its own drumbeat.

Everything became expensive; now it’s not.

The US dollar was weak; now it’s not.

Mega datacenter projects [are] under way.Urvish Vashi: Economic realities have created an almost “bi-polar” response over the last year, and 2008 can be divided into two distinct halves.During the first six months, companies focused on building smart, actionable plans to grow their businesses online.In the second half, we’ve seen companies look for hosting as a way to operate more cost effectively, without all of the capital and operational risk that comes with IT expansion plans.While we heard a lot of technology around virtualization, cloud and utility infrastructure, we saw that businesses increasingly turned to trusted IT partners who could help them navigate their hosting options with these infrastructure add-ons.Customers aren’t always sure which options address the specific problem or use case they are looking to solve, whether it be long-term data archiving, on-demand scaling, data center optimization or myriad others.As companies grow and make their bets on where to invest, we see an increasing number of SMBs wanting not just to pick and chose the infrastructure from simple to complex, but also increasingly wanting to take an a’ la carte view of services. Which technologies will be "hot" in 2009? John Lee: Mobile computing, Cloud computing and Virtualization, Unified Communication.Urvish Vashi: It’s hard to talk about “hot” without mentioning cloud and virtualization.Both will continue as big topics in the New Year. These enabling technologies can provide real benefits to SMBs looking to outsource IT. The opportunity for hosters is to take these emerging technologies and couple them with infrastructure management services to address specific customer needs.Hosters stand to gain significant benefits from these technologies because they provide a path to better efficiency in labor, server and storage resources, and data center utilization.While this is great news for hosters, the primary benefit for customers will come from improved performance and better prices. How will growth in demand for virtualization and cloud computing solutions compare to traditional hosting offerings like dedicated servers and shared hosting? Do cloud platforms by Microsoft, Amazon and Google threaten traditional hosting providers? John Lee: [There will be] no end-user impact on the shared hosting.However, from hosting company perspective, we can lower our cost of operation by adopting the cloud computing technology to better utilize resources.As you know, there are a lot of idle servers in any big server farm. Positive impact on dedicated servers:It may come to pass that cloud computing may replace dedicated server model, but that is still some years off.For now, cloud computing will help to drive more dedicated server sales as the expertise around cloud computing will develop faster in hosting companies than in internal IT departments.While large clouds will continue to gather momentum, mini- private clouds hosted and managed by hosting companies will gain momentum as well.Andthe cloud computing model is very conducive to outsourcing.As more businesses consider cloud computing, they will be more open to outsourcing model.That will help with the dedicate server sales.Remember, our biggest competition is still the in-house hosting centers.Urvish Vashi: The cloud platforms offered by Microsoft, Amazon and Google play an important role in driving broad market adoption. These players don’t, however, have a heritage of service and support, which is what most customers require to make the best use out of these technologies. That’s where we come in. The “special sauce” as you might say, is technology in conjunction with service and support.The threat of these solutions will be felt first by the thousands of hosting resellers.We’ve already seen many of our resellers begin to develop platforms that provide similar functionality based on some of the same platforms.However, those that thrive will recognize that the technical platform alone is not sufficient to address the needs of most customers. What other trends do you foresee for 2009, and how will your company align its operations to new technology and business requirements? John Lee: Datacenter space will continue to be tight.As access to capital is already tight, the datacenter needs will outstrip the available datacenter space.So as a hosting company, making sure we have enough room for growth is a key.Hostway is in a good shape for this. VALUE…maximizing value will be the key.Not necessarily lower price, but delivering more value at the same price point.This will be true across the board.This will be especially true for shared hosting space.We are hard at work to completely overhaul our shared hosting product line.Urvish Vashi: In 2009, every company will have to do more with less, and hosting is no exception. The companies that will come out on top next year are those who are squarely focused on scale, operational excellence and customer satisfaction.For us, that means we will continue to focus on enabling technologies like virtualization, but will increase our investment in the systems that drive greater efficiency and automation.Ultimately, this yields a better, more consistent customer experience, which is why customers keep coming back to us, even as they are trying to do more with less. By all indications, 2009 will be slow in terms of economic growth. How will the hosting industry at large fare in such a situation? John Lee: Hosting industry is in a good shape to take advantage of the heightened pressure to cut IT cost.In dedicated servers, our biggest competition is still in-house hosting centers.So, we should be poised to take advantage of this.On the shared hosting side, we all know how resilient the small businesses are.We will be fine.Urvish Vashi: Although it’s a tough economic environment, as an industry, hosting will see more takers. In fact, we’re very bullish about the market opportunities.We’ve just announced a new 86,000 square foot lease for our seventh data center that will be located in the Dallas suburb of Plano.We plan to house colo, private racks and Managed Hosting customers there.That said, IT managers who are struggling to raise capital to buy servers, software or data-center space will seriously evaluate companies that can provide that infrastructure without upfront expense or long-term commitment. The cap-ex-free model of the hosting industry is even more valuable in an economic crunch. Will green initiatives attract new clients? John Lee: Lower cost, innovative technology and better service attract new customers.Everything else is ephemeral hype.Don’t get me wrong.Green technologies help to drive the cost down, so it’s good.But I haven’t heard anyone losing deals or winning deals b/c they have green initiatives.Urvish Vashi: At The Planet we see two main benefits to green initiatives. Besides the benefits of being a good global citizen, lower power utilization means lower costs, which benefits all of our customers.You’ll see in our new data center announcement that we’re spending an additional $2 million on our facility to make it environmentally friendly, and we expect a return on our investment in about 30 months. If you had to specify a single most important priority for your company for 2009, what would it be? John Lee: Delivering maximum value to our customers is our priority number 1 in 2009.Value is what’s in everyone’s mind.Giving more for less is what it will be about in 2009.Look for technology and service innovations across all our product lines – domain name registration, shared hosting, dedicated hosting, managed coloation and marketing services – that will help us deliver more value than last year to our customers.Urvish Vashi: Our top priority is simple – to keep our customers happy and to find more of them.