Are traditional web hosting and hosting infrastructure dead?

Traditional hosting is dead. Long live the managed hosting. The hosting industry is changing, due to the changing nature of workloads and business demands, plus the subsequent shift to software-defined data centers. The hosting providers and end customers are in a battle for the two sides of the same coin. They demand more efficient IT environments, higher performance, better reliability and ease of operations. And these are just some of the rising requirements.

Is traditional hosting really dead?

Pretty much so! It was killed by public cloud giants like AWS and Azure. But this does not mean that hosting providers are backed into a corner. New opportunities are appearing!

The changing customer behavior

Customers are changing their behavior. As the pace of doing business is becoming faster, IT talent harder to find and complexity is sky-rocketing – customers expect more and more services from their trusted hosting providers. This means that just hosting is not enough. Businesses are searching for a reliable partner to outsource all their IT needs. There has always been a managed hosting segment, but recently the big focus is on the MSPs (Managed Service Providers). They are the ones having specific know-how, an economy of scale and specialization to build, manage and support the complex IT systems businesses now need.

Hosting providers need to change

Web hosting providers have no choice – they must change in order to satisfy the new needs of their customers. Traditional, vanilla hosting services are not enough. Usually, there are myriad ways to differentiate. The proximity to customers, the good knowledge of the local market and traditions, the better understanding of the customers’ needs are big competitive advantage. Combined with local language support and billing in local currency helps too. The focus on simple (at least for the end user), but comprehensive solutions, with a personal touch, are on the rise.

Hosting infrastructure matters more

Cloud and hosting services built with traditional technologies from two or three letter vendors are not cutting it anymore – both in terms of raised capability demand and cost point of view. Also, the very traditional shared hosting service is under rapid change – in order to keep their customers hosting companies need to provide faster and more robust service to their customers. But how to overcome the challenges of building cloud infrastructure like the big players, at a smaller scale?

451 Research says specialized IaaS and SaaS environments are luring workloads away from traditional hosting resources. For every workload type, there is an ideal infrastructure environment, or “best execution venue,” based on multiple factors from performance and flexibility to security and pricing.

The three pillars of the new hosting company

Traditionally there are 3 main (critical) components of a hosting service:

  1. IT infrastructure, which allows providing any service at all
  2. The employees (especially the quality of the support team), which manage the IT infrastructure
  3. The sales and marketing, which drive customer acquisition and revenue

And while the employees and sales and marketing stay relatively unchanged, the biggest update is currently happening in the IT infrastructure layer.

There are three major customers requirements, which have increased and thus drive this update:

  • faster speed
  • better reliability
  • lower price

You can meet all these three criteria by adopting innovation in the IT infrastructure layer. In addition, you need to add a focus on support and a personal touch and you will be able to sustain and grow your hosting business.

How to build an efficient, fast and reliable web hosting infrastructure?

Take a look at the market disruptive innovations – software-defined infrastructure (software-defined networking, software-defined storage), API driven automation, self-healing systems and the opportunities they bring. The new generation infrastructure will save you costs. It will allow you to offer faster and more reliable service by adding high-availability and live migration of services, native backup and disaster recovery capabilities of the cloud and shared hosting.

But most of all – it will help your business differentiate and grow. The benefits of using software-defined technologies are described by users in pure business terms: higher margins, more customers, lower customer churn, fewer support tickets, more word of mouth referrals.

To summarize:

Customer behavior is changing, hosting is changing and the market is changing! Stay informed and innovate!

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