Second Annual Hosting Summit Draws Large Crowd - More Changing Models

All of the panels and discussions at the conference made the point that the web hosting industry is undergoing a real transformation from within, but forced upon it by changing customer needs and a changing economic environment. For example, Tony Klockenbrink of Egenera pointed out that “server hugging,” or the practice of allocating entire servers to specific applications, is falling out of favor. Though it is a traditional practice, it is no longer the best use of resources now that power and data center space are becoming scarce commodities. Instead, we can expect to see processor area network solutions to make the most of resources and cut both complexity and costs.

Utility computing seems set to make a big splash, after being on the radar for at least two years, if talk of “utility hosting” is any indication. But how much room is there in the market for utility hosts? Could all web hosts really become grid operators? Vlad Miloushev, CEO of 3tera, figured that up to 90 percent of the servers run by corporations are hosted by in-house IT departments, leaving plenty of growth potential for the kind of “infrastructure as a service” that Crane spoke about. The question remains whether companies will be comfortable with that kind of outsourcing. In this sense, at least, the real competition web hosts face isn’t each other, but the status quo.

There was some discussion of different business models, of course. For example, Zoho, SocialText, YouTube and SixApart discussed their hosting services. While all of them offer bandwidth and storage space, their real focus is on user-facing applications. The bandwidth and storage space are not treated as end products.

One point that came up was the changing view of advertising. Anil Dash, VP evangelist of SixApart, noted that consumers’ opinions about online advertising are changing. Since so many Web 2.0 companies are supported by advertising, some customers think that sponsorships and ad placements give free Web 2.0 and software-as-a-service services an air of legitimacy. Unlike with many companies that went bust after the bubble burst for the first dot-boom, these companies have a business model that might actually sustain them.

Dan Golding delivered the morning keynote for the closing day of the conference. He talked about the evolution of web hosting strategies, with a focus on CDN services. He noted that pricing models seem to be open to experiment, and gave three examples of three very different approaches.

All in all, Tier 1 Research’s Hosting Transformation Summit was full of information likely to be useful to any web host trying to keep up with the changing needs of their customers. No doubt next year’s conference will attract even more attendees.