THS Articles

The Future of Web Hosting is About to Get “SaaSy”

By Cliff Boodoosingh

Get ready to hear this term more and more in the Web hosting market: Software as a Service. True, you may be familiar with the concept under the much maligned ASP model or more recently as software on-demand, but SaaS is the newer, glossier version.

With the current $10.6 billion USD hosting market expected to grow at a 10 percent clip for the next two years, much of that growth will be due to how effectively Web hosting providers embrace the “SaaS phenomenon.”

Pascal Martin, General Manager of Hosting Solutions of Microsoft said, “it is the number one driver (of hosting) for years to come.” Martin added that while 15,000 Independent Software vendors have written to the SaaS paradigm, the remainder of the 70,000 need to jump on the bandwagon soon and not just for CRM applications but “more diverse applications.” Among those identified by the panel, participating in the two-day Summit held at Bally’s in Las Vegas on Nov. 8-9, were email, gaming, online collaboration, online tax applications and Human Resources on demand.

Martin’s colleague, Michael van Dijken, Microsoft’s Marketing Manager of Hosting Solutions, identified the benefits of this compelling business model as part of his presentation. For the ISVs, he noted that this new market opportunity presents predictable annuity based revenue, positive customer experience and the always welcome opportunity to provide more value-added services. The end user will enjoy lower cost of entry, rapid deployment, adapting to changing business conditions and the all important ability to focus on core business.

What else should the Web hosting consumer expect in terms of costs and services?

If the CEO of Germany’s Intergenia and St. Louis-based-SERVER4YOU had his way it would be continued cheap, or to be a little more delicate inexpensive, hosting plans.

Thomas Strohe said customers will move from shared to dedicated if the price is right. “ At lower prices you’ll see customers move from shared to dedicated. And at Intergenia we are able to keep those costs low and still make a profit. In Germany, we can make a profit on shared hosting at $2 US a month.”

Two of the dominant players in the shared field and indeed hosting in general, Affinity’s Simon Anderson and GoDaddy’s Warren Adelman raised their eyebrows to that proposition.

Adelman said it’s more of an issue “to get the customer the right offering.” Virtual Private Servers may become the norm over time as it has the advantage of less complexity. Ademan added, “shared hosting will be the realm of the personal user. How do you provide higher support while seeing prices decrease…that’s the challenge.”

Affinity’s Anderson summarized that the Web host must play the consultative role. “Web presence is the first need and (the real issue) is how to make the customer succeed after that.”