The Shift in Web Hosting: Are You on the Upside

Session S8 The Shift in Web Hosting Are You on the Up Side? David Snead ( [email_address] ) Isabel Wang ( [email_address] )

Overview Do-it-yourself vs do-it-for-me Front office/back office convergence Ping/power/pipe vs new business models Hardware vs software Knowledge is power

Web Hosting Targets DYI Audience

Large amounts of bandwidth and web space

Large numbers of databases and email accounts

CGI-BIN/Perl/PHP…

“ Install dozens of free apps”

Google/MSN/Yahoo credits

Customer must assemble ingredients into solution

(My friend Irakli makes amplifiers by hand!)

Amazon: Do-It-For-Me Purchasing

“ Customers like you” auto-recommendations are responsible for 30% of Amazon’s sales

Similar technology from Aggregate Knowledge helped Overstock.com generate $100M in additional revenue

It’s profitable to help customers choose!

Google: Do-It-For-Me Apps

Google Calendar, Google Talk and Google Docs & Spreadsheet are auto-integrated with Gmail; nothing to install

Presentation app on its way

Coming soon: Google Checkout and Google Base integration?

BTW: Google Apps now has Partner Edition for ISPs

eBay: Do-It-For-Me eCommerce

All-in-one store building and online advertising process

Listing tool auto-generates product descriptions based on ISBN

Built-in traffic from peer-rated buyers

(Even customers)

Online (and offline) business encompasses…

Personal productivity/data management

Collaboration/information sharing

Vendor & inventory management

Customer & transaction management

Sales & Marketing

SMBLive CEO Matt Howard says web services providers should be facilitators for these “five conversations”

Check out BTTradespace.com!

Front Office/Back Office Integration

eBay: End-to-end Service

Market research: competitive sales/pricing data for $10/month

“ Featured items from favorite sellers” newsletter

Print postage/mailing label, request pick-up and track packages from PayPal interface

Shopster: TOTAL Solution Provider

More than Ping/Power/Pipe

Alternatives?

Pay per seat? (SaaS)

Pay per hour? (Amazon EC2)

Pay per item requested from web server? (Amazon S3)

Pay per transaction? Pay % of ecommerce proceeds? (eBay)

Overselling

Billing is NOT aligned with customer activity

The more resources customers use, the more hosting providers lose!

Overselling

Alternatives?

Pay per seat? (SaaS)

Pay per hour? (Amazon EC2)

Pay per item requested from web server? (Amazon S3)

Pay per transaction? Pay % of ecommerce proceeds? (eBay)

Overselling

Give it Away for Free?

Google/Yahoo! will double or triple revenue per user within 5 years with improvements in ad targeting technology

Average hosting provider will not see ARPU growth of 42% per year :(

Says Morgan Stanley 2006 2011

Ryan Air: “Wal-Mart with Wings”

$300 million+ out of $3 billion annual revenue from sales of 3 rd party products

CEO wants to make all flights free within 10 years; audience monetization more profitable than ticket sales

Hardware vs Software

New technologies reduce downtime and data loss

Virtualization

Grid hosting

Distributed storage

P2P content delivery

“ Fast hardware replacement” SLAs losing relevance. The question is not how to stay online, but what to do online

Are You a Software Company Too?

Cisco: “We’re a software company wrapped in steel”

eBay: 100,000 lines of new code every 2 weeks

Software encompasses more than end user apps like PhotoShop and PowerPoint. It provides framework for business processes

BT: Phone Co or Software Platform?

Nicholas Carr: Software kills hardware

Web 21C API gives .NET. Java & PHP developers access to BT’s underlying telecom network

Capabilities exposed through web services include SMS, voice call, conference call, mobile subscriber location…

Introducing the SLDN!

With SoftLayer’s open API, developers can integrate provisioning, remote reboot, bandwidth graphs, etc into control panels, third-party applications and even corporate intranets