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
“ SoftLayer is evolving into a software oriented company”

Knowledge (via Software) is Power
Google CEO: “personalization is the future”
Quantcast CTO: “eCommerce is destiny”
MIT Media Lab: can predict your schedule with 79% accuracy

Marketing is NOT Game of Numbers
Amazon: auto-recommendations responsible for 1/3 of sales
Aggregate Knowledge: drove $100M in additional sales on Overstock.com
Robot Replay: captures website visitors’ mouse movement – what if data were used to optimize site config on the fly?
Staying competitive = thinking beyond one-size-fits-all ads, website content & service plans

The Shift in Web Hosting: Are You on the Upside

by isabelwang on May 27, 2007

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