Are you ready for Hosting 3.0?


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HostingCon 2011 Keynote delivered by Antonio Piraino, VP of Research for Tier1 Research

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Are you ready for Hosting 3.0?

  1. 1. Are you ready for Hosting 3.0?<br />Antonio Piraino<br />Vice President, Tier1Research<br />
  2. 2. Tech Bubble 2.0? <br />“Facebook reached 750m users; 7 billion pieces of content shared on the site weekly<br />Facebook was linked to over 100,000 crimes in the UK<br />“Apple’s15bn app store downloads is growing 9 times faster than Macdonald’s”(A.Love)<br />Apple Embroiled in Patent violations with HTC and Samsung<br />“Google Android 550,000 a day, 160m Chrome users, $37bn cash, $200bn market cap”<br />FTC/EU is investigating Google for possible antitrust violations<br />Google retiring Google Health online personal health records<br />“Twitter's July membership increased 50,000 per day with 95 million tweets a day”<br />IOC warns athletes out of the London Olympics if they over-step Twitter and Facebook<br />“LinkedIn added up to $102/share with $470m revenue and over 100m users”<br />Competition with Zynga, and being sunk by Spam<br />Facebook, Groupon, Zynga, LivingSocial, Twitter, LinkedIn, Pandora ($3bMarket Cap = 16x Revenue), Zillow: $3.5 billion revenue; $200bn Market Cap. <br />Demand Media Enterprise Value/EBIDTA: 18-19x ($1bn Market Cap) <br />Copyright/Trademark infringement issues detracted from market cap <$1bn<br />Do Not Confuse with Cloud 2.0 or Hosting 3.0!<br />
  3. 3. Hosting Evolution<br />Phase 1<br />Phase 2<br />Phase 3<br />Courtesy of<br />
  4. 4. Cloud Computing: Market Separation<br />Public to Enterprise<br />
  5. 5. Hosting 3.0<br />What Changed?<br />The Opportunity<br />Challenges Hosters will Face<br />What can you do?<br />Where to next?<br />
  6. 6. ChangeWave U.S. IT Spending Indicator –Net Score <br />August 2006 – July 2011<br />6<br />
  7. 7. ChangeWave U.S. IT Spending Indicatorvs. S&P 500<br />August 2006 – July 2011<br />7<br />
  8. 8. Impact on SMB Budget<br />
  9. 9. Economic Impact<br />
  10. 10. What’s changed in the business Psyche?<br />Consumerization of IT Era<br />
  11. 11. Enterprise Capital Budgets<br />
  12. 12. Hosting 3.0<br />What Changed?<br />The Opportunity<br />Challenges Hosters will face<br />What Can you do?<br />Where to next?<br />
  13. 13. Courtesy: Jack of all Clouds/Cloudkick<br />The Distribution Shift<br />Number of sites in samples<br />
  14. 14. The IaaS Opportunity Cost<br />CAGR<br />70%<br />IaaS Revenue Estimates<br />Revenue $USM<br />Source: Tier1 Research/The 451 Group<br />
  15. 15. Which format of Cloud?<br />
  16. 16. Aggregate Cloud ‘As a Service’ Market<br />CAGR<br />~25%<br />
  17. 17. Growth in the Rest of the Market<br />
  18. 18. Revenue growth – Shared hosting<br />Shared Hosting Revenue 2009-2013<br />Shared hosting revenue has been growing at 7-9% per year<br />
  19. 19. Revenue growth – Dedicated hosting<br />Dedicated Hosting Revenue 2009-2013<br />Dedicated hosting revenue has been growing at around 5% per year<br />
  20. 20. Internet Infrastructure Revenue Mix<br />
  21. 21. Revenue growth – Managed hosting<br />Managed Hosting Revenue 2009-2013<br />Managed hosting revenue has been growing at around 20% per year<br />
  22. 22. Top Apps driving cloud computing<br />Cloud Computing: Top 5 Areas that Companies Currently Support Applications Running on Public Cloud Computing Services. Current Share - Jul 2011<br />
  23. 23. Hosting 3.0<br />What Changed?<br />The Opportunity<br />Challenges Hosters will face<br />What Can you do?<br />Where to next?<br />
  24. 24. Threats to your Hosting Business<br />New Entrants & Rivals <br />Legacy Processes: slow, laborious, manual<br />Spending more to be more efficient<br />SEO suboptimization<br />Commoditization<br />Trusting your vendor<br />Lack of Cross/Upsell<br />Lack of Stickiness<br />Cultural Change<br />Time and Timing<br />Where to start in the Cloud game<br />Price Wars in Cloud Era<br />Perceptions around cloud<br />Getting it wrong<br />
  25. 25. Growing Competition<br /><ul><li>“Facebook began testing an API that lets corporate admins make changes to settings or install applications (July 2011)
  26. 26. “Google launches new Page Speed Service (on top of SPDY): for Google Sites, Picassa, AppEngine, Apps” (July 2011)
  27. 27. “Businesses with Microsoft Volume License can run existing Windows Server application licenses on Amazon EC2” (July 2011)
  28. 28. “Apple has added volume purchasing to its App Store in a bid to entice the enterprise segment: B2B apps for $9.99.” (July ‘11)
  29. 29. “Intuit and recently announced a deal to integrate QuickBooks with's CRM platform.” (April ‘11)</li></li></ul><li>Perception wrt Reliability<br />
  30. 30. Perception wrt Security<br />
  31. 31. Compute model increasingly complex<br /><ul><li>Means More work and complexity
  32. 32. Means more challenges in meeting SLAs</li></li></ul><li>Management, Control & Transpaency <br />Networks<br />Servers/Network/Storage<br />Storage<br />Performance & Availability<br />Collaboration<br />Voice / Video / Telepresence<br />Operating Systems<br />Databases<br />Asset<br />Eventing<br />Servers<br />Cloud<br />Video<br />Cloud (Amazon, Rackspace, and more)<br />Ticketing<br />29<br />
  33. 33. Hosting 3.0<br />What Changed?<br />The Opportunity<br />Challenges Hosters will face<br />What Can you do?<br />Where to next?<br />
  34. 34. Options<br />Virtualize & Automate<br />Parallels, Citrix, VMware, HyperV, ISP System, etc<br />IaaS stack in a box (plumbing)<br />, Onapp, Flexient, Eucalyptus, Canonical<br />PaaS in a box<br />Hexagrid, Joyent, Opsource, Morphlabs, Elasticstack<br />Don’t forget to focus on Management and Control<br />Sciencelogic, Nimsoft (CA), BMC<br />.. and on Security, reliability and assurances to Customers Means SLAs and more high touch involvement<br />Don’t get into the habit of price wars – you can’t afford it!<br />
  35. 35. Ultimately a decision needs to be made<br />Partner, build, be acquired, change shape, compete ?<br />
  36. 36. Venture Capital Expectations<br />% of VCs who expect investments to increase in 2011 in companies related to:<br />Source: National Venture Capital Association Survey, results Dec 2010<br />
  37. 37. Hosting 3.0<br />What Changed?<br />The Opportunity<br />Challenges Hosters will face<br />What Can you do?<br />Where to next?<br />
  38. 38. The next phase of cloud computing<br /><br />
  39. 39. Framing the Consolidation<br />Other <br />(MSPs, VARs, <br />Social media)<br />Telecom<br />Providers<br />Hosting <br />Providers<br />ISVs<br />Systems integrators<br />Global<br />Regional<br />National<br />
  40. 40. SaaS/Apps Marketplace Opportunity<br />Cloud Value<br />Web <br />Conferencing<br />E-Learning<br />Team Collaboration<br />Test and <br />Development <br />SMB - ERP<br />CRM/SFA<br />HCM <br />Procurement*<br />SCE-TMS<br />Email<br />CRM/Marketing <br />Automation<br />CRM – <br />Call Center SMB<br />Complex<br />Loosely<br />Coupled<br />SCP<br />Manufacturing <br />And <br />Operations Software<br />EAM<br />FMS<br />Time <br />2010 -2006<br />2011 -2012+<br />
  41. 41. Practical Reflections for Service Providers<br />Commit to a strategy<br /><ul><li>Leveraging communities, IP software, opensource stacks</li></ul>Decide between IaaS, PaaS or SaaS<br /><ul><li>Apps Exchange marketplaces & Mobile apps growing</li></ul>The biggest Competitor <br /><ul><li>Other Provider, the internal IT guy or Cloud readiness?</li></ul>OfferingAssurances<br /><ul><li>Ease of migratability, integration, usability and tools</li></ul>Addressing the Security Poverty Line<br /><ul><li>Means more than just a pricing change</li></ul>There is no magic Solution – partnerships are key!<br /><ul><li>Or Exit</li></li></ul><li>Cloud 2.0 & Hosting 3.0<br />SLAs driven by business needs<br />Automation & Orchestration efficiencies<br />High Security (assurance, DR, compliance)<br />Granular Monitoring, Mngt & Reporting<br />Flexibility of Cost/Pricing and no lock-in<br />Consistency in Technology<br />Agility, scalability and elasticity<br />New management features and Tools<br />More Niche plays<br />More Consolidation<br />Apps/SaaS<br />
  42. 42. Not a fad… This is Next-Gen Business<br />
  43. 43. Questions?<br />Antonio Piraino<br />Vice President, Tier1 Research<br /><br />