The Future of Web and App Hosting: By the Numbers

Posted by Mary McCoy on Mar 3, 2016 6:00:00 AM

The Future of Web and App Hosting: By the Numbers


It’s time to take a deeper look at the current state of affairs within the web and app hosting marketplace, using data from 451 Research’s recent comprehensive report. How did we get to this point? Where are we likely to be by 2019? What do these numbers mean for your company?

In earlier articles, we noted that 451 Research predicts slower growth for web and application hosting over the next five years. That’s already happening. You didn’t need a research report to tell you the times they are a changin’. All you have to do is take a look at how technology is evolving. All you have to do is take the pulse of your own web or app hosting business.

Workloads are moving out of our category, as are some products. But it’s more than just a matter of shuffling the IT services deck for data-gathering purposes. More and more service providers are specializing, serving a narrower target market. Will this cut into your existing or hoped-for business? New service categories are emerging. Is there a way you can take advantage of them?


By the Numbers

Web and app hosts should take note of these three statistical predictions:

  1. As a category, web and app hosting will grow from $18.2 billion in 2015 to $25.8 billion by 2019.
  1. Total hosting revenue will increase at an annualized rate of 15.5 percent. What’s interesting is that the “balance of power” in terms of revenue drivers has shifted. Managed hosting is growing at a far faster rate than web/app hosting. Here’s how that 15.5 percent breaks down:
    • Dedicated hosting will grow about 5.7 percent per year
    • Shared hosting will grow about 10.4 percent per year
    • Managed hosting will grow about 18.7 percent per year
  1. In terms of market share:
    • Web/app hosting will decline from 36.8 percent to 28.5 percent
    • Managed hosting will increase to a whopping 71.5 percent

 

What’s causing these changes?

Evolving technology has changed the way every business does business. It’s changing the way your customers function and think about IT, and it will change the way you approach your future if you want to survive and thrive in the brave new world of web and app hosting. 

Fewer workloads need to be managed as part of service delivery. Internet-based infrastructure is more common, and an increasing number of enterprise workloads “live” in hosted environments. IaaS is attracting a growing share of workloads that used to exist as dedicated hosting environments or VPS.

And, as 451 Research collates data to present their research findings, they’re no longer comparing apples to apples. They now consider certain environments to be part of managed hosting. Increasing modularity of managed services makes them more versatile – appropriate for a widening range of infrastructure types and applications.

 

Change is a constant

Identifying and understanding trends is bottom-line critical for hosting providers. As a business, you must stay alert and nimble, quickly responding to the challenges and opportunities of change. The same is true for your customers. Their struggle to find new and improved IT solutions to streamline and manage their work offers opportunities to strengthen your relationship with them.

 

Converting predictions into profits

These numbers are global in scope. They represent the Very Big Picture. And though growth may have slowed, 451 Research suggests the sector should see an additional $7.5 billion in revenue each of the next few years. That’s a Very Big Pie. To carve out a tasty slice for yourself, you’ll have to reinvent your business model and/or your marketing strategy.

Continued growth for web and app hosting will come from two sources:

  • Adding new subscribers to grow your customer base
  • Adding new services you can sell to existing customers

 

So stay tuned. Now that we’ve looked more closely at the numbers, we’ll explore each key industry trend in greater detail, uncovering specific insights and recommendations you can use to attract more customers and sell more services.

See also:

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Meet Mary! Mary McCoy is Continuum’s resident Inbound Marketing Specialist and social media enthusiast. She recently graduated from the University of Virginia (Wahoowa!) with a BA in Economics and served as digital marketing intern for Citi Performing Arts Center (Citi Center), spearheading the nonprofit’s #GivingTuesday social media campaign. Like her school’s founder, Thomas Jefferson, Mary believes learning never ends. She considers herself a passionate, lifelong student of content creation and inbound marketing.

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Topics: Webhosting, hosting industry, hosting

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