Web hosts: Downturn? What downturn?

By all accounts, the web hosting industry is holding its ground in the economic downturn. Across online meeting places for hosting professionals, such as the ongoing discussion in the sizable LinkedIn Hosting Industry group, there are no indications that the industry is undergoing a crisis period. On the other hand, the stock market slump in the beginning of October hit hard on the big publicly traded hosting companies -- was that simply the side effect of an economy-wide event, or indication of specific weaknesses in the web hosting sector?

Back when people were starting to get really nervous about the economy, HostReview held a web hosting executive roundtable and asked representatives of different companies what they thought laid ahead for the industry. The answers were a resounding affirmation of the sector's business stability.

"..In a potentially shaky economic climate, customers really need a low-risk platform for their business and IT needs" said Urvish Vashi, Director of Product Management, with The Planet. "Hosting providers (...) have enabled customers to avoid big upfront expenses and have given them the flexibility to do business without long-term contracts. As a result, hosting providers often become the safest place."

Another participant in the roundtable--Steve Renda, Vice President of Sales and Marketing at Verio, said "SMBs are examining how to make their businesses more efficient, turning to hosting, software services, virtualization and other cost and time savings methods that could help impact their bottom line."

In the LinkedIn discussion, Ditlev Bredahl from UK2Group.com, predicts a possible slowdown in the sales of high-end managed and dedicated hosting setups, but he sees growth in the low- to mid-end segment, and especially in virtualized offerings: "I think the virtualized hosting business (incl. vps/cloudhosting/etc) will prosper during this period - they have every chance to convince their clients that there are savings to be made, and that they can provide a 'real' alternative to a dedicated managed server at a fraction of the cost."

From these and other professional opinions a definite consensus emerges--web hosting has entered the domain of essential services and is not regarded as a luxury anymore. Thus, people and companies are less likely to cut significantly on hosting expenses in a time of economic slowdown. As the industry keeps consolidating and introducing new offerings -- notably in the areas of cloud computing and virtual servers, the outlook is good for most hosting companies.

Read more about the LinkedIn group discussion and the market crash offsite.