Tier1 Research: Mass-Market Web Hosting Sector Is Under Pressure and Facing Rapid Transformation

NEW YORK--(BUSINESS WIRE)--The mass-market hosting sector is developing into a space that is fragmented, under pressure and transforming rapidly. These findings are contained in a report released today by New York-based Tier1 Research (T1R), an independent research firm that analyzes the financial and industry implications of developments affecting public and private companies within the hosting, IT, communications and Internet sectors. This is the fourth report in the 2007-08 T1R Mass-Market Quarterly Series – a series designed to provide timely analysis and perspective on key technology trends and marketplace developments in mass-market hosting.

T1R analysts believe that driving change in the mass-market hosting sector is the proliferation of wireless and broadband access, Web-enabled mobile devices, and the movement of personal and business lives to an online environment. This has created growing demand for a wide range of online services that now form a new layer of value that hosters are fighting to deliver to their customers.

"The transformation under way has forced hosters to reconsider old concepts, explore new opportunities and change the way they traditionally do business," said Philbert Shih, Senior Analyst at T1R and lead author of the report. "But it has also opened the door to increased competition as the likes of Google, Microsoft and others look to target the mass market for various types of Web-based services, of which Web hosting is just one, albeit an important piece."

T1R analysts find that social networks and functional hosting services continue to challenge hosters for market share. Shared and dedicated hosting have dominated the mass-market hosting sector for most of its history, but new technologies such as virtualization and open computing platforms like Amazon will test their staying power.

This 62-page report, titled 'Mass Market Quarterly Series: Spring 2008 Review,' recaps and analyzes the impact of key events in the past quarter and takes a closer look at some of the noteworthy trends. The report also takes an empirical perspective, tracking movements in market share while balancing historical reflections with a peek into the future.

Trends covered in this report include:

• M&A activity slows: An extremely busy Q307 was followed by a slow Q407 as the M&A wheels wound down for the year.
• Amazon's overlooked threat: Amazon's e-commerce hosting service expands its threat to the hosting sector.
• SoftLayer and on-demand services: SoftLayer is innovating in on-demand services and taking it to the next level.
• Outages test hosters: A number of outages tested hosters and taught some hard lessons.
• Google threat getting more serious: Google had a relatively quiet Q407, but continues to build out services that will make it a formidable challenger to the hosting sector.

Key Companies Covered

The report covers more than 30 key public and private companies in the mass-market hosting sector, including: 1&1, Amazon, Aplus.Net, Apptix, Arsys, Endurance International, eNom (Demand Media), Go Daddy, Google, Group NBT, Homestead, Hostopia, Hostway, Intuit, Mamut, MelbourneIT, Microsoft, NaviSite, Network Solutions, Newtek, OVH, Parallels/SWsoft, Peer 1, Pipex, Rackspace, Register.It, SoftLayer, Strato, The Planet, Tucows, Verio, Web.com, Website Pros and Yahoo.

Report Orders

To learn more about this report, visit www.t1r.com or contact Dan Ephraim, Vice President, Business Development with Tier1 Research, at 212-505-3030 x 122 or at dan.ephraim@tier1research.com.

About Tier1 Research

T1R, a division of The 451 Group, analyzes the financial and industry implications of developments affecting public and private companies within the IT, communications and Internet sectors – with a particular focus on hosting, Internet infrastructure and IT services. Clients include institutional investors and technology vendors, along with end users and venture capitalists. These clients leverage T1R's analytical insight for idea generation, trend identification, due diligence and grounded opinions, as well as metrics and forecasts on companies and industries covered.

T1R is headquartered in New York. For additional information on its research coverage and services, visit www.t1r.com.