Tier1 Research: Consolidation in Mass-Market Web Hosting Creates New Leaders and Reinvigorates the Sector

March 2, 2007; 01:06 AM

MINNEAPOLIS - A new report by Tier1 Research finds that the mass-market hosting sector – defined as the shared, virtualized service and standardized dedicated server segments of the market – is transforming as more institutional money enters the sector and competition stiffens. Consolidation in this space is creating new leaders that are reinvigorating the sector's identity. This is all taking place amid quickening adoption of broadband and multiple Web presence possibilities for consumers, businesses and everything in between. These findings are contained in a report released by Minneapolis-based Tier1 Research (T1R), an independent research firm that analyzes the financial and industry implications of developments affecting public and private companies within the IT, communications and Internet sectors. This is the third report from the T1R Mass-Market Quarterly Series – a series of reports designed to provide timely analysis and perspective on key technology trends and marketplace developments in mass-market hosting.

"Hosting at the mass-market level continues to experience commoditization pressure as it increasingly becomes a common denominator across a widening scope of technology service providers," said Philbert Shih, Senior Analyst at T1R and lead author of the report. "We believe that noteworthy changes in market share along with the trends that developed around the 4Q06 period are telling for possible future directions of this marketplace."

This 36-page report, titled "A 4Q06 Review of the Mass-Market Hosting Sector: Change Continues to Sweep the Sector, but Opportunities Remain" provides a market size/share review and comparison of companies in the North American and European mass-market hosting sector. This is followed by a review of major events – executive appointments, datacenter expansions, new products and services – and a detailed discussion and analysis of important trends and developments that are driving the mass-market hosting sector, as well as insight into where this market is going.

The trends covered in this report include:

• Industry consolidation slows as it gears up for 2007: After a busy few quarters, 4Q06 was relatively quiet, but two new equity firms have entered the sector and could begin rolling up mass-market sector assets.
• Internet giants lurking: The Internet giants continue to make moves that potentially threaten the livelihood of mass-market hosters.
• Shared hosting under attack by functional hosters, Part III: Social networking sites are reducing the need for shared hosting accounts, but offer interesting opportunities for hosters.

Key Companies Covered

The report covers more than 20 key public and private companies in the mass-market hosting sector, including the following: 1&1 Internet, 3Tera, Affinity Internet, Amazon, Aplus.Net, Apptix, BlueFreeway, Catalyst Investors, Demand Media, eBay, Go Daddy, Google, Mamut, Microsoft, Group NBT, Network Solutions, Peer1 Network, Rackspace, The Planet, Web.com and Yahoo!

Report Orders

To learn more about this report, contact Lori Larson, Business Development Manager with Tier1 Research, at 239-561-9504 or at lori@tier1research.com.

About Tier1 Research

Tier1 Research analyzes the financial and industry implications of developments affecting public and private companies within the IT, communications and Internet sectors. Tier1 blends traditional Wall Street investment research with industry analysis to deliver dynamic market and financial intelligence. Clients include institutional investors and technology vendors, along with end users and venture capitalists. These clients leverage Tier1 Research's analytical insight for idea generation, trend identification, due diligence and grounded opinions, as well as metrics and forecasts on companies and industries covered. Since its founding in August 2000, Tier1 Research's coverage has spanned the largest publicly held technology companies as well as smaller, pioneering public and privately held companies in order to provide comprehensive assessments of all companies impacting the technology marketplace in a meaningful way.

Tier1 Research, a division of The 451 Group, is headquartered in Minneapolis. For additional information on its research coverage and services, visit www.tier1research.com.