Right Sizing Companies to Suit Current Market Conditions Ensures Web Hosting Success

PALO ALTO, Calif.--(BUSINESS WIRE)--Dec. 10, 2003--Right sizing the company based on an accurate evaluation of true core competencies is proving to be vital for web hosting providers to survive in a mature and highly competitive market.

New analysis from Frost & Sullivan, (www.IT.frost.com) U.S. Web Hosting Market, projects revenues in this industry to reach $4.23 billion by 2009.

"Analysis might reveal that owning and operating data centers is not the core competency and that decommissioning them and running operations out of a collocation data center would be in the best interest of the hosting provider," says Frost & Sullivan Industry Analyst Jarad Carleton.

In addition, decommissioning unprofitable data centers increases the utilization rates of the remaining facilities, helping to achieve a breakeven point for data center loan payments and operating costs to make them profitable.

Hosting providers should not be reluctant to outsource their data center operations to tier-one collocation facilities if this offers better financial stability and profitability.

"Companies need to stay ahead of competitors by offering the best prices with the latest hardware and building a hosting product that offers business solutions to vertical markets as opposed to a simple dedicated server lease for horizontal markets," says Carleton.

This does not imply that demand for dedicated server leases will lessen. Instead, the ability to offer customized value-added services can help participants to successfully win the business of medium and large-sized organizations.

Competitive intelligence studies that glean information from sales personnel, third party research, and trade journals are expected to enable providers to target the verticals that require specific hosted application offerings and other higher-margin value-added services.

Along with monitoring customer requirements, telecom companies that aim for a larger share in the web hosting market must focus on offering superior customer service than that offered by the voice services arm of their organizations.

To promote end-user awareness regarding the superior level of customer service that they are capable of providing, telecom companies have to demonstrate pro-activeness and responsiveness as hosting partners and their ability to offer customized hosting to specific market verticals.

U.S. Web Hosting Market Study is part of Frost & Sullivan's annual IT market research. It examines the current state of the market and addresses issues surrounding the right sizing of hosting operations to be able to compete and achieve profitability. The study analyzes market shares based on revenue earned, discussing measures to reduce overhead costs and increase profit margins. Forecasts based directly upon revenue drivers and restraints as highlighted by web hosting industry executives offer valuable insights. In-depth strategies to aid market penetration and address each individual challenge are also included.

If you are interested in viewing the research overview for U.S. Web Hosting Market, please e-mail Dustin McVey at dmcvey@frost.com with the following information: Full name, Company Name, Title, Contact Tel Number, Contact Fax Number, Email.

Frost & Sullivan, an international growth consultancy, has been supporting clients' expansion for more than four decades. Our market expertise covers a broad spectrum of industries, while our portfolio of advisory competencies includes custom strategic consulting, market intelligence, and management training. Our mission is to forge partnerships with our clients' management teams to deliver market insights and to create value and drive growth through innovative approaches. Frost & Sullivan's network of consultants, industry experts, corporate trainers and support staff spans the globe with offices in every major country.