The Host With The Most Will Survive

In the early days of the Web, hosting services sprang up to provide servers to Web entrepreneurs who couldn't afford to purchase and maintain their own.

Web-hosting services are the behind-the-scenes engines that keep millions of sites connected to the Internet. As more providers join their ranks, hosting may be the next Web industry due for a shakeout.

Every Web site runs off of Web servers that keep it connected to the Internet. If those servers dont hum reliably around the clock, consumers cant access the site and business is lost.

In the early days of the Web, hosting services sprang up to provide servers to Web entrepreneurs who couldnt afford to purchase and maintain their own. Today, with the growing complexity of e-business, even modest Web sites need more advanced capabilities like security and site traffic management.

Despite the recent wave of dot-com failures, the hosting industry is expected to thrive. At the start of 2000, hosting was a $1.8 billion business. Recently, Forbes magazine predicted that the industry will grow 475 percent annually.

As e-business competition heats up, hosting companies are ratcheting up their services to provide the end user more sophisticated e-commerce solutions. Hosters have added a couple of new wrinkles to their bread-and-butter responsibility of keeping sites connected to the Internet, offering a wide range of Web-site management services, from domain name registration to streaming video, and even system integration.

Hosting has caught the eye of so many new companies that its in danger of becoming overcrowded. In fact, according to Courtney Munroe, director of Web hosting at International Data Corp., the most dominant hosting trend of the year is the number of companies now clamoring to get into the business.

Who has the edge in the crowded hosting arena? Those with a strong, established track record are expected to prevail. But like other technology services, they need capital to build additional data centers to handle the demand for their services.

Mark Evans is managing director of Deloitte & Touches Technology & Communications Group. Comments on this column can be sent to [email protected].