What is the strength and weakness of the hosting market?

Users are changing, but hosting and cloud service providers are not. This is the main idea of ​​the report of the Indian entrepreneur and billionaire Bhavin Turakhia (Bhavin Turakhia), with whom he spoke at the international exhibition of cloud services and hosting CloudFest.

We were there too, we talked a lot with providers and vendors, and some thoughts from Turakhia’s speech were considered consonant with the general mood. Especially for the Russian market, we have translated his report.

About the speaker . In 1997, at the age of 17, Bhavin Turakhia and his brother founded the hosting company Directi. In 2014, Endurance International Group bought Directi for $ 160 million. Now Turakhia is developing Flock messenger and other, less well-known in Russia services: Radix, CodeChef, Ringo, Media.net and Zeta. He himself calls himself a start-up evangelist and serial entrepreneur.

At CloudFest, Turakhia presented a SWOT analysis of the hosting and cloud market. He spoke about the strengths and weaknesses of the industry, opportunities and threats. Here we give a transcript of his speech with some abbreviations.

You can watch the full recording of the speech on YouTube , and a short squeeze in English to read in the report CloudFest .

Strength: huge audience

Just imagine, people present at CloudFest control 90% of the global Internet. More than 200 million domain names and sites are registered (approx. - already 300 million), 60 million of them were created in just one year! Most of the owners of these sites work directly or indirectly through the companies gathered here. This is the incredible power of us all!

Opportunity: access to new businesses

As soon as an entrepreneur has an idea, he chooses a domain, launches a site, buys hosting - cares about how his business will be presented on the Internet. He goes to the provider before hiring the first employee and registering a trademark. He changes the name of the company, focusing on the free domains. Each of us in one way or another influences the way of its business. We are literally at the bottom of every business idea.

Google, Microsoft or Amazon didn’t immediately become huge, they started with Sergey and Larry, Paul and Bill, etc. The whole idea is based on the idea of ​​one or two people, and we, hosting or cloud providers, can participate in its growth from the pupa to a butterfly, from a small company to a corporation with 500, 5,000 and 50,000 people. We can start with an entrepreneur and help him: in marketing, collecting leads, getting customers, as well as tools for communication and collaboration.

Threat: users have changed

Over the past ten years, consumer behavior has changed dramatically: the baby boom generation has replaced the millennials and the Z generation. Smartphones, unmanned vehicles, artificial intelligence, and many more things have emerged that dramatically changed behavior patterns. I will talk about several important trends for the industry. Now users:

Rent, not buy

If before it was important to own things, now we just rent them. Moreover, we are not renting an asset, but an opportunity to use it for some time - take at least Uber or Airbnb. From the ownership model, we moved to the access model.

A few years ago at this conference we discussed hosting, selling servers, racks or places in the data center. Today we are talking about renting computing power in the cloud. World Hosting Day (WHD) has become a cloud festival - CloudFest.

They want a convenient interface

There was a time when users expected only functionality from the interface: I need a button with which I can solve my problem. Now the request has changed.

Software should be not only useful, but also beautiful and elegant. He must have a soul! Awkward gray rectangles out of fashion. Now users expect that UX and interfaces will be elegant, comfortable and fun.

Choose yourself

Previously, when searching for an electrician, a person consulted with a neighbor, chose a restaurant on the recommendation of friends, and planned a vacation through a travel agency. All this was before the advent of Yelp, TripAdvisor, UberEATS and other advisory services. Now users make decisions by conducting their own research.

This also applies to our industry. There was a time when buying software couldn't do without talking to someone who could say, “Hey, if you need CRM, use it; and for personnel management take this. " Users no longer need consultants, they find answers through G2 Crowd, Capterra or even Twitter.

Therefore, content marketing is developing. His task is to tell the client in which situations the company's product may be useful to him, and thus help in the search.

Looking for quick fixes

Previously, companies developed programs themselves or installed software vendors and customized it for themselves, attracting IT-professionals. But the time of giant corporations, in which their own development is possible, is gone. Now everything is built around small companies or small teams within large organizations. They can find a CRM system, task manager, tools for communication and collaboration in a minute. Quickly install them and start using.

If you look at our industry, users no longer pay thousands of dollars to web designers to develop a site. They can create and install a website themselves, as well as do much more. This trend continues to develop and influence us.

Weak side: providers do not change

Changed not only users, but also competition.

Two decades ago, when I was part of this industry and started a hosting company, we all sold the same product (shared-hosting, VPS or dedicated servers) in the same way (three or four tariff plans with X MB of disk space, X MB of RAM, X mail accounts). It continues now, for 20 years we all sell the same thing!

In our proposals there was no innovation, there was no creativity. We competed only with price and discounts for additional services (for example, domains), and providers differed in terms of support language and physical location of servers.

But everything has changed dramatically. Just three years ago, 1% of sites in the US were created using Wix (this is only one of the companies that I think builds a great product). In 2018, this number already reaches 6%. Sixfold growth in only one market!

This is another confirmation that users now prefer ready-made solutions, and the interface is acquiring exceptional importance. “My cPanel is against yours, or my hosting package is against yours” - this does not work anymore. Now the battle for the client is at the level of user experience. Wins the one who provides the best interface, the best service and the best features.

Remember

The market has incredible power: access to a huge audience and the beginning of every new business. Providers are trusted. But users and competition have changed, and we continue to sell the same products. We do not really differ in anything! For me, this is a problem that needs to be solved in order to monetize the opportunities that exist.