How Hosters Stand Out in a Commoditized World

July 11th, 2013 by

differentiationIn order for the citizens of this saturated hosting nation to survive, they have to start looking for ways to stand out. Where the hosting world has been an attractive and welcoming industry since the era of the dot com bubble, times are changing. Much like shampoo or toothbrush brands, hosting providers seem to be a dime a dozen in today’s networking world.

“Commoditization” and “differentiation” are two buzz words that keep flying around the networking community. As cloud computing grows, hosting providers are invaluable. It is, however, no secret: the hosting world is commoditized. There are enough solutions on the shelf where, without a big, household brand name, there is no guarantee a potential customer is going to pick any one particular offering. Since lowering its price point is just a way for hosting providers to race to the bottom, it is time for them to start differentiating their services.

With pieces of the pie in today’s market running out, hosting providers have a couple of important decisions to make today that will determine the course of their future: should they position themselves to build their offerings, or should they look to sell? And, in either case, how are they going to differentiate themselves to be more attractive either to potential customers or to potential buyers?

What makes things difficult about this field is that most hosters are small companies with revenues under $25 million. It is one thing to separate your strengths from other same-size hosters. It is quite another to stand apart in a market dominated by names like Amazon, Citrix, and Rackspace.

A smaller hosting provider really has to offer something special for a customer to choose it over a name brand. Nobody ever got fired for buying IBM, and in this world, nobody ever gets fired for choosing AWS. With this said, there will no longer be room for small, undifferentiated hosting providers.

In the last year, some small hosting providers have taken a different approach in conducting their services: if you can’t beat them, join them. Hosters can get discouraged by trying to beat the household names, or they can look at complementary solutions to optimize their performance in the cloud.  For example, Logicworks uses ScienceLogic’s AWS Power-Pack, leveraging AWS as a part of their managed service offering.

A solution like ScienceLogic is ideal because hosters can enhance their cloud offerings with a value-added network monitoring service. Many of our customers are seeing success by collaborating with AWS instead of trying to beat it- differentiation by combination.  Network monitoring software takes care of these problems by visualizing instance costs and correlating costs across all dependent AWS services.  This allows customers to see the true bottlenecks in performance, such as problems in a particular zone in the AWS cloud.

Everyone should be on their toes in staying ahead of the cloud performance curve – hosting providers and symbiotic vendors alike. There are a number of tools on the market designed for hosting providers to perfect their services, as there is no sitting room in this packed field. Whether looking to sell or stay independent, hosters need to select good partners that will help them stand beside the hosting monsters. In order to survive, it is crucial for a hoster to find conscientious vendor partners that are wired to handle anything.

Looking for more information on how to differentiate? Register for our upcoming webinar: Stand Out From the Hosting Crowd. A roundtable discussion moderated by Charles Weaver, co-founder and CEO of the MSPAlliance, Liam Eagle, analyst at 451 Research, Antonio Piraino, CTO of ScienceLogic, and Chris Drake, founder and CEO of FireHost.

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