It's a safe bet that the Web hosting industry of the future will look very different from the one today's hosting providers are used to, and that's certainly cause enough for concern to those in the business. An even greater concern, though, is the serious possibility that the future isn't as far away as some hosts might believe.

Over the past year, plenty of signs have emerged that indicate the face of Web hosting is already starting to stretch and shift in new directions. And it's not just all the usual suspects of change - i.e., shutdowns, mergers, buyouts, etc. - although there have been plenty of those. No, the new winds of change include acquisitions of companies that deliver more than just additional hosting customers, a fresh generation of startups that look nothing like your father's Web hosting company, and experiments with innovative ways to sell hosting to the next wave of customers.

Consider the growing trend of acquisitions focused on providers of small-business tools and services other than hosting, for example. One of the more recent - and most notable - transactions is Interland's purchase of the Website publishing company Trellix, completed earlier this month. The acquisition arms an already dominant player in the SME (small-and medium-sized enterprise) hosting industry with an even stronger grasp on the market by giving it control over a site-creation tool already used by millions of consumers.

Everyones Internet/Rackshack's buyout of HostingTech Magazine this month also creates unique new marketing opportunities for a veteran hosting provider, putting it at the helm of a recognized trade publication. That's added muscle for a company that also operates a popular hosting industry forum,

Of course, there's still plenty of activity in the garden-variety host-to-host acquisition arena, too: 2001 - 2002 saw more M&A headlines than either of the previous two years, and 2003 is showing all signs of that trend continuing.

And then there's the new breed of Web hosts emerging onto the field: ventures like OnSmart Network, ServerBeach or Ready-Set-Web, all squarely focused on the SME market. Ready-Set-Web, started by software R&D company Webnox Corp., roams the furthest into new territory with its "ready-made Websites for rent" and a range of personal-interest and business templates that include domain name registration and regularly updated site content. In promoting its services, Ready-Set-Web barely mentions the word "hosting," much less old-World hosting terms like megabytes or bandwidth.

The future of SME hosting gets even more interesting when you factor in the small-business hosting forays of 'Net service providers like Yahoo! and its "business-class Web hosting service," or AOL, with its AOL for Small Business offering for small-office/home-office customers. Both services, launched late last year, promise to make an already competitive hosting industry even more cutthroat, considering Yahoo!'s and AOL's well established brand-name familiarity with millions of consumers and entrepreneurs.

While "traditional" Web hosts can't help but notice these developments, many haven't yet fully formulated their response plans. They're dead certain they need to do something different to stay in the race for new and existing small-business customers. But they're still fuzzy on the details of what that "something different" is Ö or should be.

Although they're still exploring their long-range strategic options, small-business hosts at least realize they must keep up with the competition as far as value-added services and tools are concerned. That explains the growing number of hosting providers that are expanding their services, implementing automation tools, adding site-design tools or wizards, and making e-commerce a standard offering, even with entry-level plans. And that's a movement guaranteed to pick up steam in coming months.

What else does the near future hold? Look for more Web hosts to forge increasingly creative alliances with complementary service providers, seek out new ways to sweeten their appeal to resellers and affiliates, and experiment with less-traditional means for marketing their services. Among those who have already taken that last step are EarthLink and C I Host, both of which recently began promoting their services through retail storefronts, either on their own or through partnerships.

While no one company has yet shown it has all the answers, for the average host hoping to stay on top of the small-business market in 2003 and beyond, one conclusion is loud and clear: the coming months and years will present challenges like no time before, and it will take creativity and stamina to stand up to the test. The future of Web hosting is here.

About the Author
Shirley Siluk Gregory is senior analyst with the ebi Group, an analyst organization that specializes in market research and data resources for Web hosts and other technology companies targeting the small- and medium-sized enterprise (SME) market. Check out the ebi Groupís Website at or email Shirley at