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August 24, 2012

Hosting Service Providers Spill Their Worst Fears

Robert Gelber

Back in July, cloud hosting providers went to Boston to attend the eighth annual HostingCon convention. Participants would learn about partnerships, handling compliance issues and a number of other important cloud topics. They also, according to ScienceLogic, reported their biggest fears.

ScienceLogic is a Virginia-based company that aims to assist cloud providers with monitoring and management services. They decided to survey HostingCon2012 attendees, asking questions about competition, stack usage and potential threats to the industry.

While 39 percent of respondents were primarily concerned with Google, Amazon and Facebook as potential disruptors, slightly more believed pricing wars were dangerous to the hosting market.

The survey authors believe this is due to a majority of providers not differentiating their services. Essentially, if the market is full of the same product, the cheapest price will most likely succeed. However, if the providers were to offer unique and beneficial services like mobile access to management tools, etc., success would be measured by user experience. The report went on to show that Amazon’s built-in SaaS tools enabling advertising, sales and other features, are important aspects of the service.

After expressing their fears, the providers offered some insight regarding how the hosting market currently operates. When asked how they differentiate their service from the competition, 59 percent said through management and support. The second highest response was pricing at 34 percent. Similar to management and support, customer control and tools pulled in 32 percent, while 22 percent mentioned applications. The question allowed for multiple answers, which explains why the math appears slightly fuzzy at first glance.

From a bird’s eye view, the ScienceLogic survey reflects a disparity between cloud service providers and potential adopters. While hosting companies are primarily concerned with pricing wars and industry goliaths, potential cloud users typically hesitate over other issues. These include data security, lock in, cost efficiency and SLA uptime. 

Pricing may appear more attractive towards helping cloud user’s operational budget. On the other hand, if client data is compromised, or an outage occurs when they try to access the service it will surely reduce confidence in the relationship.

It might behoove hosting providers to operate their datacenters with added focus in removing the barriers to cloud adoption. Proudly displaying a proven five nine (99.999%) SLA or offering migration assistance may be far more effective than better pricing.

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