The recent release of Gartner’s Magic Quadrant for Cloud Infrastructure as a Service (IaaS) and Web Hosting has underlined the disruptive effects the evolution of cloud computing is having on the Web hosting market.
For the past five years Gartner (news, site) says the market has been moving towards on-demand infrastructure that is offered on a flexible pays-as-you-go basis. The majority of users obtain at least some of their infrastructure on demand, while most new web hosting contracts include some level of on-demand services too.
IaaS and Outsourcing
While the web host market continues to grow, especially for internet and intranet web applications, the rise of cloud computing is radically shaking this up with cloud-based IaaS expanding the number of use cases that IT buyers are considering outsourcing.
Currently, the three most common use cases for outsourced hosting are:
- Self-managed IaaS: For cost effective agile replacement of traditional data center infrastructure
- Lightly managed IaaS: For users who wish to self management but want the provider to be responsible for routine operations tasks
- Complex managed hosting: For users who want to outsource operational responsibility for the infrastructure underlying Web content applications
The result is ongoing change in the vendor landscape that is providing significant opportunities for new entrants and considerable competition for older, more established players.
IaaS and Hosting
Gartner maintains that by the end of this year 25% of the hosting market will be accounted for by IaaS. Most IaaS will be delivered on virtualized systems. However hybrid architectures that combine virtualized resources with dedicated servers for resource intensive needs will still be common.
Two types of users moving to outsourced hosting
- Traditional web hosting customers, who have a website, application or enterprise application that needs to be hosted externally.
- Those interested in what cloud computing is able to do for their business. They begin with pilot projects but intend over time to move some, if not all, of their data center infrastructure to the cloud.
IaaS, Web Hosting Convergence
In response to that there are two different markets at play -- but only for the moment.
- The market for traditional web hosting, which is quite mature with most web hosters having a high level of operational reliability and reactive support
- The IaaS market, which is “highly immature” and evolving rapidly
While IaaS reliability is still good, the rapid evolution of technology through the stack from hardware to applications is driving a level of change that provides management challenges for service providers as well as customers.
Providers may release several updates every quarter making it difficult to pick a vendor based on existing offerings. Service and support are also variable from provider to provider.
Both these markets will converge fully within five years, Gartner says, but for the moment most providers offer both traditional web hosting and cloud IaaS on two different platforms. The future will see a single unified architecture with multiple tiers of service quality. The multiple platforms in use today are a reflection of current immature technology.
As a result, for users, the principal difficulty at the moment is choosing a vendor in such a volatile market. Gartner stresses that the Magic Quadrant is only a guide and that vendors should look at market offerings -- including those that are not in the Magic Quadrant -- before making a decision
To be included in this report, in June 2010 vendors must:
- Sell on-demand hosting as a stand-alone service
- Services must be enterprise class offering 24/7 support
- Significant market presence with web-hosting related revenue of at least US$ 50 million in 2009, or on-demand hosting revenue run rate of at least US$25 million.
Leaders, Gartner says, have shown that they have staying power in a turbulent market, can innovate easily and provide enterprise-class products. New managed hosting customers should have signed a two-year contract with old and satisfied customers signing three-year deals.
Magic Quadrant Leaders
There were five companies in the Leaders Quadrant this year. They include in alphabetical order:
Has a long history in the hosting market and offers collocation, managed hosting and cloud IaaS on its Synaptic Compute as a Service (CaaS) platform.
- Strengths: Has a strong corporate commitment to cloud computing with the broadest vision of any global carrier. It is a leader in complex managed hosting and very strong technical competence for all hosting.
- Cautions: It is often inflexible in both sales and service, Gartner says, and support is often reactive.
Rackspace is an independent Web hoster and offers simple managed hosting, complex managed hosting and cloud IaaS.
- Strengths: Has long set the bar for customer service with proactive service and support. Prices for complex managed services are below the industry average and it has open sourced its cloud development in conjunction with NASA.
- Cautions: Its IaaS is not yet enterprise-class and is best when handling Web-centric environments rather than traditional enterprise applications like ERP.
Savvis is an independent Web hoster with a significant market share and leadership in collocation and managed hosting.
- Strengths: Its product portfolio is one of the broadest and deepest with its cloud IaaS particularly diverse. It provides “highly competent” solutions engineering with expertise in designing solutions. It also has one of the best customer service portals in the industry.
- Cautions: The diversity of its portfolio can lead to customer confusion. It has still to integrate its managed services with its cloud offerings.
Terremark is an independent Web hoster with an eye for new technologies.
- Strengths: Is a highly innovative company and very effective at exploiting new technologies. Very strong in the public sector it has invested in compliance and audit solutions including FISMA. A VMware partner it is generally first to market with their products.
- Cautions: While the service and support have been traditional very good, customers are now complaining that personnel seem overcommitted and overstretched. Focus on collocation is inhibiting product development.
Verizon is a global telecommunications carrier with a track record in hosting business.
- Strengths: It revitalized its host business in mid-2009 and introduced CaaS with automatic patch management. Customers can opt out of managed service or opt into higher levels of managed service.
- Cautions: It’s in the middle of sweeping changes to service, support and service ordering systems. Its CaaS pricing is competitive but its traditional managed hosting is a premium service.
Gartner warns in all its Magic Quadrant reports that companies may be added or dropped to the report as markets change. With the upheaval in this market, the big question is whether all, some or even any of the above will make it into the Leaders Quadrant next year. A full copy of the report is available here.