Price Wars and Commoditization Continue to Threaten Hosting Providers’ Bottom Lines

Survey reveals hosting industry will invest in monitoring and provisioning solutions to support new, differentiated customer offerings

Reston, Virginia – November 13, 2013 – According to a survey of HostingCon 2013 attendees, “price wars” continue to threaten the hosting industry, with 41 percent of respondents citing competitive cost cutting as their biggest potential profit-drain. Fear of IT commoditization was also identified by 26 percent of attendees as a key threat to their bottom line, which is a new concern identified among hosting providers when compared to a similar survey in 2012.

To combat these industry challenges, 24 percent of respondents plan to focus on support services in order to gain a competitive advantage. Furthermore, the study revealed that 15 percent of hosting providers are placing a greater focus on reputation to differentiate, while 28 percent are investing in monitoring tools and provisioning systems combined. This shift reflects hosting providers’ desires to introduce new high-value services to market.

“Hosting providers that do not invest in value-added services and monitoring systems to differentiate risk losing their competitive advantage,” said Antonio Piriano, CTO, ScienceLogic. “Competing on price alone just isn’t a viable option for most hosting providers as they can’t possibly compete in this way with behemoths like Amazon, Rackspace, and Google. Instead, hosting providers must learn to appreciate the large cloud providers as necessary enablers and learn to manage a crossbred environment while adding value to the underlying infrastructure resource offering.”

Additional key findings from the survey:

  • Twenty-seven percent of respondents cited they are investing in new customer offerings
  • Hosting providers rate Rackspace and Google among their biggest competitors by 26 and 17 percent, respectively
  • While cloud giants are viewed with concern by hosting providers, the survey reveals their threat value has reduced to 26 percent, which is down from 39 percent in 2012

For the full survey report please visit: www.sciencelogic.com/hosting-report

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About ScienceLogic

ScienceLogic is the global leader in hybrid IT service assurance. Over 47,000 global service providers, enterprises, and government organizations rely on ScienceLogic to significantly enhance IT efficiency, optimize operations, and ensure business continuity. ScienceLogic is the first monitoring solution to provide a comprehensive, real-time view of all IT components, whether they reside in a public cloud environment or on-premises. With hundreds of packaged management apps and custom dashboarding capabilities, we deliver the scale, resiliency, and automation needed to simplify the constantly evolving task of managing IT infrastructure, applications, and services.

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Chris Walker
The Walker Group
202.379.3085
pr@sciencelogic.com
cwalker@walkerlimited.com

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