ZXD332-ITP-0400-WebHostThisreportcontainsinformationthatisconfidentialandproprietarytoMcKinsey&CompanyandissolelyfortheuseofMcKinsey&Companypersonnel.Nopartofitmaybeused,circulated,quoted,orreproducedfordistributionoutsideMcKinsey&Company.Ifyouarenottheintendedrecipientofthisreport,youareherebynotifiedthattheuse,circulation,quoting,orreproducingofthisreportisstrictlyprohibitedandmaybeunlawful.February2001WebandApplicationsHostingTelecomITP-MontrealWillDaugherty-SVRyanMcDonough-SFDavidThomson-CHAndrewWhite-SVXindiWu-SVZXD332-ITP-0400-WebHosting2SUMMARYWebhostingandapplicationsserviceproviders(ASPs)areamongthemostexcitingplayersintheemergingcommunicationsandInternetlandscape.Thesecompaniesareachievingsubstantialgrowthandmarketvaluebyprovidingthenetworkconnectivity,servers,datacenters,software,andserviceguaranteesnecessaryformanycrucialInternetandIntranetservices.Companiesarerecognizingthevalue-creationopportunitiesandareenteringthisspacefromavarietyofstartingpoints,includingestablishednetworkproviders,equipmentmanufacturers,andsoftwarecompanies,aswellaswell-fundedstartups.•Webhostingprovidersofferarangeofsolutionsfromstaticwebpresenceonsharedserverstofullsupportofcustomized,dynamic,andcontentrichsitesondedicatedservers.Economicscanbehighlyattractiveduetodecliningserveranddatacentercosts,andincreasingrevenueupsellofvalue-addedprofessionalservices.Keysuccessfactorsdependheavilyuponreliableandscalabledatacenteroperations.•Applicationshostingproviderssplitbetweentwocamps,thoseprovidingapplicationshostinginfrastructureandthoseprovidingpackagedorcustomizedapplicationstobusinessesonamonthlyfee.NumberofplayersexplodedinrecentmonthsascompaniesvieforashareofthehighmarginsoftheASPmarket.•Whiletheoverallspaceisattractive,complexwebhostingandapplicationshostingareinthesweetspot.Successrequiresintegratingapplications,professionalservices,datacenter/networkinginfrastructure,andappropriatecustomerserviceandsupport.Severaldifferentstrategiesarebeingpursued.ZXD332-ITP-0400-WebHosting3RECENTWEBANDAPPLICATIONSHOSTINGHEADLINESSource:LiteraturesearchQUOTESFROMPAST30DAYSUSinternetworking-DellInkServices,USinternetworking-DellInkServices,HardwareDeal--HostingCompanyToUseHardwareDeal--HostingCompanyToUseVendor'sPersonnelForComplexVendor'sPersonnelForComplexApplicationImplementationsApplicationImplementationsInformationWeek,Oct.15,1999VerioReaches300,000Web-SiteVerioReaches300,000Web-SiteBenchmarkWorldLeaderinWebBenchmarkWorldLeaderinWebHostingOperatesNearlyThreeTimesAsHostingOperatesNearlyThreeTimesAsManyWebSitesasitsClosestManyWebSitesasitsClosestCompetitorPRNewswire,Nov.5,1999OracleBusinessOnLine'stotalcustomerbasetonearlyOracleBusinessOnLine'stotalcustomerbasetonearly2,000usersin30companiesaroundtheworld,2,000usersin30companiesaroundtheworld,andunderscoresitspositionasthelargestapplicationandunderscoresitspositionasthelargestapplicationserviceprovider(ASP)serviceprovider(ASP)PRNewswire,Oct.6,1999ProgressSoftwareAnnouncesApplicationServiceProgressSoftwareAnnouncesApplicationServiceProvider-ASP-AgreementWithNaviSiteProvider-ASP-AgreementWithNaviSitePRNewswire,Oct.19,1999DigexReportsThirdQuarter1999Results;DigexReportsThirdQuarter1999Results;3Q99RevenuesIncrease158%From3Q99RevenuesIncrease158%FromSamePeriodLastYear;SamePeriodLastYear;NewSmartCentersOpenedOnEastandNewSmartCentersOpenedOnEastand...
