Web Hosting Market Benefits from Strong US Economy

An increasing number of companies are turning to Web hosting service providers to implement and manage their Web sites, and in response, the Web hosting services market is growing at a torrid pace, according to International Data Corp. (IDC).

In its “Web Hosting Services: Market Review and Forecast, 1998-2003,” IDC calls Web hosting one of the fastest-growing markets in the information technology industry and the Internet economy in general. IDC expects revenues of US-based Web hosting companies to grow by almost $1 billion in 1999 alone, when all the money is counted, bringing the market to more than $1.8 million.

“Among the factors driving growth in the Web-hosting market, the broadest is the remarkably robust US economy, which is enjoying the longest period of sustained growth in this half of the century. Even more remarkable is the vigor of the IT industry and in particular the Internet,” said Courtney Munroe, director of IDC’s Business Network Services research program. “The Internet economy now encompasses and affects far more than just the IT industry that fostered it, and Web hosting forms a core component of this economy because in many respects hosting is its platform or foundation; without Web hosts there would be no World Wide Web, which is now the leading Internet service.”

According to IDC, the US Web hosting market will increase by a factor of 10 through 2003, when it will total $18.9 billion. The US provides the most lucrative market opportunities for US-based service providers, but IDC expects international sales to generate a significant portion of revenues by 2003.

As Web hosting service providers become more popular, other IT vendors and professional services firms have begun to target them.

“The Internet datacenter is becoming a leading environment for IT development and innovation. Additionally, what constitutes Web-hosting services is subject to change,” Munroe said. “Just a few years ago, Web hosting implied a simple static Web site on a single, dedicated or shared server. Today, a single Web site may comprise dozens of clustered servers operating as one or more domains and supporting several applications or business processes and often drawing on resources hosted in other locations. What a minor add-on to the Internet access business has become central to e-business.”

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