Monday, December 11, 2006

Hosting Disruption Again

First, you have Microsoft Live serving up free hosting in follow up to the 1and1 and GoDaddy boys playing in the low end of the hosting spectrum. Now Wiki is jumping into free hosting - and you keep the ad revenue!

Wikipedia founder Jimmy Wales said on Monday his for-profit company, Wikia Inc., is ready to give away -- for free -- all the software, computing, storage and network access that Web site builders need to create community collaboration sites.... Wikia, a commercial counterpart to the non-profit Wikipedia, will go even further to provide customers -- bloggers or other operators who meet its criteria for popular Web sites -- 100 percent of any advertising revenue from the sites they build.

Why is everyone in a race to the bottom??? Unless it is just a PR ply. A hoster needs lots of volume to make money on razor margins (or worse free).

The money is in the middle - the gap between the Fortune 1000 and the two-person shop. Success means you have to be willing to FIRE clients that are not profitable or do not fit into your client profile. And you have to be willing to disqualify these prospects as well. Quickly. Most companies find it easier to just take orders and hope it makes them a buck down the road.

1 comment:

Anonymous said...

I think the answer is simple - go public and cash out. Perhaps they are hoping that Google will buy them. I agree that there is a race to the bottom. I have been saying since 2000 that hosting without apps is a commodity, and it is finally coming true.

I saw 1&1 as a European competitor doing whatever necessary to break into the US market. That is why they gave hosting away for free. Back when NetZero started, Elliot Noss (TuCows) and others were saying at that point that all dialup was going to be free, and that people didn't care if their browser had ads stuck at the top. It didn't last. Racing to the bottom never does. There is a hosting company near me that sells hosting for $2 a month. Seriously. They can have that. I am growing my business and my hosting starts at $20 per month. How? Applications.

Wikipedia is a great, great site. The goodwill and openess of the site have made it a success. But remember when Google said that they would be evil? That changed the day that they went public. The same will unfortunately happen to Wikipedia as well more than likely. Think of ONE web site or online application that came out of obscurity to become a household name, that didn't get tarnished at some point by advertising. It is a very hard thing to do. I can't blame this guy for wanting to cash out and run.

For sure, Peter, you are correct. Hosting based on price is NOT where anyone wants to be. Even the $2 host is looking for new ways to make money every day. And can you imagine the subscriber churn that must create? Ugh. They can have it.

While you are on the subject of hosting disruptions, take a look at the Amazon Elastic Cloud and their on-demand storage solution as well. I think that those are going to be WAY bigger disruptors than Wikis being free. We installed wikis here and ended up pulling the plug. They are horrible things to use every day.