Webhosting Day 2008 - The New SaaS Battle Lines

• By Liam Eagle on March 13, 2008

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One thing that has come out of this conference is that Google is being treated with a lot of credibility as a threat to Web hosts. Now that we all agree (interesting in and of itself, I suppose) that Web hosts are clearly in the business of offering hosted applications, and Google has been extremely consistent in executing on its strategy of delivering hosted software.

And it is, of course, important to note that Google is not in the business of partnering with ISPs or hosting providers. Google is going it alone, and is succeeding at securing the market - hosted email, definitely, and to a fairly menacing extent other small business apps.

One of the remarkable things about that, and one of the things noted Serguei Beloussov, CEO of Parallels, in his Tuesday keynote presentation, is that from the Web host's perspective, that makes Google the new "evil empire."

The company doesn't want to partner with distributors. It wants to control everything from user activity to user data to payment. And it doesn't appear to have any intention of leaving any business out there for anyone else (meaning Web hosting providers).

Once considered the "evil empire," Microsoft is now the nice guy in the SaaS market. Microsoft has always been friendly to the partner model, from OEMs to VARs and now more attentively to hosting partners. Now, the company is almost by default carrying the banner for smaller service providers into the battle for the business of small business.

It's a battle between giants - big as they come - and if you're a smaller hosting provider, you're either in the ring with Microsoft, or you're on the sidelines, probably cheering for Microsoft.

That metaphor maybe got a little confused. Basically, you don't have to be a Microsoft partner to want "partner-hosted solutions" to beat "one company operates the whole Internet" as far as SaaS models go.

From Serguei's perspective, the answer to the challenge is something akin to "use Parallels products," generally. More specifically he says you should be paranoid about efficiency, and about providing an automated and self-managed solution. And that mans an automated and virtualized architecture.

And make sure you own your customers. Hosts are in the enviable position right now of having the customer relationships that every builder of business applications covets. When adding those applications to your own offering, hang on to those customer relationships. Only resell solutions in a white-label model, he says, where you continue to own the customer.

Ultimately, Microsoft and Google are going to offer everything that hosting providers used to offer - domains, a Web presence, email, and everything else. For more complex business solutions, there's still room for hosting providers to make those customer relationships evolve.

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