No, this post won’t be about 200-core Opteron processing arrays. But now that I’ve mentioned it, don’t you think DataReturn could have come up with a better name than MH-One.com (with a dash in the middle of the URL, no less) for its new utility hosting service?
Anyway… I was reading speculations on YouTube’s probable revenue ($7.5 million/month?), versus other speculations on its billion dollar price tag. I’ve also been following discussions on MySpace’s soon-to-be $15 billion valuation. If you think about it, YouTube and MySpace are not *too* different from the average web hosting company. They give content owners bandwidth and disk space for putting data on the web.
Likewise, it wouldn’t be such a stretch to say that SalesForce.com is in the shared hosting business. It just has a super-specialized focus. BUT – SalesForce.com’s shares are trading at 8.8x its annual revenue, whereas Web.com is valued at only 1.4x. The folks at Tier 1 Research say that Navisite‘s 0.89x make it a fine acquisition target. Even super-successful Savvis, which made it to the top of Gartner’s Leaders Quadrant trades at just 1.96x. Word on the street is, 1&1 bought Fasthosts for 4x, but it was THE largest web host in a market 1&1 wanted a presence in. And even that pales in comparison with the 11x that YouTube might supposedly be able to fetch 20x on YouTube’s acquisition by Google.
So my question is, why aren’t more web hosting companies branching out? For instance, take Globat. When I read Liam’s blog post on the company’s guerilla marketing gone wild, I wondered how effective sex-tape actors could be in selling web hosting. Over-the-top marketing, I think, could boost demand for consumer products (beer, jeans, etc) – things you could show off and associate yourself with. But if I hosted my website with Globat, would would even know? Given the company’s preception of its target audience, maybe it’d be better off as a social network for showcasing user-generated provocativeness?
Such a business model shift takes development resources, you say. But as my friend Carlos points out, many of the highly successful Web 2.0 companies that his server admin firm has worked with started out with nothing but a couple of guys and a cheap server. If GoDaddy or Hostway, let’s say, wanted to build a PhotoBucket (which, incidentally, was founded by a former Level 3 exec), they’d surely have more than enough resources?
Speaking of GoDaddy, Bob Parsons mentioned on his blog that his company is the first domain registrar to offer a podcast service. Had he evaluated the possibility of aggregating content and building traffic versus merely collecting $4.99 per stand-alone user, per month? Venture capitalists apparently think that traffic equals potential for monetization. For you, therefore, traffic equals potential for higher valuation.
By the way, it’s not just investors who are interested in Web 2.0. Even the US Army is using MySpace as a recruitment medium. And IBM – yes, Big Blue itself, wants to bring social networking into the enterprise. Ask among your friends, too: are they more likely to be enticed by Aplus.Net‘s multi-purpose hosting plan, with 2500 GB of monthly bandwidth? Or would they have an easier time understanding Flickr‘s photo sharing serivce, even if it comes with only 2 GB/month??
