Over the holidays, I came across this Digg thread on 1&1, in which an unhappy customer griped about his hosting plan’s failure to handle a traffic surge.
After his blog got Digged (Dugg?), the customer began getting ’500 Internal Server Error’. Shortly thereafter, the message changed to “Forbidden”. A “Customer Compliance Operative” (doesn’t that sound menacing?) from 1&1 explained that the account was put on hold for using 41% of the server load. This indicates the need for a dedicated server.
The customer complained that he wasn’t running anything besides his WordPress blog. In response, two commenters pointed out that it’s not uncommon for WordPress blogs on shared machines to hog resources. They suggested that the customer consider a VPS.
But this is crazy! The customer has a blog! How can one single blog need a dedicated server – or even a VPS?? Google’s Blogger and Microsoft’s Windows Live Spaces each host millions of blogs. Can you imagine any one of them consuming 41% of a whole entire server’s resources?
That’s when a really obvious thought occurred to me: single user apps are far less efficient than multi-tenant SaaS! In addition to Blogger, consider YouTube – and how much more resources it’d need if every single user installed his own video uploading/converting software in separate web space. Or think about Photobucket – and imagine each of its 30 million customers running individual copies of Coppermine or Gallery.
Shared hosting is much more expensive for service providers, and kind of a hassle for most consumers and businesses. I’ve installed WordPress and Coppermine before; I have to say I prefer TypePad and Flickr. I haven’t checked out Windows Live Spaces, but it must be pretty high on the ease of use scale. Netcraft says it signed up 1.3 million new accounts in August alone.
So there are good reasons why Web 2.0 services are outpacing the web hosting market. User-friendliness is only part of the story, they’ve got a lower cost structure as well.
As Microsoft Chief Software Architect Ray Ozzie pointed out, consumer-accepted technologies tend to trickle up in the small business market, and eventually impact enterprise IT. This means companies who run their own stand-alone copies of CRM or other back-office software on dedicated servers could very likely begin drifting off to Salesforce.com and other hosted solutions. Because it’d be easier. And more efficient.
In which case, the only remaining audience in the “install your own apps” market will be developers. This means it’s time to make up your mind. You could:
Be like Zoho and go after the “manage it for me” market with a well integrated suite of SaaS apps – or
Be like Amazon Web Services and build a one stop developer community.
You can do both, but you won’t be very popular if you did neither. Not even if you cut your prices by half.
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