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IT Sector Embracing Cloud Offers Opportunity to Hosting, Cloud Service Providers

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For the last two years I have been writing about the IT industry getting ready to enter the hosting and cloud service provider business. After attending the Miami ITExpo event I am assured that my beliefs have come to fruition – it is happening now. Not only is that group ready to embrace cloud services,  they are almost afraid if they do not the entire IT business could collapse or drastically reduce in scope.

There have already been moves by some very large IT firms to become major players in the hosting sector. Last September Ingram Micro, the largest IT firm in the world, purchased Canada’s SoftCom Inc. The company is also white-labeling Uber-Global’s cloud services market into some 4,000 IT reselling firms in Australia. After Nippon Telegraph acquired South African IT firm Dimension Data it rapidly expanded data center, cloud and other web centric services worldwide.

You see the IT sector is made up of thousands of local and regional companies that for decades have run wires, installed telephones, fixed computers and all that Information Technology (IT) that permeates the SMB. MSBMentor estimates there are some 80,000 total MSPS and VAR/resellers in North America. At ITExpo I walked away with the feeling that this sector is concerned about the impact that aaS and cloud services will have on their business. These services could replace the very products IT firms provide. Offices run on the cloud with very few associated on-site IT needs.

The industry as a whole appeared fairly naive regarding the cloud and the technology behind it – they just want to go there. Call it cloud 101.

I attended the panel seminar Recurring Revenue – The Secret to Service Provider Success. Recurring revenue is somewhat new concept in this business sector; they really like the idea. Often IT revenues are piece-work oriented; recurring revenues are exciting to attendees.

So who are these people? Very focused on telephone, unified communications, audio/video and networking. This is a group of people that want to go someplace else fast, maybe cloud services, but attendees really appeared not to know how to get there yet.

The only web hosting company that exhibited was Codero, who frankly could have done a better job. Time Warner and Comcast business class services were primarily hawking the three pack, I would have been selling data centers, back-up and cloud. Many of the booths were looking for agents and resellers.

If I were a hosting or cloud service provider I would consider exhibiting at an ITExpo. I would go there to become the conduit and player behind the scene for IT firms as they enter the  cloud and offer a turnkey service.

This group is very familiar to marketing chains, VARS, resellers and often dominate metro markets with boots on the ground. They just want something to sell and often have their label on the product. They are looking for someone to lead them.

According to statistics regarding this event, there were between 4,000 and 6,000 attendees. There were very few parties and an older base then what I am used to in the general hosting sector. There are two ITExpos a year, the next one is in Las Vegas in August, which I was told has a larger attendance.

A side note, this could be almost a defensive move for hosting firms as when IT firms enter your sector they could take some business away. As a marketing chain you may rather have these boots on the ground increasing your business.

Feel free to call and pick my brain.

Later – Tom

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About the Author

Tom is president of Millitzer Capital. The Business Broker to the web hosting sector. We have completed 400 assignments. For 20 years we have been making millionaires. I recently wrote a blog outlining a transaction. The seller could have pocketed an additional $2,001,371 by coming to us. ALWAYS seek representation. If you are, or are considering being on a "list" to sell your company call me for my insight.

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  1. Very nicely presented. Really the business of hosting service is booming these day. Many IT companies are being restricted have their own hosting services and later on it turns into reselling hosting.

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