Back in the late 1990s, I used to run a web hosting directory called ISPcheck. I sold ads to early web hosting pioneers who, for the most part, set up email accounts and provisioned web space by hand. When cPanel, Plesk and Ensim came along, some of them said they had no use for GUIs. Their businesses were doing just fine with what they'd got. None of those folks are around any more.
I was reminded of my old friends during an email exchange with someone from a dedicated server provider I greatly respect. I sent him a long list of new developments that worried me: the 4 million gigs of RAM in Google's cluster, for instance. And an article in the Economist about Amazon's S4 (Tim O'Reilly's name for Fulfillment by Amazon; S4 = simple storage service for stuff). His response?
"Since we are immersed in the industry, it is easy to get caught up with the next flavor of the week. But 95% of our customers don't have a clue about these developments... I still think that the hosting business (as it looks today) has a long life ahead of it."
The problem is, I think our customers might know more than we do about the next flavor of the week. In addition to the Wired/Economist articles I'd mentioned, Amazon's hosting initiatives were recently written up in a few other popular venues. (In particular, check out what former Exodus VP Research Niel Robertson has to say.) I really don't think we can count on 95% of the market to believe that dedicated servers are state of the art.
Amazon's primary value proposition, by the way, comes not from its $0.10/hour pricing. What matters much more is its virtualization technology. You can create images of web/app/DB servers and deploy multiple instances of each at will - without having to go through the looong process of provisioning hardware, installing the appropriate OS, updating/securing/configuring the system, then finally uploading your data. What sounds easier?(*)
In other words, complex hosting has arrived at the same turning point that shared hosting reached in 1999. If you aren't a believer in manually setting up each and every shared hosting account, you shouldn't be spending time at the data center VLANing bunches of boxes, either. It's too much trouble and you can't do it fast enough.
In response to my post on Adobe's new document hosting service, David asked whether web hosts need to compete with every application provider out there. We don't need to *be* Adobe or Salesforce or MySpace or whatever - we can just offer them great hosting. If that's the path we pursue, complex hosting will become the high volume business that shared hosting is today. And it'll have to be just as highly automated.
(*) 3tera has a even more convenient solution than Amazon's! You won't even have to go through the trouble of deploying virtual web/app/DB servers. Instead, whole entire applications become self-contained logical entities which you can expand and collapse at will, or redeploy with a single click. While I recently joined the company's advisory board, I started writing about their technology way back in August, before I had any contact with their team.
3tera's is certainly not the only solution; several other hosting providers have developed their own. One way or the other, the grid computing/virtualization combination is something I think every dedicated server provider needs to look into, before it's too late.
This is such a traditional catch 22, they teach it in business school. Let's say I am a car dealer, and all I sell is black cars. Since I am in business to make money, I tell my salespeople that they better learn to "qualify" prospects quickly. So every time a prospect calls my dealership, the first question they hear is "What color car are you looking for?". Obviously, if I only sell black cars, anyone who answers "red, white or blue" is not a good prospect and is told to have a nice day. Pretty soon, everyone in town knows that I only sell black cars. Then, one nice day, I hear someone talking about consumer tastes shifting to silver metalic cars. My answer? "I don't think so. 95% of my customers are happy with black".
If you let the world know that you only sell dedicated servers, people looking for something else will go somewhere else. The only people calling you will be the ones who want to buy dedicated servers. That doesn't mean that the market is not changing underneath you - only that you have become blind to the change.
(a) seems like a sure thing - at least for now, but there are no guarantees in the as yet undeveloped market for (b). I know that when I worked at EV1, I was totally averse to any kind of new technology, because I was already getting more sales inquiries that I had time to answer. Any distraction from selling and provisioning what we'd got meant less revenue.
Given the amount of attention S3/EC2 are getting, maybe (a) isn't such a safe option any more. But would I have recognized that if I were still fighting day to day operational fires? To be honest, I don't know. I hope so. And I really hope people who are in similar positions today do as well.