May 4, 2007 | Posted By : Peter Damato at 5:59 PM PERMALINK | Blog Comments (3)

David vs. Goliath. . . will Google get into the shared hosting space in a BIG WAY?

Now that they have firmly established themselves in the transactional business with Google Checkout, is it feasible to believe they may wish to get even closer to the customer. Should we begin to consider the what ifs and if so, when?

With Google Checkout turning out to be a relatively big success, even challenging the likes of PayPal, might they be turning their attention to controlling the ENTIRE online shopping experience on the Internet merchant side? This would be monumental and create an enormous shift in the way business is conducted. At the very least, there will be a significant adoption rate, resulting in lost business to value hosting providers everywhere. True to Google form, they could feasibly waive costs (for a period of time) to gain market share and change the economy hosting industry overnight.

Amazon just may have already done this with their Simple Storage Service. This is the model Google is using in the payments side of the business with Google Checkout, and online payment service providers have been forced to offer better services like fraud protection, loss prevention and PCI compliance just to stay competitive.

For instance, we at InternetMerchant.com focus on niche, servicing small-to-medium-sized etailers with a suite of products that are cutting edge, but eventually will be mainstream. All this will occur before the likes of PayPal, or Google could implement on a broad scale. Fact is, the big guys cannot be all things to all people, so they need to stay somewhat generic to reach the masses. Therein lies our opportunity to differentiate and beat them at their own game. While they can play in all markets, like hosting, we need to continue to find the vertical market products and services they simply cannot compete with.

It only takes a small, well-placed stone to take down a giant. Choose your weapons carefully and solely based on what do YOUR customers really want/need? The more a hosting company can be unique by providing value, as well as specialty, niche tools, the more firmly established it can become and remain.

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If Google were to get into Web hosting, I think it would challenge larger players more than small players. Smaller hosting providers already go up against GoDaddy and 1and1, so they know what they're doing. They tend to already be focused on niches. But GoDaddy and 1and1 themselves are cocky and generally stupid when it comes to competing. They compete on brute strength, something that smaller hosts don't have - but something Google does have, through its brand.

# Posted By Daniel | 5/6/07 6:17 PM

As a former consultant to one of the largest hosting companies, I agree that one must look at Google's potential entry into hosting as likely possibility. In my opinion (and I have no evidence to support it), Google will, indeed, enter this segment. But they will not do so in a way that requires significant customer support resources, but rather, they'll enter in the wholesale and self-serve segment. Amazon's model is a good one. Google might do something similar but subsidize the offering by tying in AdWords and Google Checkout. Frankly, they're most of the way there with Google Base and their simple page builder. They also have a competitive advantage with customer acquisition and bandwidth (controlling a large portion of the fiber backbone in the US). Their pitch would be along the lines of: "why pay a hosting company for generic hosting services, we'll pay you to host with us (AdWords) AND we'll send you traffic."

The impact on the hosting industry of a Google entry would be dramatic. Google would take, over time. Hosting companies need to realize now that the days of vanilla hosting are over. The successful hosting company will partner quickly and deeply with Google and offer traffic and revenue to their clients. Those that fail to do this will find it increasingly challenging to compete.

# Posted By Eliot Jacobsen | 5/7/07 11:22 AM

@eliot - But, there lies the problem for hosting companies: Google is notorious for being a poor partner. Do any of us remember when they arbitrarily increased their pricing? I think if Google were to go into hosting, there wouldn't be any partnering going on. I don't think there would be an immediate impact on the hosting industry if Google entered. It'll be interesting to see what, if anything, they'll do with Google Page Creator

I do think that there is an end in sight for generic web hosting, especially as consumers decide they'd rather have a myspace page versus their own website or their website is a specific application, i.e. the most common one being a blog. I think hosting companies need to move upstream into richer pastures.

-matt

# Posted By mathew baldwin | 5/7/07 3:57 PM

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