According to the report titled, "Internet Infrastructure: Market Overview 2008," the managed hosting sector remains the largest sector within Internet infrastructure and has experienced over 30 percent growth in the last 12 months. It is estimated to grow another 24 percent in 2008.

Tier 1 says several trends account for that strong growth including increased managed hosting adoption by small to medium-sized businesses and mid-tier enterprises as well as hosting for software as a service providers. Moving forward into 2009 and 2010, a selection of new utility storage and hosting services will continue to fuel strong growth, says the research firm.

"While the managed hosting sector sees tremendous growth, a massive transformation in how shared hosting services are successfully marketed and sold is well under way," says Daniel Golding, senior analyst at T1R and author of the report. "Disk space and bandwidth is no longer a selling point and customers are now looking for the functionality that enables them to do things like blog, share photos, publish profile pages on a social network or sell things online. As a result, shared hosting has quickly commoditized and become a common denominator of sorts. In other words, shared hosting is no longer just about selling Web space for static websites. Rather, it is more about the many different things that can be done in a hosted environment."

Tier 1 Research recently launched a report that highlights mergers and acquisitions activity in the Internet infrastructure and mass-market Web hosting sectors in the first half of 2007.