Josh Beil and Eugenio Ferrante prepare to deliver their report Wednesday afternoon
(WEB HOST INDSUTRY REVIEW) — In the first session in the afternoon marketing track Wednesday at the Parallels Summit, Josh Beil and Eugenio Ferrante presented the results of a study of approximately 600 SMBs, conducted in an effort to gain some insight into their spending on cloud services.
They found that US SMBs spend about $8.6 billion annually in cloud services, including $4.9 billion in hosted infrastructure, $2.3 billion in web hosting, $600 million in hosted email and $800 million in Hosted PBX (which seems to be a particular area of new focus for Paralllels).
There’s a bit of a chicken-and-egg thing going on with Parallels’ definition of “cloud services” and the services it designs its products to enable. But the simple answer is, they’re the same. And they’re more or less the buckets described in that first bit of data, minus the super-specific hosted PBX bucket.
They say 55 percent of SMBs have servers, but only 18 percent of those are hosted. The implication there, of course, is that an opportunity for new business lies in the fact that those in-house servers are eventually going to move to a hosted solution, and none or next to none of the hosted servers will be going in-house. And of course there’s the 45 percent of SMBs with no servers, at least some of which will ultimately want something.
Splitting up the web hosting market, they found some interesting divisions between customer sizes and penetration of whether they have a website. The point there being, know your customer.
Interestingly, among those, the website maintenance, building and updating tends to go either in-house, or through a web designer, either of which is a specific use-case for how your hosting services are going to be consumed. In each case, it requires packaging in a pretty specific way.
As for add-on functions, social media has now far outpaced e-commerce capabilities as the number one add-on to their online presence, at 54 percent for Facebook alone, and another 23 percent for Twitter. The point here is that adding functions for integrating things like Facebook and Twitter, at this point, could be as important as e-commerce functions. Certainly, they’re a bigger opportunity for differentiation at the current moment.
Anecdotally – or qualitatively, in the research sense – customers are also willing to pay for search marketing help, particularly if it can alleviate some of the work they have to do.
In the Email space, 41 percent of SMBs use a free email provider, versus the 34 percent that are currently using a service provider. The extrapolation here is that with email services, you’re competing against free services, which is difficult. Basic email, they say, has zero dollar value to an SMB. The opportunity here lies in the services you can add around email – particularly archiving, backup and security.
In the hosted PBX area, 46 percent of SMBs use a PBX, with only 7 percent using a hosted solution. They say this is a fantastic opportunity because they see a lot of that business moving to the cloud – a business that is currently fairly untapped.
Generally, they assume that over time, in-house hardware is going to become obsolete, and those services are unlikely to remain in-house for SMBs. And generally, the smaller SMBs are expected to catch up to the larger SMBs in terms of their adoption rates.
Selling to small businesses requires a different approach, they say, because at the smallest organizations, the owner or CEO is the IT decision maker in 77 percent of the cases. A little higher up the ladder (of business size) it tends to be a web developer, or some other kind of IT supplier.
If you want to sell into those larger organizations, then, you’re going to need a solution more tailored to a web developer.
Knowing your customer, and customizing to suit your customer, is key to capitalizing on these opportunities in the hosting market.
They’ll be distributing a white paper with the results of the study Thursday at the summit, and more than likely in other venues after that.
About Liam Eagle
Liam Eagle has worked as a contributor to the Web Host Industry Review since its inception in 2000, and as editor since 2003. He has been editor of the WHIR's print magazine since its launch. His daily involvement in the gathering and reporting of Web hosting news and his regular interaction with Web hosting leaders gives him an uncommonly broad appreciation of the issues and tends facing the business. Through his WHIR blog, Liam spots Web hosting trends and offers opinions on the industry-wide impacts of major developments and the motivation behind big announcements. Follow him on Twitter @liameagle
No related posts.
