January 4, 2002 — (WEB HOST INDUSTRY REVIEW) — Research firm the Yankee Group (yankeegroup.com) has released
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its popular annual “Prediction Edition” for 2002. Each of the Group’s
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research teams have considered last year’s predictions, assessed their
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accuracy, and forecasted trends for the next year.
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Among the predictions made:
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“Managed network services will not sell themselves.” Yankee Group
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says enterprises will approach increasingly-hyped managed services with
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caution, until they can see real economic or service value from them. Only
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13.5% of large businesses are currently outsourcing / out-tasking network
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operations, and only 12.3% are considering the option.
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“Hosting vendors’ sales and marketing efforts will markedly shift
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from customer acquisition in 2001 to client up-selling and retention in
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2002.” As customer acquisition is becoming less popular, the focus of
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vendors’ hosting strategies next year will be to retain their existing
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client base while drilling deeper into those accounts. Service offerings
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will revolve around practical needs like site marketing tools, and less
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glitzy applications like video streaming. Web hosts will also concentrate on
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improving services to become more user-friendly, such as e-commerce, Web
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analytics, and better customer support overall.
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“In-house remote access VPNs will lose ground to managed solutions,
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which will narrow the gap by 50% in 2002.” Although in-house remote access
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VPNs outnumber managed services by 2:1 in 2001, the ratio will close to 3:2
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by the end of 2002, the Yankee Group predicts. More service providers will
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be bundling remote access with Internet access, and in some cases
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collaborating with hardware vendors, a service that will be adopted by
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smaller, less technically sophisticated SMBs. Inhibiting managed services
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will be still be preferred among larger SMBs, to control their own network
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services and lower long-distance phone rates.
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“In 2002, 21% of medium businesses currently using DSL to access the
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Internet will abandon DSL in favor of more reliable broadband alternatives,
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namely dedicated T-1 access.” Companies that used DSL as a means of cheap
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entry to test the value of a broadband connection will be convinced of the
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value of the Internet, but frustrated by the lack of reliability and
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consistency of DSL. However, the overall market penetration of DSL will
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increase in the SMB market, especially among very small business.
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“Application service providers will reinvent themselves by becoming
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vertical service providers (VSPs) or providers of pre-integrated application
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solutions, or will go out of business.” ASPs will be able to gain footing in
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the market by developing solutions for specific vertical markets, such as
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health care. Successful companies will be to offer a new solution to big
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problems.
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“Dedicated hosting explodes in Europe as more sophisticated new
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enterprise users emerge.” The Yankee Group has forecasted 2002 to be the
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year of the more sophisticated Web hosting customer. Shared hosting will
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officially become a low-end commodity, with fewer enterprise users opting
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for it. Web hosting service providers will be focusing on providing
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quick-start dedicated hosting packages to support smarter, more ambitious
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new customers.
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The full Prediction Edition is available online at
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http://www.yankeegroup.com/ygrn1-1-2002.html.
