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Counting on the online market
(Express Computer, January 2006)
According to a recent IDC report, India and China are expected to lead the Asia Pacific market for Web hosting, wherein spending is set to go up from $521 million in 2004 to $924 million by 2008. The key to the growth of the market is a focus on developing a model for e-business.
India is expected to show the largest compounded annual growth, with its share increasing from $40.45 million in 2004 to $95.14 million at a CAGR of 24 percent. Firms with less than 1,000 employees are expanding their use of a variety of advanced IT services, with Web hosting and network and security consulting being the most widely used.
The focus on Web hosting is increasing as Web presence is considered necessary for a business to grow. Although the Internet is not yet ubiquitous in the interiors, wannabe entrepreneurs have realised that the fastest way to network could well be through the Net rather than the age-old method of calling on a business prospect.
Looking at this opportunity, Web hosting companies offer an environment where organisations can have their piece of Cyberspace on the Internet 24/7 without spending a bomb. Web hosting companies have developed a model where they can carve up space on servers connected to a common backbone and rent it, splitting the cost of hosting across many companies that co-host on a server.
SMBs Online
SMBs have ignored Web hosting for a long time. They are finally making a foray into Cyberspace moving from domain registration to Web hosting services. The adoption has been slow, as SMBs do not like to invest large funds into such services. That said, many SMBs do have their own Web sites today.
Hosting comes in many forms. There's free, image, shared, clustered, reseller, dedicated, file, virtual private server and collocated hosting.
Says Jasjit Sawhney, CEO, Net4India, "As far as SMBs are concerned, shared Web hosting is the best option. As cost is an issue, it makes sense as it curtails their spending on the server and other infrastructure." Initially, the demand was for simple Web sites with contact information. Today, SMBs are going in for advanced services like feedback forms, online payment, shopping carts and e-commerce services.
Moreover, an SMB does not need to have a dedicated IT team, which would otherwise be required to take care of its Web site and related services.
Jasmeet Singh, VP of Product Marketing, Rediff.com, says, "Web hosting is a viable option for SMBs to take their business online and reach out to a larger pool of potential customers at a minimal expense. The Internet has fast become an effective communication medium, sales and marketing channel and customer service interface."
A variety of offerings
Rediff.com has been targeting entrepreneurs and SMBs with focussed offerings. The company recently launched 'Rediff Business Solutions'—a suite of services offering everything an entrepreneur needs to go online. The bouquet of services includes personalised domain names, business e-mail solutions and Web hosting services. A single domain can cost as little as Rs. 495 per annum, while the annual Web hosting service costs Rs 2,400. "All our Web hosting customers are SMBs. We have 200 plus business associates across 40 plus Indian cities," Singh adds.
Emerging trends
Web hosting can be done through co-location in a data centre or by owning the infrastructure. According to Singh, customers are moving from low-cost Web companies with minimal infrastructure to service providers that have a reliable infrastructure and strong customer support team. Also, consumers are increasingly opting for domain-based e-mail services along with Web hosting. This gives them a 'professional' Web presence.
Rustom Irani, CTO, Sify is of the view that hosting services offered in the market are going through a metamorphosis from low-end vanilla services to high-end services involving quality customer service, security, virtual servers, e-commerce and high-availability. SMBs that are into electronic commerce will avail of these services.
"SMBs will find it beneficial to move to a model where they pay for using a particular application including the hardware associated with it, rather than spending upfront and working with obsolete technologies later on," he adds.
As the Internet spreads its roots deeper into India it is becoming an increasingly compelling reason for SMBs to choose the online medium. "A Web presence recognises the strength of e-commerce and the ability of this medium to enhance a company's advertising and marketing. Considerable potential is seen in offering value-added services along with the traditional hosting model," says Irani. "Hosting begins at around Rs 3,500 per annum depending upon the size of space being rented. We provide all services under one roof, whether it is Web hosting, corporate e-mail or domain registration. Every six months we upgrade our features," says Sawhney.
SMBs form a large market base
The Web hosters are looking at this opportunity with growing interest considering the fact that the Indian SMB market is huge. Net4India has around 50,000 customers including Hungama TV, Parsvnath Developers, Grand Hyatt and Pizza Hut among others. With about 1.5 lakh customers they have 70,000 Web sites hosted on their network.
I see huge potential in the SMB segment. India has 70 lakh SMBs. Web hosting is becoming an integral part of their communication system. A lot of them started by buying domain names, now they have their own Web sites. The next four to five years should see a rapid growth," adds Sawhney.
PizzaHut, one of Net4India's clients, says that the biggest advantage of Web hosting is that their customers can contact the management directly if they have any complaints. This has helped them improve customer service.
SMB concerns
SMBs have serious concerns related to connectivity and downtime. Since servers are hosted by service providers, the client has no control on the speed and quality of connectivity.
The other issue is the selection of the 'right' host for which the company needs to evaluate providers. Issues that need to be resolved and prioritised include ongoing maintenance and physical support services, network quality, speed, contract terms, and, of course, value for money. For most clients, the level of the host's customer service is the key to satisfaction and when we talk about SMBs, their first concern is cost. Hence, Web hosting companies will have to consider the cost factor, simplicity and customer service as the main points while catering to the SMB segment.
Although shared hosting is a less expensive way for businesses to create a Web presence, it is usually not sufficient for Web sites that enjoy high traffic. These sites need a dedicated Web server, either provided by a Web hosting service or maintained in-house. In shared hosting, a Web site is placed on the same server as several hundred other sites. A problem with another site on the same server can bring all the sites down.
One thing is clear. SMBs are getting serious about their online presence and their interest is only going to become more pronounced as Net usage expands in India. For now, the use of the Web is mostly limited to getting customer feedback and tailor services accordingly.
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