European Hosting market transitioning to new service models

According to a recently published report from 451 Research on the state of the European hosting market, many providers have been moving away from their traditional focus on dedicated hosting, network services and colocation – instead moving further up the stack toward sets of service offerings with strong elements of managed services and infrastructure as a service (IaaS).

The State of the European Hosting Market highlights five disruptive factors that will impact the growth of the industry:
· The rate of public cloud adoption.
· The emergence of midmarket managed service offerings.
· The prospect of formalized EU legislation.
· The growth and availability of Eastern European and non-EU markets for Western European companies.
· The increased use of licensed SaaS to provide hosting customers with additional premium features.


The comprehensive study looks at key international, pan-European, and local providers of Web, application hosting and managed hosting services; examines regional differences and disruptive influences; and offers recommendations for technology vendors and services providers. Additional highlights from the report include:


· The hosting market in Europe risks stagnation as demand shifts to the consumption of apps, layers of managed services and menus of cloud offerings.
· There is a geographic divide across Europe – more complex services are sold by pan-European providers in the north, while regional suppliers in Southern Europe address domestic markets.
· Strong demand still exists for basic Web hosting services in the European SMB and low-end midmarket. Large numbers of companies still lack the in-house capabilities to manage anything beyond a basic Web presence.
· Hosting providers with more sophisticated vendor partnerships can provide added value more quickly to a wider range of geographic areas, especially in the midmarket.


“Although these trends are potentially disruptive, they also present opportunities for technology and service providers to adapt and develop through investment,” said Rory Duncan, Senior Analyst, Internet Infrastructure Services, 451 Research. “Hosting companies are the natural implementors of cloud services because they have the experience in merging multiple platforms and services into a single interface, and then selling their service offerings with SLAs for corresponding support and customer service.”

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