70 Responses

  1. sundar
    sundar April 1, 2015 at 14:21 | | Reply

    Hi,
    Thoroughly enjoyed reading your piece. Certainly interesting and in no unclear terms very fascinating. Marketing rules the roost right? In fact it has never been out of focus! Thanks a lot for your insightful article.
    sundar

  2. mercury2
    mercury2 April 1, 2015 at 17:03 | | Reply

    Very informative. Thank you for your insights and view of the future.

  3. Jerry Low (@WebHostingJerry)
    Jerry Low (@WebHostingJerry) April 1, 2015 at 17:23 | | Reply

    Kind of irony to see a short hosting ad promoting SiteGround and WP Engine after reading your article 🙂

    Lame joke aside, I have to agree with your view in this article.

    I had exactly the same feeling when I heard Google keyman Urs Holzle that they are giving out $20 mil of free infrastructure credits to startups – “these big players are coming after hosting companies and would kill the industry soon”.

    Get (really) big or get out – I guess. And I believe soon Google, Microsoft, and some other big names will be giving free, decent hosting accounts to everyone who wants it – just like free emails that we are enjoying right now. It’s sad to see big players monopolying almost every aspect in our online activities these days but like most things in our capitalism world – it’s inevitable.

    I miss the good old times when we have more smaller players in every field.

  4. H. Yavuz Yildirimturk
    H. Yavuz Yildirimturk April 1, 2015 at 17:51 | | Reply

    We tried siteground but we were not very happy. We do not like godaddy either but siteground response time was worse than godaddy for the EXACT SAME WEBSITE. You can see the screen shot at; http://www.screencast.com/t/s7943C5GEmxY

  5. Jim Walker
    Jim Walker April 1, 2015 at 20:10 | | Reply

    Your article is predicated on that belief that service is meaningless, and that customer service response time in the 24 hour or longer range, if at all, is perfectly acceptable for most people. Email only support is simply unacceptable for many as well.

    As long as folks are using content management systems like WordPress, and others, there will be a need for expert and responsive support. The fastest web server on the planet with the most amount for free space is not going to help a business whose site is down due to a network or server glitch–and no one available to help in a responsive manner.

    Not everyone is an expert…

  6. zenofwordpress
    zenofwordpress April 1, 2015 at 22:53 | | Reply

    “Anyone can now go to Linode or Digital Ocean and fire up their own VPS (Virtual Private Server)” Totally not true. Not everyone, in fact, only a few have the specialized knowledge it takes to do that.

  7. Cormac
    Cormac April 1, 2015 at 23:37 | | Reply

    The specialised knowledge required, is to know that Digital Ocean, Linode etc are the ones to go for.

    Of course a *true* techie such as myself will use another free service such as serverpilot.io to set up a highly optimised server instead of the default 1-click install. Maybe I should write a tutorial…

  8. Dan Knauss
    Dan Knauss April 2, 2015 at 17:22 | | Reply

    I don’t fundamentally disagree with you on this, but I don’t think it’s currently as easy as you describe or likely to play out quite the way you envision.

    To deal with any kind of server there is substantial conceptual knowledge required to understand what you are even doing and “where your stuff is,” to say nothing of handling version control, backups, migrations, major OS upgrades, and all levels of dependency management. Paying others to worry about this and handle it is ultimately about delegating stress and saving time for what you want to be doing instead. ServerPilot is very far from being able to take on that role, and the mass market is very far from understanding the value or even the need. Try to get ServerPilot to say what they will do with customers who don’t self-upgrade when their OS reaches EOL, and how long they will support old versions of PHP.

    It’s hard for me to envision one of the cloud giants getting all the major market segments covered in an interface or series of services that cater to , more or less, everybody. Premium specialty managed hosts like Pantheon and Flywheel with very specific niche markets make sense as customers of the cloud giants, or maybe as subsidiaries, but not as services to duplicate and compete with on price. At the end of the day their unique value is to know a particular type of customer really well and serve them really well. I don’t see that ever being replaced to more than a minimally adequate level by Skynet. Mass market services and products always tend to be minimally adequate at best because they are maximally faceless and impersonal. Most people may accept that, but not all, and no one will love it.

  9. wycks (@wycks_s)
    wycks (@wycks_s) April 3, 2015 at 20:56 | | Reply

    This article is understandable in a WordPress or a small to medium sized website context, but does not apply at all to a large segment of the hosting market. By large segment I don’t mean in terms of “website” volume, but in terms of revenue. Large and enterprise level clients have very specific demands that require internal IT or rock solid 24/7 management from the host, and that will never go away regardless of the big players.

    It should be named “Hopefully an end to crappy shared website hosting and marketing savvy niche hosts who don’t really do anything different…. is near”

  10. Luis Alejandre
    Luis Alejandre April 3, 2015 at 21:16 | | Reply

    “we will all be replaced by robots that look like Matt Mullenweg” Something is going wrong here, Donnacha, I don´t want a Matt replica replacing me. Can´t I choose a Groucho March clone instead?

  11. SomeDude
    SomeDude April 3, 2015 at 22:42 | | Reply

    The title talks about the end of the webhosting industry as a whole, but the body talks about the end of premium wordpress hosts.

  12. tjpa
    tjpa April 4, 2015 at 01:30 | | Reply

    Well, April 1st and all that, but still an interesting thing to consider. Your proposition might hold water if one is working for a ridiculously low wage. The $30 you are tightly clutching will cover about 10 minutes of my time. So I need to figure how much the hosting service saves. Is it more than 10 minutes? Certainly is. As for Google Cloud Launcher, Google estimates the monthly charge will run about $36. So the hosting service saves me $6 and eliminates some mighty boring maintenance work. I’ll happily pay the $30.

  13. Kevin Ohashi
    Kevin Ohashi April 4, 2015 at 18:34 | | Reply

    Just wanted to say, the researching for good providers and finding rankings not based on affiliate links is possible. I’ll disclaim right away, I run a web hosting review site that was designed to get around that problem, so my opinion is biased. I’d love your opinion since you seem to have quite a strong opinion on the topic. http://reviewsignal.com is mine. I’ll explain how it’s similar and different than the junk review sites. The same, it still uses affiliates, it’s not a charitable service, it took years of software development. The difference, it’s data mining what people are saying publicly about web hosting companies on Twitter and automatically analyzing the results in a transparent manner. You’ll notice the ordering looks a LOT different than just about every other review site. The majority of the EIG brands rank quite low (one exception being A Small Orange, which has continued to run independently for ~2 years so far post acquisition).

  14. Paul
    Paul April 6, 2015 at 15:42 | | Reply

    I am not so sure that the giants will kill off the specialist, as Google, Amazon etc, could never offer the support that the niche hosting suppliers offer.

    Many WordPress bloggers, do it for love, and have very little technical knowledge, and when their site is compromised, or something just does not work as they want it too, they look for personal support rather than spending hours on a forum to try and find help.

  15. Steve Wilkinson
    Steve Wilkinson April 6, 2015 at 22:34 | | Reply

    Heh, I read this and then realized it was posted on April 1st… please tell me this was an April’s fool article.

    If not, then LOL and this guy is probably one of the folks predicting the end of truck drivers because of automated cars, and fittingly (based on the choice of photos), is awaiting the robots who ‘decide’ to end humanity. And, he probably doesn’t even realize why such a thing is so silly. Oh well…

    1. donnacha
      donnacha April 6, 2015 at 22:40 | | Reply

      Hi Steve, thanks for taking the time to comment.

      Just to confirm, yes, if we are talking about the same ten year timeline as my hosting prediction, I reckon there is a high probability that autonomous vehicles will impact the trucking business by 2025 – not all of it, not everywhere, but they will have their place.

      As for robots ending humanity, I figure humanity can probably handle that job just fine on our own.

      1. Steve Wilkinson
        Steve Wilkinson April 8, 2015 at 05:41 | | Reply

        Agreed on your final point. 🙂

        Various kinds of automation and assist technologies will certainly impact trucking, as well as the average daily commute for the rest of us. But, so long as there are human drivers on the road, autonomous vehicles will be a disaster waiting to happen. That said, it might be tried, because too many people have sci-fi visions of the future rather than understanding the real implications of ‘A’ in AI.

        If we have anything to fear from robots, it will only be in what devious humans might program them to do… despite recent predictions from some otherwise really bright folks who should have taken a philosophy class or two along with all their tech.

  16. philbraun
    philbraun April 7, 2015 at 10:22 | | Reply

    This interesting article reminded me somewhat of Chris Lema’s outlook for the Managed WordPress hosting industry, with service providers becoming more and more just specialty VPS image providers that can be used on a wide array of inexpensive VPS hardware.

    From the little I understand, Kinsta is actually in a way advancing in this direction, since they can and do deploy their (really nice, BTW) WP stack on Linode and Vultr wherever one asks for, and possibly would and could do the same with many more good-quality VPS providers. They understandably are not quite ready to do this for as little money as ServerPilot, for example, but will or would be well-prepared when the high-margin WP hosting business begins to falter.

    Possibly this could then be a step inbetween today’s highly specialized and thus pretty expensive WP hosting industry (GoDaddy being the exception – they probably need to get as much market share as possible before their private equity investors can cash out) and a possible fully commodized future of hosting run by the industry giants* for free, as envisioned by @donnacha.
    * this is not something I necessarily look forward to, actually – I’m old school enough to quite frankly fear the Google/Amazon/Microsoft-run world.

    1. donnacha
      donnacha April 7, 2015 at 15:33 | | Reply

      Hi Phil, thanks for commenting.

      Your prediction about providers such as Kinsta transitioning to running their stack on the customer’s choice of cloud is spot-on, that is almost certainly one of the trends we will see emerging.

      My hunch is that we will see stack “recipes”, from a wide range of individals and companies, becoming available as one-click deployments on all the clouds, and competing for popularity in much the same way as apps do on today’s app stores. Just like apps, I suspect these recipes will be mostly free, with companies like Kinsta making money by integrating the sale of support, training and preferred premium themes and plugins into their recipes.

      I’m actually not worried about Google, Amazon and Microsoft, because competition will force them to become interchangeable utilities, switching providers will be far easier than it is today.

  17. Tamer Ziady
    Tamer Ziady April 8, 2015 at 12:47 | | Reply

    Very good insight and breakdown of future approaches. Don’t completely agree with everything he says. Nice insight; but the reality of it; is that more and more clients are coming on board that do not want the hassle of setting up and dealing with these issues. The key is service for many of our clients that do not want to be bothered by the minutia of hosting a website.

    1. donnacha
      donnacha April 9, 2015 at 14:10 | | Reply

      Thanks for the comment Tamer. Support is certainly important for most people at this stage in the evolution of hosting technology.

      1. Steve Wilkinson
        Steve Wilkinson April 9, 2015 at 18:57 | | Reply

        And support isn’t going to be important in the future because….?

    2. Steve Wilkinson
      Steve Wilkinson April 9, 2015 at 18:45 | | Reply

      Exactly… and it is important even for folks like me who know a good deal about what we’re doing. A couple of years ago, I transitioned my clients from *free* hosting (where I helped manage the server) to some fairly expensive managed WP hosting, just because of the services they offer. While I might user Google, Amazon, etc. for some aspects of my business, they simply don’t provide the services which are valuable to me, and I don’t expect they ever will.

  18. Ola Ajibode
    Ola Ajibode April 9, 2015 at 13:29 | | Reply

    I have tried the Google platform and can confirm it’s really fast. I write automated tests for web applications and with what I experienced, I reckon most companies will go for this. Running a test script on local box took about 1m45s, on Google’s LAMP VM I created, it took just 0m2.261s. That’s a massive cut in time. I have been using various hosting services since 2005 and can tell you, this is the beginning of the end for specialised hosting services. The real gap between these “giant cloud” service providers and normal hosting companies is the ability to use new “Big Data” technologies and remote connection(ssh) without having to supply new forms of identification as they already know you. For me, deploying a comparison engine coupled with Elasticsearch and Apache Hadoop + Spark doing the clever stuff behind the scene just got a lot easier. Welcome to the present, the future is bright!

    1. donnacha
      donnacha April 9, 2015 at 14:08 | | Reply

      Yup 🙂

      At this stage, while the cloud giants are not actively pursuing the mainstream market, the specialised hosts will retain most of their customers because, for most people, support is more important than raw performance, but we are already seeing a wave of companies who provide WordPress support as a thin layer above cloud hosting, that trend will grow over the coming years.

      The real disruption will happen, a few more years ahead, when the cloud giants feel that the time is right, and the technology is in place, for them to cut out the middleman and directly chase mainstream customers.

      1. Steve Wilkinson
        Steve Wilkinson April 9, 2015 at 18:56 | | Reply

        That ‘middleman’ is the services the giants are unable/unwilling to deliver. So, unless you think the above Terminator robots are going to be able to do it, I’m just not seeing how your thesis is likely, if even possible.

    2. Steve Wilkinson
      Steve Wilkinson April 9, 2015 at 18:52 | | Reply

      What were the details of that local box? Was it a Raspberry Pi? 😉 Just kidding. Yes, some of these places offer some pretty fast raw hosting performance, but it’s about the service IMO, not the performance for most people. As I mentioned in another thread, I moved from free hosting to fairly expensive hosting because of the service. My backend speed got slower and I only gained maybe a second on my front-end speed (i.e.: 3 sec -> 2 sec type stuff). It’s all about the services unless you’re an IT-masochist or a newbie (or business is Web-hosting).

  19. James Isles
    James Isles April 19, 2015 at 08:58 | | Reply

    Nice insightful article an interesting read. I disagree about the role of a web hosting company disappearing. We have our own managed dedicated server and the majority of our customers are just not interested in the details of running their own account they just want their email and website to work and to have someone at the end of the phone should they need it or if there are any issues. A lot of our clients stay with us because of the service we provide as well as ensuring their email and website is working, something you certainly wouldn’t get from a huge company like Google on their ivory tower.

    1. donnacha
      donnacha April 19, 2015 at 22:04 | | Reply

      James, thanks for taking the time to comment.

      I agree that the vast majority of clients are not interested in even the slightest hint of complexity but, within the ten year time span I am thinking about, both technological capabilities and customer expectations are likely to shift significantly.

      With regard to Google’s ivory tower, I recently became a Google Apps for Work subscriber and my impression is that, when you are paying, their attitude towards support is markedly different. I even have a phone number I can call, presumably connecting to some sort of actual human, but so far I have not had any reason to call because their automated systems are performing flawlessly.

      1. tziady
        tziady April 19, 2015 at 22:10 | | Reply

        I also use Google Business Apps and have on a few occasions used Enterprise Support from Google. They are amazing and very very helpful.

        1. donnacha
          donnacha April 19, 2015 at 22:32 | | Reply

          Thanks for taking the time to comment tziady, that is good to know.

      2. James Isles
        James Isles July 26, 2016 at 05:46 | | Reply

        I agree then in 10 years things can change a lot, especially where technology is concerned so I guess on time will tell.

        I also use Google Apps for my mail not had to speak to their support as yet but good to know they are efficient.

  20. abu murad
    abu murad April 20, 2015 at 02:04 | | Reply

    The world is going to the one web , one log in , one hosting , one world. After few years we will log in a website and no need to log in anywhere , only one host will be there where we can host – Google ,Microsoft ,Facebook will be dominate all of this . Other will be either their own site or will support them like wpmayor – Things are changing very quickly and moving towards one world .Nothing to do ..

  21. Kingofnyct
    Kingofnyct October 22, 2015 at 04:43 | | Reply

    This has got to be the dumbest article i have ever read. Sorry this is pipe dreaming. The big cloud players do not have the infrastructure or capabilities to support web hosting on a large scale. Cloud systems cannot operate mobile applications which are consuming the world. In fact mobile computing will make the large cloud players like Amazon or Google obsolete because the latency is too high. Saas is already showing its cracks and failing in the current mobile and edge computing market. If the cloud providers attempt to sell hosting it will not work because hosting companies own entire backbone networks and infrastructure designed to host. This goes up to the core of the internet itself. Cloud computig has no controls over performance because ultimately they do not co trol the network which is 99.9999% what good hosting and mobile computing is about. So this hypothesis is seriously flawed. Lastly there are plenty of hosting company applications that can totally destroy or outcompete cloud providers such as OnApp. These large cloud providers cannot compete with companies that specialize in their business nor do they want to.. they just want to offer mediocre services to get more advertising eyeballs or user coverage as much as possible without a concern for quality or quality controls. Then what about IOT and big data? That cant be hosted in the cloud its not powerful enough by its very nature of its infrastructure
    Silly article…and naive

  22. Kingofnyct
    Kingofnyct October 22, 2015 at 04:43 | | Reply

    This has got to be the dumbest article i have ever read. Sorry this is pipe dreaming. The big cloud players do not have the infrastructure or capabilities to support web hosting on a large scale. Cloud systems cannot operate mobile applications which are consuming the world. In fact mobile computing will make the large cloud players like Amazon or Google obsolete because the latency is too high. Saas is already showing its cracks and failing in the current mobile and edge computing market. If the cloud providers attempt to sell hosting it will not work because hosting companies own entire backbone networks and infrastructure designed to host. This goes up to the core of the internet itself.

  23. Kingofnyct
    Kingofnyct October 22, 2015 at 04:44 | | Reply

    Cloud computig has no controls over performance because ultimately they do not co trol the network which is 99.9999% what good hosting and mobile computing is about. So this hypothesis is seriously flawed. Lastly there are plenty of hosting company applications that can totally destroy or outcompete cloud providers such as OnApp. These large cloud providers cannot compete with companies that specialize in their business nor do they want to.. they just want to offer mediocre services to get more advertising eyeballs or user coverage as much as possible without a concern for quality or quality controls. Then what about IOT and big data? That cant be hosted in the cloud its not powerful enough by its very nature of its infrastructure
    Silly article…and naive

  24. donnacha
    donnacha October 22, 2015 at 12:48 | | Reply

    Who is this anonymous fellow “kingofnyct” who, six months after my article was published, turns up to post a rant in the WPTavern discussion and THREE increasingly deranged rants in the WPMayor discussion?

    I mean, seriously, what extremes of loneliness, procrastination and mania would have to possess a man to cause him to waste hours of his life, his precious irreplaceable life, tapping the same misinformed drivel into multiple websites?

    There are many angles that one could take to question a prediction looking ten years ahead, and many here made good points (six months ago), but it is hilarious that this moron doesn’t realise that most of the major WordPress hosts are actually built on the cloud he considers so unsuitable 😀

    Also hilarious that he thinks Amazon is about to close down AWS, their most profitable and fastest-growing division with over $1 billion in annual profit.

    All of that pales into insignificance, however, when set against the personal tragedy of this poor, bewildered man, driven to pontificate but unable to squeeze out rational thoughts without spasmodically adding completely irrelevant buzzwords such as IOT and big data.

    Initially funny but, ultimately, a bleak warning of the perils of not having friends to hang out with on a Friday night.

    1. Dan Knauss
      Dan Knauss October 22, 2015 at 19:08 | | Reply

      Who is this guy who decides to respond to the late, crazy commenter on his blog, takes notice of him on other sites, and then takes six paragraphs trying to find a psychologically vulnerable human to pour contempt onto?

      Too bad Jetpack subscriptions don’t auto-expire after a few months.

      1. donnacha
        donnacha October 23, 2015 at 01:48 | | Reply

        @Dan Knauss, get off your high horse. As author of the post, I am notified when comments are made. I am also notified when comments are made on any of the websites where this article spawned discussions. All told, I wrote well over two hundred responses.

        I felt I had a responsibility to take the time to respond to all the comments made, regardless of site. I engaged, in a civil manner, with everyone, including you, who made their points in a civil manner. You surely noticed that.

        I am, however, under no obligation to keep on the kid gloves when some asshat starts his comment with the line “This has got to be the dumbest article i have ever read” and continues in a similarly abusive manner. A psychologically vulnerable asshat is still an asshat and, yes, I have utter contempt for him or anyone else who trolls discussions.

        I understand that, as a Midwesterner, you may have an exaggerated sense of politeness but I feel that more people should take a stand when these nutters hijack our discussions. They are not simply howling into a void, they are venting their insanity into otherwise valuable conversations and stealing the attention of real people.

        Jetpack subscriptions probably should auto-expire after a few months, or comments should auto-close, I certainly would not object. As it stands, however, if I come across one of these keyboard vandals I will take the opportunity to remind them that actions have consequences, that the world is not their punching bag, that people will treat you as you treat them.

        Have you considered that I might actually be doing him a favor? Have you considered that, by being absolutely clear that his behavior is deranged and unacceptable, I might be giving him a rare chance to think about what he is doing and find a more productive, less negative use of this time?

        1. Dan Knauss
          Dan Knauss October 23, 2015 at 09:20 | | Reply

          Google deeper. I’m not a midwesterner, I’ve lived all over the place. Originally from southeastern New York State. Do you habitually google people and make assumptions about them you can use to explain them to yourself (and them) in terms of their perceived defects? Does that seem like a good use of time and higher brain functions? You are not obligated to treat others as rudely as they treat you; in fact there is a preferred version of your ethical axiom that says treat others as you’d like to be treated and do not treat them as you would not like to be treated.

          1. donnacha
            donnacha October 23, 2015 at 15:33 | | Reply

            Dan, I did not Google you. I followed the link that YOU provided at the head of your comment. That is what those links are for, for the commenter optionally provide context about himself. YOU chose to link to your “About Me” page, a page that specifically YOU created to publicly provide information about yourself.

            In that page, literally half of the information points are Midwestern, so, yes, I took a guess that your bizarrely combative crusade for politeness towards deranged anonymous trolls was a regional quirk.

            All of that is, however, largely irrelevant to the actual situation:

            1. An anonymous idiot posted some deranged drive-by comments on an old article.

            2. As the bartender for this article, I called him out for unacceptable behaviour but left his comment in place for entertainment value.

            3. You butted in to call me out for calling him out too harshly.

            4. I argued that harshness was precisely what was called for.

            At this point, let’s just agree to disagree, I’ll hang on to my preferred ethical axiom, you hang on to yours, and both of us can get back to what we were doing before this anonymous troll sprayed his nonsense in our direction.

  25. hostinghell (@hostinghell)
    hostinghell (@hostinghell) February 1, 2016 at 02:53 | | Reply

    Very interesting to read this article about 1 year after publication. Are you still standing with the predictions you made? I’d like to believe in a brighter future with less (or even no) dependence on a traditional web host. Unfortunately, I don’t see it happen in the next couple of years. Big players like EIG are having a grip on the industry by acquiring a whole portfolio of hosting brands, but intentionally not consolidating them. In this way they don’t have to worry about quality and customer service. As when a customer is fed up with the service of one brand, chances are big that he will unknowingly switch to one of their other brands. These umbrella companies seem still fearless of a technological shift at any time soon. I would love to hear your thoughts!

  26. Donnacha
    Donnacha February 1, 2016 at 07:59 | | Reply

    Hi,

    Your “Hosting Hell” website idea seems interesting 🙂

    Yes, every development I have observed in the ten months since I wrote this article is moving in the general prediction I predicted, I am confident that people who come across this article by the time we hit the 5 and 10 year marks will wonder why anything I said was so controversial.

    In the same way that the perceived value of Uber is not about their current model, relying upon human drivers, but, rather, about the value that gets unleashed when autonomous vehicles become a practical reality, we can see that the big players are positioning themselves for a future when it will be possible to provide complex Web hosting, at massive scale, with a minimal staff.

    Off the top of my head, and just as a quick response to your question, look at how one of the companies I mentioned in my article, Automattic, are continuing to use Jetpack to pull self-hosted WordPress sites deeper into their orbit. The post and page creation pages now prominently display an invitation to edit via WordPress.com instead.

    Offering this service, and so many others, to tens of millions of self-hosted sites does nothing but cost them money today, but they know that being in a service relationship with all 100 million WordPress sites, not just the WordPress.com ones, will be a vital competitive advantage for them as the range of services that can be provided automatically explodes in the coming years.

    The race has already started, all the big players know the destination, that so many people providing ah hoc, small-scale WordPress hosting today are in denial about it is unfortunate.

    With regard to EIG, yes, they are not worried about any of this because their business plan is very simple and far more short-term. They tap into the vast over-supply of money currently coursing through the World’s financial systems and use it to buy up hosting companies, strip out costs and wring as much money as possible out of the existing customers.

    Looking at the list of EIG purchases, I see quite a few names that were once highly respected within the hosting industry, such as A Small Orange. I presume they are now just a ghost, just another front-end for the same rotten EIG service and this is the unavoidable problem with tech companies whose value is built around the human touch they provide: enthusiasm wanes, key employees move on, owners get tired, companies get bought, loyal customers get fucked.

    The hosting giants won’t have to provide an automated service that is better than the service provided by humans, it just has to be more consistent and improve over time rather than deteriorate.

  27. Matthew
    Matthew April 8, 2017 at 15:24 | | Reply

    Hi Donnacha. Interested to hear any more thoughts you may have now, over a year since your last comment. I’ve read the entire post and all the comments here.

    The current managed hosting services industry in its current form still seems to be growing… When and how quickly do you think companies like EIG will really start to suffer? When will the “old guard” start losing revenues to the new world order?

    1. Donnacha
      Donnacha April 8, 2017 at 19:43 | | Reply

      Hi Matthew.

      A year on from my last comment, and two years on from the original article, we are still on course for my five and ten year predictions. What I wrote is a now far less controversial, and probably even seems quite mundane, because the trends I identified now loom over other areas of life and have entered mainstream awareness.

      By growth, I presume you mean the publicly visible kind: that more competitors are entering the managed hosting industry and marketing like crazy. I believe that mainly indicates that the barrier to entry, in terms of both skills and capital, is continuing to plummet.

      Right now, anyone, in any almost any country, can pay around $50 per month, with no long-term commitment, for a server hefty enough to comfortably host over a thousand clients, manage that server by paying $10 to a service such as ServerPilot and bulk-manage the WordPress sites by using software such as InfiniteWP, giving them the full array of “advanced” features such as automated backups and weekly client reports. I am aware of several people, none of whom I would describe as being technically oriented, who are single-handedly running successful managed WordPress hosting businesses in this way. Their only real cost is marketing.

      Other people are starting with no capital at all by rebranding services such as Pressable, at a cost of around $3 per WordPress site, they can even handle the client billing. When you realize that tiny teams like Pressable, with just a couple of technical guys, provide the entire technical, support and billing backend for hundreds of other “managed WordPress hosting” businesses, you begin to grasp just how deeply automation has gone, and how reliably it can scale. Again, for businesses based upon Pressable, their only real cost is marketing.

      So, the technical cost is minimal, the additional costs per additional customer are insignificant, and scaling is easy, you no longer need to hire a load of “WordPress experts”. The whole game is customer acquisition, and that is why we are relentlessly bombarded with adverts and marketing for managed WordPress hosting. It does not necessarily mean that these new businesses are making a lot of money, it just means that the profit margins are huge and each customer is worth fighting for.

      Meanwhile, the more traditional hosting industry continues to consolidate, driven by simple math that one host can absorb another host’s entire customer base while retaining just a few of their staff, mainly support. We know that, behind the scenes, the big hosts are in an arms race to deploy any form of automation that will lower their per customer cost, reduce the events that cause customers to leave, and provide increasingly sophisticated software so that they can flood into more niches. Godaddy’s acquisition of ManageWP is a fine example of using software to target the managed WordPress niche.

      Most of the people who expressed anger at my predictions, both in the comments here and the four other WordPress news sites that reported on it, were well-meaning guys who provide hosting to a small number of clients, probably alongside various web design tasks, and they proudly do all the technical stuff “by hand”. They are all dimly aware that automation is happening, somewhere out there, and understand that it will affect jobs but, in their heart of hearts, no white collar worker really believes that his work, with all its peculiar intricacies, could possibly be performed by an algorithm.

      They are wrong. Their clients will not disappear overnight, but that portion of their livelihood which comes from managing WordPress hosting by hand will represent increasingly bad value, more of a tax levied upon clients too loyal or lazy to investigate other options. That is not sustainable and being angry about that reality does nothing to change it.

      1. Matthew
        Matthew April 9, 2017 at 04:24 | | Reply

        Interesting, thanks. I meant growth in terms of actual revenues, based on a little preliminary research. Of course it’s difficult to make accurate macro estimates, since industry consolidation produces quite a large distortionary effect (organic versus inorganic growth).

        Still, it looks like the industry is still “working”. EIG is not performing especially well, and even got caught up a while back, incidentally I think in April 2015 when you first published this article, in a case that involved a dispute regarding its organic growth figures.

        I’m just wondering when we’re suddenly going to see all of these VC and IPO-backed web hosting companies (read: marketing companies) start to lose out to the bigger players.

        It’ll be interesting to see whether the larger players will subsume (through acquisitions) the thin existing “service layer” that companies like WP Engine provide, or whether they will create their own, new platforms that actually steal market share rapidly and evaporate the current industry (like your super bowl reference: AWS going mainstream).

        And if/when mainstream web hosting is a commoditized utility, and when the “service layer” is also Apple-like in its simplicity and accessibility, where will the opportunities lie? Will there be any niche opportunities left in the industry, or will all the “high niche margins” float to creative design and application development, etc. (i.e. the product itself, rather than the infrastructure).

        GoDaddy, as you mention, seems to be doing well for now. The stock is at all-time highs, revenues are set to reach $2bn+.

        1. Donnacha
          Donnacha April 9, 2017 at 09:37 | | Reply

          Thanks for your insights Matthew, your phrase “service layer” is exactly right, wish I’d thought of that!

          That’s the bit which, already largely automated, will continue to be eaten by software. The specialist brands are already vehicles to accumulate customers. In most cases, they will get bought out based upon the value of those customers, and the brand either disappears or lives on but with their backend swapped out for the purchaser’s (EIG-style).

          In the most lucky case, a giant will buy them with the intention of throwing their entire content management offering behind that existing brand. I find it hard, however, to imagine Google, Amazon or Facebook buying, say, WP Engine for the brand, they almost always launch their own brands. None of the big names in CMS hosting even sound particularly good.

          The one exception is WordPress itself, which we could consider to be a super-brand due to its foundational importance in the CMS niche, its numerical dominance and, perhaps most importantly, the undeniable coolness of that name. Then again, Automattic would be an incredibly difficult company to integrate into any other, and it is almost certain that there would be a user backlash against the buyer.

          Politically, Facebook could not do it even if they wanted to, while I sense that Google would turn their nose up at both the technology and the organizational structure. Microsoft buying WordPress would cause quite a stir but it would be good for the ongoing rehabilitation of their reputation, and a good match for last year’s acquisition of LinkedIn. Amazon has sufficient credibility to avoid a serious backlash, in the sense that they are already the backend for much of the Internet, and have the ambition, expertise and scale for the purchase to make sense.

          The commoditization of advanced, managed CMS/app hosting will be just another step in the continuous lowering of barriers, allowing ever-smaller groups, with fewer technical skills and lower budgets, to reach an expanding worldwide audience. The opportunity moves to content, trade, curation and services, all iterating and evolving under brutal competitive pressure because the gap between idea and execution will be narrower than ever.

          1. Matthew
            Matthew April 9, 2017 at 10:47 | | Reply

            Great response and analysis, thanks.

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