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On the Wal-Mart-ized Web...

Fri, 16 Mar 2007 17:39:00 -0400

Liam says this week's most important trend is web hosting providers' continued expansion of data center footprints. The strong demand for hosting facilities seems like a good sign. At the same time, there are a number of outside-world developments that folks in the hosting business ought to keep an eye on.

1. On Wednesday, in addition to officially releasing RHEL5, Red Hat announced that it will soon launch an open source marketplace called Red Hat Exchange (RHX). As Business Week reports, Red Hat will guarantee the compatibility of RHX products with its platform AND provide tech support for each and every 3rd party product on the exchange. In addition, RHX will allow end users to submit ratings, read reviews and compare notes.

2. Later that afternoon, Microsoft said it will buy Tellme Networks. The Associated Press thinks the deal is worth $800 million to $1 billion.

3. Less than a day later, Cisco announced that it has agreed to acquire WebEx for $3.2 billion (or $2.9 billion, if you deduct WebEx's $300 million cash balance).

4. And last but not least Google sort of confirmed that it's working on a mobile phone.

It's a Wal-Mart-ized web; every Big Co wants to assemble a broader range of more seamlessly integrated products for a wider and better networked audience. This leaves less and less of a market for old school vendors who sell standalone widgets to isolated prospects.

For instance, consider 1&1's recent survey of 765 small business owners. Andreas says 100% of the respondents agree that the absence of a company website is bad for sales, but there's much more to these customers' operations beyond setting up a web presence. Might they not benefit from Zoho or ThinkFree powered productivity apps? SharePoint based collaboration? CRM?

More importantly, Andreas counts "hundreds of thousands of US small businesses" among his customers. As such, one super valuable feature that he's uniquely positioned to deliver is a 1&1 social network through which customers can connect with potential vendors, partners and buyers. I feel like 1&1 is really missing out by amassing a sizable community without leveraging it for its members' benefit.

As SWSoft CEO Serguei Beloussov likes to point out, 1&1 and its competitors have sold tens of millions of "web hosting 1.0" accounts, which collectively generate billions in annual revenue. He's absolutely right - but as you see above, the world's not standing still...

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