The hosting companies had a few good years. But hyperscale cloud providers such as Amazon Web Services (AWS), Microsoft Azure, Google Cloud, Alibaba Cloud or DigitalOcean are eating their lunch. This presentation is showing the state of the hosting & cloud industry and how both, hosting companies and ISVs need to react to it and become a managed services provider.

1. How Hosting Companies Can Survive Hyperscale Cloud And
Hyper Competition In 2019
Lukas Hertig, SVP Business Development

2. A Few Words About Me..
Working with a few startups
to support them on their
journey, mostly in the
blockchain and SaaS space.
16+ Years in Sales,
Management, Marketing &
Business Development
Based in Zurich and Barcelona
Advisor, InvestorPlesk | cPanel | SolusVM
2015 - Plesk
2014 – Parallels/Odin
2005 - Parallels
2003 – Confixx/Swsoft/Parallels
Chainstack
Others
LinkedIn: https://www.linkedin.com/in/lukashertig/
Twitter: https://www.twitter.com/LukasHertig
Facebook: https://www.facebook.com/lukas.hertig

4. The hosting
industry had a
good few years…

6. Things are changing
though…

7. Now the industry
is in turmoil

8. 1. Market Consolidation
GoDaddy - HEG Ι Endurance Group Ι Savvis Ι Zayo Ι SingleHop Ι Cogeco Ι IBM Ι
web.com Ι United Internet (1and1) Ι Telecity Ι InterXion Ι UK2Group Ι Six Degrees
Group Ι etc etc
(= a few large guys buy everyone else)

9. 2. Capital
requirements are
absolutely crazy

10. 3.CPAs* are
skyrocketing
* Cost per Acquisition. Average in the cloud should be not more than 30% of the CLTV (customer life time value)
– but many hosters spend up to 70% of the CLTV!

11. What worked
yesterday does not
work today!

12. Like…

13. What did Hosting clients care about?
•Uptime // SLA ?
•Price ?
•Support // Service?

14. Yes – true, hosting
clients did care about
that…

15. The problem is that the
whole industry is focused on
those three (and only those
three) USPs*
*USPs are so-called «Unique Selling Points» , e.g. how you differentiate in the market

16. Hmm – we
all look the
same?!

17. So ok, Hosters all
solve the same
problem

18. And together,
hosters raised
the bar

20. But what were cool USPs
before, are now only the
entry ticket to the game…

21. Innovation died out,
and we left the door
open to the …

22. Megahosters

23. a.k.a

24. Hyperscalers

25. The Hosting
Market
The golden age for Hosters…... is transforming into a new paradigm...
Source: Netcraft Dec 2018

27. aws = The Dark Side!

28. But AWS suck at
price, uptime and
support, right?
Yup, hosters
have
nothing to
worry about!

29. Yes, they really do

30. So how are
they stealing
the clients?

31. The AWS Jedi
MindTrick

32. You do not care
about uptime,
price & support!
HUH?!
Hyperscalers and their JEDI mindtrick…

33. Why are Hyperscalers not focusing on
Uptime, Price or Support?

34. Because ‘anyone’ can deliver good
uptime, with decent support at fair
pricing. It’s a commodity.
… are you a commodity!?

36. Hyperscalers sell:
1. Scale
2. Geographical reach
3. Product breadth
4. Innovation (AWS #1 – in all IT Market)
Because they know most Hosters can’t…

37. It’s normal …

38. Old school hosters will feel the pain!

39. Hyperscalers will eat them for
breakfast…

40. Go big
…or go home

41. That’s the new
‘normal’
Deal with it…

42. Back to the Hyperscalers

43. 50%+ (2018)
0% 10% 20% 30%
Amazon
Hosters
Google
IBM
Microsoft
IaaS Marketshare
Marketshare
YoY Growth
AWS 51%
MS 96%
IBM 48%
GCP 81%
RAX -

46. want more details? Please refer to
the reports of structure research.

47. So, clearly the fastest growing segment
in the history of our industry…
And we left it to a bookshop?!

48. Like a
boss

49. It’s bound to happen to any
industry that has grown up

50. It’s normal,right?

51. Meanwhile, hosters are thinking…

52. “We will be fine”
“Our customers respect us for who we are”
“They like that local touch…”
“We have a special bond with our customers”
“Loyalty…blah blah”

53. Let’s stick with
what we know

54. Right!?

56. Peter Drucker thinks
you are wrong!
Peter who!?
…Peter Ferdinand Drucker was an Austrian-born American managementconsultant,
educator,and author, whose writings contributed to the philosophical and practical
foundations of the modern business corporation

58. The winners will be people who break
the mold and change the way stuff is
done…

59. Who create a
‘new normal’

60. Disruption!

61. Future hosters have to become MSPs – small and
medium sized specialists, some even multi-cloud

62. Future hosters are not running any –
infrastructure, they manage it

63. The rest either sell their company to someone
who has (some) scale - or transform on
productized and subscription based managed
services (1.5M$ investment approx. Per Microsoft)

64. Hosters and IT channel (SI/VAR), Agencies etc. will
be all the same – MSPs. Distributors may die and
others also.

65. What’s that we hear Hosters say?
“I like to be in
control…”

66. What’s that we hear Hosters say?
“I want to compete
over price - it’s
easy…”

68. Well – the model is not
exactly new to our
industry…

69. At least 40% or more of our industry
revenue is tied into reselling
infrastructure or services & products
outside of our control

70. Hosters are already a reseller
and already manage many 3rd
party products!

71. Power
Etc…
Etc..
Software
OS
Servers
Network
DC gear gear
DC
IP

72. IP
Power
Etc…
Etc..
Software
OS
Servers
Network
DC gear gear
DC

73. DC
IP
Power
Etc…
Etc..
Software
OS
Servers
Network
DC gear gear

74. DC gear
DC
IP
Power
Etc…
Etc..
Software
OS
Servers
Network
gear

75. DC
IP
Power
DC gear
Network
gear
Etc…
Etc..
Software
OS
Servers

76. DC
IP
Power
DC gear
Network
gear
Servers
Etc…
Etc..
Software
OS

77. DC
IP
Power
DC gear
Network
gear
OS
Servers
Etc…
Etc..
Software

78. DC
IP
Power
DC gear
Network
gear
Software
OS
Servers
Etc…
Etc..

79. DC
IP
Power
DC gear
Network
gear
Etc..
Software
OS
Servers
Etc…

80. DC
IP
Power
DC gear
Network
gear
Etc…
Etc..
Software
OS
Servers
Hosters are not producing all that,
right?

81. DC
IP
Power
DC gear
Network
gear
Etc…
Etc..
Software
OS
Servers
Most Hosters are probably in this
space…
And reselling the rest to offer a full stack…

82. Sales
Business
processes
Management
Applications
Operating system
Server Infrastructure
Network Infrastructure
Data center Infrastructure
Datacenter plant and building
IP/bandwidth/internet connectivity
Redundant powersupply
Margins
YESTERDAY

83. Sales
Business
processes
Management
Applications
Operating system
Server Infrastructure
Network Infrastructure
Data center Infrastructure
Datacenter plant and building
IP/bandwidth/internet connectivity
Redundant powersupply
Margins
TODAY

84. Technology has reduced transaction
costs, creating and accessing assets is
cheaper and easier than ever - and
therefore possible on a much larger
scale

85. What’s next?

86. #ThugLife

87. Trends
Source: Structure Research Report – Q4/18

88. Value of the IT channel company in a hyperscale world
Guide the
end customer
Control the
value chain
Monetize
every interaction
Choose the
partners who need you

89. The Channel
challenge
(Cloud)
Solutions
& Vertical Focus
New Revenues
Breakthrough in X/upselling
Baseline
Selling infrastructure only
• With a singleplatform, SPs reduce
capitalexpenditures (CapEx) and
increase margin.
• Plesk is the layer on top of the
infrastructure enabling SPs to add
value to product siloes
Low/flatdemand,
high riskof churn,
margins in freefall
Adoptionof Pleskextensions
andsolutionbundles to
addresscurrentcustomer
needs,reachout to new
targetaudiences
Newand focusedproducts influence
consumer’s purchase decisions, and prevent
churn. Ideallybundledwithprofessional&
managedservices as a differentiator around
managed AWS/Google/Azure/Alibaba or
even on top of DO, grow both revenues and
margins
• New revenues: Taking advantage of a lightweight
Plesk core deployed in the baseline layer to offer
application portability, standardization and
version control combined with a rich extension
catalogue generating upsell opportunities
• This allows continuous deployment, followed by an
ongoing increasein “sales”
• New opportunities to take advantage of deployed
services in the medium layer to create new and
innovativevalues addressing technology trends and
current buying behaviour
• Provide consistentenvironments from development to
production to customers
Successful MSPs view the monetization opportunities as set of layers, infrastructure
independent

90. Maybe running
a bookshop is
not all bad…
We have a shot at
it - we can totally
do this!

92. Oh, and it’s the right thing to
do for the environment as well…

93. Oh, and it’s the right thing to
do for the environment as well…
Thank You!
Twitter: @LukasHertig Linkedin: Lukas Hertig