August 21, 2002 -- Hosting providers focusing on the dedicated server market showed strong growth in the first half of 2002, outdistancing competitors in the colocation and managed hosting sectors, according to new data from Netcraft.
"Amidst the carnage, some companies with more carefully chosen business models have been able grow at rates which would normally be regarded as impressive, but seem outstanding in the current climate," Netcraft said in its analysis.
The new data, based on Netcraft's ongoing monitoring of Internet web servers, tracked the growth of IP addresses. It found eight established providers with growth of roughly 30 percent or better between January and August of this year.
"It is noteworthy that all of the fastest growing companies are all majoring in dedicated servers, although Interland and CrystalTech also have a large shared business," Netcraft noted. "Dedicated servers have proved the most successful segment of the industry."
The largest players in the shared hosting market, Alabanza and Pair Networks, also showed solid growth, although not as strong as the dedicated hosting firms, according to Netcraft.
The findings highlight the growing segmentation of the hosting market, in which "mass market" hosts specializing in shared hosting and dedicated servers are finding traction at the lower end of the pricing spectrum.
Tier 1 Research estimates that mass market hosting revenues will climb 11 percent this year, to $3.4 billion, while the number of users of mass market hosting will grow 23 percent to include 13 million companies and individual site authors.
"The shared and low-end dedicated hosting sector truly represents the ‘mass market’ of hosting when it comes to the pure volume of opportunity," said Tier 1.
While shared and dedicated hosting offer pure volume, profit margin is a different story. Mass market hosts typically use automation to control costs by improving resource usage and shifting many basic server management functions to the end-user through web-based control panels.
The fastest-growing provider in the Netcraft survey was Rackshack, which offers dedicated servers starting as low as $99 a month. Cybercon and CrystalTech, which followed Rackshack in the results, price dedicated servers between $325 and $375 a month. Interland, one of the largest mass market hosts, offers an entry-level $129 a month package, with full-featured accounts priced at $350 a month.
Netcraft is an internet consultancy based in Bath, England.