Earlier today, IBM launched a “bold” (their words) new marketing campaign about cloud computing, with an ad in today’s Wall Street Journal stating that IBM’s cloud “powers 270,000 more websites” than Amazon. Not too shortly after the ad was in the market, I received an inquiry asking if this figure is actually true.
The short answer to that question, is yes.
The medium-length answer is that IBM is quoting figures from hostcabi.net which appears to crawl through the top several-hundred-thousand websites on the Internet and figure out where they are homed. The methodology hostcabi.net probably uses would involve verifying IP addresses for the top sites against various registries like ARIN, RIPE, APNIC, etc. I’ve actually performed similar analysis of the market in the past so I believe the methodology (and the results) are generally sound – for what is being stated.
The long answer (because the devil is always in the details), is that the types of sites matters. About 18 months before their acquisition, Softlayer was (according to public statements) on a revenue run-rate of about $340 million annually. However, in the same quarter for Amazon, their ”Other” revenue was coming in at a run rate of about $1.6bn annually. While the “other” line item in Amazon’s financials also includes some non-AWS items - like marketing and promotional agreements, seller sites, and co-branded credit card agreements – those portions of “other” are not generally believed to be significant, and Gartner believes (as many financial analysts have published) that Amazon likely had close to $2 billion in AWS revenues in 2012.
So how does IBM/SoftLayer end up being the provider to so many more “sites” on the Internet, on presumably smaller revenue? In the world of hosting, size matters – and SoftLayer had good successes in the market in underpinning some shared hosting providers, such as HostGator (which claims to have 12,000 servers under management, and is a partner of SoftLayer’s). This can tend to skew numbers a bit, as shared sites are frequently quite small – in fact, even as I am writing this blog post there is an ad for “$0.01 Web Hosting” with HostGator running on hostcabi.net’s site. Shared hosting is not “cloud”, and what small websites lack in size … they tend to make up for in volume as the “long tail” of the market. To be sure, using the same yardstick that IBM has chosen, GoDaddy nearly surpasses Amazon and SoftLayer combined with 431,087 websites as of today … compared to 358,532 for SoftLayer and 73,821 for Amazon.
Based on Gartner’s own research (using similar methodologies as hostcabi.net) we believe that Amazon Web Services is now being leveraged by 10% of the top 5,000 websites in North America – so Amazon is definitely taking a bite out of the market from many other players.
Of course, none of this diminishes the value of the property that IBM has picked up – SoftLayer has some very innovative capabilities, all built with in-house developed intellectual property, and was very successful overall in the broader hosting market … and will likely continue to be in their new home with IBM (my colleague Lydia gave an in-depth overview of the transaction here). However … that doesn’t make for a very eye-catching headline to splash across the pages of the WSJ – so while the marketing team over at IBM is being accurate; they’re choosing a very specific view of the market as well.
Category: Uncategorized Tags:
As of this morning, all pre-qualification surveys for the 2013 Managed Hosting Magic Quadrant have been sent out to organizations that have confirmed their point-of-contact with our coordinator – Michele Severance. If you have previously confirmed a contact for your organization, but have not received your pre-qualification survey URL – please let Michele know as soon as possible.
Additionally, if you had previously received a contact confirmation email from Michele – but have not responded to her yet, please do so as soon as possible so that she can send you the survey URL.
Finally – if you believe your organization may be eligible for consideration in our managed hosting magic quadrant, please see my previous post on the process.
Category: Uncategorized Tags:
We have started confirming contacts and delivering pre-qualification surveys for this year’s Managed Hosting Magic Quadrant, with the North American edition due to be published in the spring of 2013. If you believe you may be eligible for consideration for this Magic Quadrant, please get in touch with me immediately either via my blog here, or via email at douglas -dot- toombs -at- gartner -dot- com, or my colleague Bob Gill who is helping run the pre-qualification survey process at bob -dot- gill -at- gartner -dot- com. Our primary administrative coordinator for the process is Michele Severance (michele -dot- severance -at- gartner -dot- com), who should also be copied on all communication.
In anticipation of many of the questions that will come in about the process as it moves along – I have tried to address a few of the more common questions here:
Should my company participate?
If you are uncertain as to whether or not your company may be eligible for consideration, consider your organizations’ offerings against the following three criteria:
- Your organization is a service provider (not a hardware or software vendor).
- Your managed hosting offering largely meets the inclusion criteria in the previous iteration of this magic quadrant. You can read a reprint copy here – you will want to pay close attention to the “Market Definition/Description” and “Inclusion and Exclusion Critera” sections. Please keep in mind that inclusion criteria are not guaranteed to stay the same from one iteration of a Magic Quadrant to the next as the market evolves over time. If you met last year’s inclusion criteria, you should probably submit for consideration in this cycle.
- If you consider yourself a direct competitor to the companies detailed in last year’s Magic Quadrant, you should probably submit for consideration in this cycle.
Once we have confirmed a primary contact point to use, you will receive further details on the pre-qualification process. Please note that receipt of the pre-qualification survey does not – in any way – indicate that we believe your company may qualify for inclusion.
You do not need to be a Gartner client to ask to be considered for inclusion, and Gartner client status has no bearing on inclusion or evaluation. Gartner analysts will evaluate all providers that we can that are currently active in the managed hosting market, a service provider cannot ask to be excluded from the process if their service offering meets Gartner’s market definitions for managed hosting.
I am a PR professional representing a managed hosting provider, can I get a survey to fill out for my client?
No. Gartner has a strict process that governs all Magic Quadrant related communications, therefore we cannot work through 3rd party organizations on behalf of a service provider. But please have your primary contact at your client reach out to us – we can work directly with them.
How does the Magic Quadrant process work?
Gartner has published a few official methodology documents on the process – the official Gartner Methodology document, and a FAQ.
There is a lot of reading material for the Magic Quadrant process, do I really need to read it all?
Yes. Although all of us as analysts write for a living – we don’t write this much about our methodology solely for our own benefit. You will be best prepared for the process if you take advantage of all the material available to you. It is only human to skim long emails, and even more human to skim through lengthy Word documents – but for many service providers, the Magic Quadrant is viewed as a high-stakes exercise that will consume a tremendous number of hours of your time and the time of your executives. You would do your organization a disservice if you do not read every single word of every single communication that’s sent to you with regard to the Magic Quadrant. You don’t have to do so instantly, but you probably want to carefully read what you’re sent within a business day — and to take the time to mark deadlines on your calendar, add contacts to your address book, and so forth.
My colleague Lydia has posted several helpful blog posts during previous Magic Quadrant iterations – they are a good additional read (the tips about preparing for magic quadrant briefings are particularly helpful):
I am currently a Gartner client – can my Gartner account executive help us navigate through this process?
Gartner account executives do not have any special knowledge of the Magic Quadrant process, and your Gartner client relationship (if any) has no bearing on the Magic Quadrant. While some people do like to discuss the Magic Quadrant with their account executive, please note that these communications are separate; do not use this as a form of message-passing. If you want to ask a question or raise a concern, please contact the analysts directly, and please copy our admin for the Magic Quadrant. Your account executive can also help you set up a client inquiry, if need be.
What will the inclusion criteria be for this iteration of the Magic Quadrant?
Gartner does not disclose final inclusion criteria for this Magic Quadrant in advance. All providers that are being considered – including those that have requested a survey, and others that may not have – will be notified about their inclusion or non-inclusion status once the pre-qualification survey process is complete.
Ok, I completed the survey. What’s next?
Once Gartner has evaluated all of the survey responses, you will receive an email notification from our coordinator as to whether or not your company will be included in this iteration of the Magic Quadrant. If your company is included, you will receive further instructions on the next steps of the process at that time.
Category: Uncategorized Tags:
I’ve recently joined Gartner as a Research Director focusing on the hosting and managed services market – namely data center colocation, dedicated and managed hosting, cloud infrastructure as a service (IaaS), content delivery networks … as well as other third-party services (like managed DNS, DDoS mitigation, etc.) that are naturally “adjacent” to the hosting market.
After a 20-year career in IT in which I’ve played the role of both the customer and the service provider, it’s exciting to be able to bring my expertise and insight from both sides of the marketplace to Gartner’s customers. This is augmented, of course, by the number of interactions that Gartner has with clients over the course of a year (about 290,000). Speaking with customers and vendors/providers on a daily basis provides (in my opinion) an unmatched insight into how the marketplace is evolving, and the challenges that IT organizations are facing. Add on to that, the privilege of being able to work with some of my incredibly insightful colleagues here – such as Lydia
, Tiny Haynes, Bob Gill, Kyle
, and the 800+ other Gartner analysts covering every other aspect of IT you could imagine – and it’s been a pretty exciting opportunity in my few months here so far. I’m looking forward to having conversations with many more of you in the months and years ahead.
Although “the cloud” continue to dominate the headlines (and very few people have to wade through more cloudwashing than us industry analysts), I’m actually glad it is getting a bit over-covered in the media because it seems to be having a bit of a “halo effect” across the entire range of service provider offerings that I cover. IT organizations are now critically evaluating their roadmaps and seriously considering what needs to stay in-house, and what could be entrusted to a 3rd party – whether that 3rd party is a SaaS application, cloud IaaS, hosting, or even colocation. IT executives faced with budget constraints, in data centers that have run out of space and/or power (usually power), and tasked by their executives to help grow the business overall – seem far more amenable (to me, at least) to shifting their workloads outside of their “four walls” now than ever before. It’s going to be exciting to watch how this dramatic shift in IT plays out in the coming years.
Thanks for reading, and be sure to follow me on Twitter
as well, where I will post whenever I have new blog entries.
Category: Uncategorized Tags: