ScienceLogic's HostingCon 2012 survey of hosting providers revealed that 50 percent of respondents named "price wars" as the greatest threat to the industry. Providers find themselves locked into a pricing race to the bottom if they do not differentiate themselves via value-added services. Hosting service providers are encouraged to emphasize factors other than price to differentate their offerings.
According to the survey, 60 percent cited management and support as the main way to differentiate from competitors other than price. Only 34 percent cited price as a strategy to differentiate from the competition.
ScienceLogic CTO Antonio Piraino told MSPmentor that a key takeaway of the survey was the importance of Rackspace and Softlayer over Amazon. Only 1 in 6 hosting providers view Amazon Web Services as their biggest competitor, while Rackspace and SoftLayer are top of mind when it comes to competition.
"The buzz in the industry revolves around Amazon and having service providers emulate Amazon – but the reality is that hosters see RackSpace and SoftLayer as pathfinders of the industry," Piraino said. "It's therefore not a major strategic shift for us, but it helps us better understand where to put our development efforts – in addition to Amazon, we can help service providers emulate RackSpace and SoftLayer to help them differentiate and compete."
Additional findings include the following:
- 46 percent of respondents say they have no plans to use any integrated stacks
- 39 percent of respondents found cloud providers in general as a threat to the industry.