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Recently, there was a discussion on Twitter about the fate of small webhosts. I thought I will expand my thoughts here in this post. Traditional web hosting ecosystems is huge with big hosts offering enterprise level managed hosting to a college kid having a reseller account to sell hosting space to friends and family. As we move ahead with cloud based hosting, the natural question is about the fate of such small hosts. In this post, we will take a look at what is in store for them.

The cloud world will definitely be harsh on most of the smaller webhosts. There is no doubt about it. However, it doesn’t mean that we will see a world where there will be a consolidation of handful of monopoly cloud infrastructure players, which is a shortsighted idea. There are many constraints to such thinking along with other mundane reasons for a more federated ecosystem.

Two weeks back, I wrote a post about an European cloud infrastructure provider, ScaleUp Technologies, and I wrote about how one of the traditional webhost, Internet4you, has morphed part of their datacenter resources to offer cloud based services using 3Tera’s Applogic platform. Recently, I spoke with VMOps, a company developing software stack that helps service providers set up Infrastructure as a service easily. Their software stack comes with three components.

• A retooled multi-tenant hypervisor that supports dynamic resource provisioning and complete isolation of CPU, memory, storage and network resources for virtual servers.
• A management tool that helps service providers to package their offerings, setup and manage users and, also, an integrated billing solution.
• An easy to use self-service interface for end-users with necessary API to allow them to control the launching of applications in the cloud.

Companies like Reliacloud and Cloud Central have already tapped into the VMOps stack to offer IaaS offerings. I will dig deep into VMOps in the future but software like the ones offered by VMOps and 3Tera shows tremendous potential for smaller webhosts to jump straight into the cloud bandwagon. These software will help webhosts who have their own datacenters to reposition themselves as a cloud provider.

What about the shared webhosting providers who either rent a dedicated server or use a reseller accounts? A big chunk of them will eventually vanish to the pressures of market forces. However, there are still opportunities for these smaller hosts in the cloud world. They could add value on top of these cloud offerings and then resell it to low end users like some of the small businesses. For example, they could add some management layer and a customer support layer on top of raw EC2 instances and sell them to individual and small businesses who neither want to manage these EC2 instances or don’t know how to manage them. As I pointed out in my post about Blackmesh and the future of small webhosts, customers want support. They want to talk to a human beings and get personalized support. Then, there is the idea of regional clouds where some of the customers (somewhere in the long tail) want to do business with a cloud provider who has operations nearby. Now add the regulatory requirements and other factors based on diverse needs of the users, I see huge opportunities for smaller level players.

Yes, cloud era is going to drastically reduce the number of cloud infrastructure players. Yes, most of these smaller webhosts are going to shut down their business and go away. However, we will still see a vibrant federated cloud ecosystem and we will see software tools that will enable some of these small players to reposition themselves to play the cloud game. The future is in an open, federated cloud ecosystem.