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Thursday, December 4, 2008

The Discount Dedicated Hosting

December 30, 2003 -- (WEB HOST INDUSTRY REVIEW) -- One of the most notable areas of development in the Web hosting industry this year was the competitive discount dedicated hosting market niche. Over the course of 2003, price points continued their sharp downward trend and vendors from various corners of the hosting market jumped into the fray.
In contrast to the thinning at the high end of the market, with UK carrier Cable & Wireless (cw.com) striving to escape the US, two European players made moves to break into the US market - one with its sights set firmly on the discount dedicated hosting market, and the other certainly appearing to be heading in the same direction. Their entry into the US dedicated hosting market, joining several key local players, sets the stage for a battle that promises to heat up in the coming year.
Since EV1Servers.net (ev1servers.net), the dedicated hosting arm of Texas-based ISP Everyone's Internet, burst onto the scene in 2000 with its $99 self-managed dedicated servers, the company has carved out a formidable market niche for itself. In fact, their discount dedicated model has inspired several other hosting providers to roll out similar offerings. ServePath (servepath.com), a San Francisco-based dedicated server specialist, rolled out a $99 dollar server in early 2002. But it wasn't until this year that things really began to heat up.
In January, Richard Yoo, founder of Texas-based Rackspace Managed Hosting (rackspace.com), left the company to launch ServerBeach (serverbeach.com), offering self-managed dedicated servers for Windows and Linux at $99 per month. The same month, Washington- based Superb Internet launched its Superb Servers division, unveiling various dedicated server configurations at prices ranging from $79 to $99 per month. Midway through the summer, SERVER4YOU (server4you.com), a subsidiary of German communications firm intergenia AG, launched its US operations, releasing a $49 bare-bones dedicated server to the surprise of many. In just six months, the price floor for a discount dedicated server had dropped by 50 percent.
The downward trend continued in the latter half of the year as other vendors reduced prices in response to the competition. Affinity Internet's (affinity.com) ValueWeb (valuebweb.com), based in Florida, dropped the price of its Linux and Windows dedicated servers to $59 and $89 per month respectively and Atlanta-based Interland (interland.com) introduced a $79 dedicated server, albeit as a limited time offer.
SERVER4YOU's arrival was significant not just for the dramatically low price point, but because it represented Europe's first entry into the US dedicated hosting market. At the time EV1Servers was staking its claim in North America, German-based SERVER4YOU was already a powerful player in Europe's discount dedicated server market. SERVER4YOU, with operations in the UK, Germany and France, has been selling budget-priced discount dedicated servers as far back as 1997. It currently hosts over 6,500 servers and 380,000 domains, and has set up its US-based shop in St. Louis, Missouri, where it has already begun to win clients.
Looming on the horizon is 1&1 Internet (oneandone.co.uk), Europe's largest Web host. 1&1 announced in October that it would be entering the US market in January of 2004. In order to gain a foothold in the market, 1&1 offered new customers three years of free shared Web hosting. The company said its US operations, based in New York, would include dedicated hosting offerings and many expect that 1&1 will join SERVER4YOU in the budget dedicated business. Though 1&1 has not yet revealed any dedicated pricing, its three free years of hosting promotion has led some to speculate that another extremely low-priced dedicated server from a European-based company could be added to the menu.
Based on the noise its long-time rival has made and its own eyebrow- raising promotions, it is a good bet that 1&1 will be involved in the looming battle in the discount dedicated server market. The two European hosts join a market that includes US-based upstarts ServerBeach and Superb Internet, who are set to face off aganst the segment's leader EV1Servers and other industry players like ValueWeb and Interland, which are just getting started in the discount server market. Look for this eclectic group of vendors to include new members in 2004 as the market for discount servers continues to develop.

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