The web hosting industry is in a very interesting position in the beginning of 2009, heavily influenced by two opposing trends. The first trend is the continuing growth in IT infrastructure and innovation in the sphere of web-related technologies, while the second one is decreased consumer spending in the face of what everyone expects to be a lengthy, unpleasant recession.
A mature global internet infrastructure is becoming a fact of life. Bandwidth is increasingly abundant and cheaper, while new data centers spring across the world. The emergence of cloud computing, the ability to seamlessly use online resources to store and process data, is direct consequence of the global network reaching a more mature state. Amazon S3, arguably the first mainstream cloud storage service, grew on top of an existing data center network, which had been created to serve Amazon's e-commerce empire. The talk of cloud computing, the new "the internet is the computer," has firmly displaced "Web 2.0" from the language of pundits and is now the hottest buzzword in technology. And this time, it is big. Cloud computing is a flexible technology, and can serve many tasks, from keeping your personal photos online in a care free manner, to providing multiple, scalable, redundant server instances for your web application. It reduces expenses for hardware and staff.
Cloud computing offerings are often reliant on virtualization technology, which has been around since the era of big iron, but became more wide spread in the late 90s when ported to off-the-shelf x86 computers. Virtualization diversified web hosting offerings further, and indications are that Virtual Private Servers are a fast growing area.
Efficiency in the data center is increasingly important. Virtualization helps in that respect, but regulation and changing consumer preferences make many hosting providers consider going green. Today, many companies purchase, from their profits, renewable energy certificates, which offset the negative environmental impact of the facilities that provide their electricity. A few go for a radically different approach and generate their own electricity--most often with solar panels, but for now, this is more of a novelty thing. Then again, Google also generates thousands of kilowatt-hours of electricity directly from the sun for its facilities, daily. The bottom line is that the "green" factor adds pressure for the companies to use their hardware more efficiently.
There were internet hiccups in 2008, of course, like the repeated occasions, in February and December, of cut undersea cables in the Mediterranean. Trouble strikes on land, too--an example would be the fire in The Planet's Houston data center, when the clients of this reputable company were left without service for days; thankfully, there were no people harmed and the company handled the situation in a timely and efficient manner. Those were the exception rather than the rule, however, and for the most part the internet performed according to expectations.
The software factor is also an important thing to consider when discussing growth of online services. Open source has always been at the core of the web, but the movement has accumulated such a momentum, you could say there is a constant Olympics in programming, an eternal Google Summer of Code, going on. From the desktop to the server, from the browser to the CMS, innovation and development are happening at a frantic pace.
And then there is the slowing global economy. This editor, having flunked an economics major before heading into the greener field of communications, has always regarded economics as a pseudo-science and is somewhat vindicated by the displayed inability of fat cat bankers to explain what the heck is going on. Nevertheless, with Keynesian economics back in vogue and a new president in the White House, there is place for cautious optimism. The word here is "cautious," because the end of 2008 already saw significant layoffs in the IT sphere, and web hosting companies are also likely to become leaner and meaner in order to weather the crisis. There will be acquisitions and consolidations, as in 2008, but some smaller companies may need to close their doors.
The world wide web is here, and here to stay. Hosting services, in their many forms, from blog hosting to managed servers, are essential to both personal life and business. No longer is presence on the internet considered a luxury. This fact ensures that the industry will continue to generate profits and, more importantly, develop new products, even in a gloomier economic climate.
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