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The web-hosting market – still a scattered landscape

  • 23 Nov 16

A number of web-hosting companies are still not making real net profits. Based on adjusted EBITDA numbers, however, these companies look quite profitable. The reality is somewhat different. According to research from hostadvice.com, United Internet is the second largest web-hosting company worldwide with a market share of 4.28%. The US-company GoDaddy, the market leader, has a market share of around 4.65%. The German company Strato AG, a subsidiary of Deutsche Telekom, has a market share of 2.23% followed by Amazon Web Services (AWS) with a market share of 2.13% and OVH.com (French company) with 2.05% and the German company Hetzner with around 1.95%. The survey is based on the number of customers but these numbers also differ. GoDaddy has around 13.8m customers and United Internet around 6m. GoDaddy is a leading technology provider in web-hosting and a global market leader in domain name registration. In 2015, the company had 62m domains under management representing a market share of around 20% out of a total 299m domains. The company added 1.1m new customers to a total of 13.8m in 2015. Securing a domain name is the first step in creating a digital web presence. The company generated around 52% of total revenues in 2015 with domain products. To create and manage the digital identity, the company offers hosting products. GoDaddy designs and develops cloud-based technology products. In 2015, the company hosted around 10m websites. Major products are Website Builder, E-commerce and Search Engine Visibility. In addition, the company offers own (email accounts, email marketing) and third-party business applications, e.g. Microsoft Office 365. Major competitors in traditional domain registration services and web-hosting solutions are Endurance, Rightside, United Internet and Web.com. Website creation and management solutions are offered by Shopify, Squarespace, Wix and WordPress. Symantec and Rackspare are offering cloud infrastructure services and online security solutions. Rackspace entered into a US$4.3bn or US$32 per share transaction to become a private company again. Various funds managed by Apollo Global Management acquired the company. The deal will be closed in the fourth quarter. Security, however, is the cornerstone of web-hosting, especially since the emergence of cloud computing. In November 2016, Symantec acquired LifeLock for a total of US$2.3bn. LifeLock has more than 4.4m customers and offers identity-theft protection. Constant Contact, OpenTable, Yelp and Zillow are competing with GoDaddy in alternative web presence and marketing solutions. Providers of productivity tools and business-class emails, file-sharing systems and payments are also competing with the company. These are companies such as Dropbox, Intuit, Xero and Square.