Yankee Group Says Managed Services to Dominate Hosting Market

Managed services are in and co-location is out, says a new report by technology research firm Yankee Group.

In its latest analysis of the hosting market, Yankee Group predicts vendors will now differentiate themselves by specialty, resulting in an industry that no longer competes on communication transport and real estate, but rather on management services.

"Hosting has performed strongly for the past several years due to physical under capacity. Today there is enough physical capacity, but a strong under capacity in services," said Andy Efstathiou, a program manager in the Yankee Group's E-Sourcing Strategies research and consulting practice said in a statement. "Ultimately, we believe that successful hosting providers will be focused on managed hosting services, not physical plant."

As a result, Yankee Group believes 2001 will be far harsher on lackluster business models in the hosting marketplace than were previous years. "The market will react much more harshly on ill-considered initiatives, and therefore the cost of not getting it right will be higher in 2001, and the benefits for getting it right will be higher as well," said Efstathiou.

The Report, called Managed Hosting Centers: Focus on Service, Not Space, discusses what managed hosting offerings will succeed in the marketplace in the years ahead, and is available immediately from the Yankee Group's E-Sourcing Strategies research and consulting practice.

For more information, visit www.yankeegroup.com.