Although demand will increase as the number of businesses and private investment grow slightly, purchasing costs are expected to remain stable.
Los Angeles, California (PRWEB) October 18, 2013
Web hosting services have a buyer power score of 3.9 out of 5. The higher the score, the better the negotiating conditions are for buyers. Overall, buyers have very strong negotiating power over suppliers because such services are commoditized, providers have diversified revenue streams and prices are relatively stable. “Web hosting services are in the mature stage of the product life cycle, which presents stability for buyers,” according to IBISWorld procurement analyst Andrew Yang. Although there are no real substitutes, web hosting services are commodities with very little specialization. With over 18,000 website hosting providers in the US market and low market concentration, buyers should have no difficulty finding a reliable supplier that can meet their web hosting needs.
Buyers also benefit from a relatively low risk market. “Many web hosting services providers are diversified companies with multiple revenue streams and low bankruptcy risks,” says Yang. However, medium supply chain risks reduce buyer power. Web hosting service providers require a steady supply of computer servers to host websites. If they are not able to obtain servers or if server prices increase, web hosting services may have price shocks and disruptions in service. Major suppliers include Rackspace US Inc., Endurances International Group Inc., GoDaddy.com and Web.com Group Inc.
Prices have remained stable from 2010 to 2013, which is favorable for buyers, as they do not have to worry about rising prices and can better budget and plan for web hosting costs. They can also better compare prices across suppliers. In the three years to 2016, an improving economy will accelerate demand for web hosting services. The number of businesses, which remained stagnant from 2010 to 2013, will increase in the next three years. Private investment in computers and software is also expected to grow significantly. As a result, IBISWorld forecasts modest increases in prices in the three years to 2016. Although low provider profitability presents difficulties for obtaining lower prices, buyers can mitigate the effects of rising prices by negotiating long-term contracts with fixed prices. Buyers can also negotiate deals where additional services, such internet marketing or web design, are included with the purchase of web hosting services.
For more information, visit IBISWorld’s Web Hosting Services procurement research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of web hosting services. Web hosting services provide remote servers and software that enable websites to be shared online. This report focuses on dedicated website hosting, which businesses use, and excludes shared hosting, which individuals and very small businesses use. Dedicated web hosting services, or web hosting services with dedicated servers, allow for application and video use, as well as higher traffic volumes and more consistent performance than shared hosting services. This report excludes domain name sales, website design and other website and internet services.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.