US hosting industry will pull in $9.3b in 2004
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Revenue from the US hosting market, a primary engine for the new economy, is likely to reach $2.8 billion this year – and an astonishing $9.3 billion in 2004.

Hosting touches both the traditional retail market and a new, fast-growing wholesale market. It is defined as the provision of data center facilities, bandwidth, compute and storage capacity, with some administrative and management services.

“Hosting provides an external infrastructure that can serve as the foundation for a supply chain of services. End-users can use hosting services directly, or they can buy them from a service provider supported by the hosting company,” said Bruce Caldwell, senior analyst for Gartner Dataquest.

In 1999, US hosting represented six per cent of the $34.5 billion US management services market. By 2004, it will account for 13% of a $69.2 billion market.

The wholesale market is driven by application service providers that want to focus on their core competencies by partnering with a hosting service. The retail segment is driven by a demand among end-users for scalable bandwidth, compute and storage capacity for new and legacy application management.

Caldwell said that the wholesale and retail markets are benefiting from a surge in startup companies and spin-offs, as well as from small and midsize enterprises that are taking advantage of more affordable IT services based on hosting.

Analysts recommend that full service outsourcers, telcos, hosting companies and other vendors should join forces to forge the infrastructure of IT outsourcing services together, and allow each to invest in and develop their core competencies.

Greater detail is available in the Gartner Dataquest perspective, ‘US Hosting Market: Preliminary Forecast’. It looks at the future for hosting service in the United States and explores the various combinations that telcos, hosting companies, IT outsourcers and others are forming to pursue the emerging market.

Gartner, founded in 1979 and headquartered in Stamford, Connecticut, has 4,300 associates in 80 locations worldwide.



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