The future looks bright for Web hosting. "We're projecting growth in that area from about $1.4 billion at the end of 1999 to $19.8 billion in 2004," says Forrester senior analyst Jeanne Schaaf. "It's a huge opportunity."
But is this a good opportunity for start-ups? "It's not for someone who knows nothing about Web hosting, Web architecture, Web servers and networks," says Schaaf. "This is a high-tech business that's going to demand high-tech skills."
In other words, contrary to popular opinion, it's not as easy as throwing a bunch of servers in a room and expecting the company to run itself.
Don Fredrickson, co-owner and CEO of ISP got.net, brings in about $1 million in annual sales. He plans to expand his Web hosting activities from its current level of 15 percent of his business, to as much as 70 percent of his business over the next four years. Fredrickson says that while high-profile and enterprise-level clients are flocking to data centers that charge between $5,000 and $10,000 per month for 24/7 hosting service, many smaller businesses are looking for a less costly, but still trustworthy, alternative. Fredrickson, for example, charges about $20 per month for his basic hosting service, and $300 a month for co-locating a company's server in got.net's facility.
Fredrickson adds that entrepreneurs will be especially successful if they have an area of expertise. "People looking for hosting will start coming to you," he says, "because you'll build up a reputation in that area."