HostingCon 2011 Keynote delivered by Antonio Piraino, VP of Research for Tier1 Research

1. Are you ready for Hosting 3.0? Antonio Piraino Vice President, Tier1Research

2. Tech Bubble 2.0? “Facebook reached 750m users; 7 billion pieces of content shared on the site weekly Facebook was linked to over 100,000 crimes in the UK “Apple’s15bn app store downloads is growing 9 times faster than Macdonald’s”(A.Love) Apple Embroiled in Patent violations with HTC and Samsung “Google Android 550,000 a day, 160m Chrome users, $37bn cash, $200bn market cap” FTC/EU is investigating Google for possible antitrust violations Google retiring Google Health online personal health records “Twitter's July membership increased 50,000 per day with 95 million tweets a day” IOC warns athletes out of the London Olympics if they over-step Twitter and Facebook “LinkedIn added up to $102/share with $470m revenue and over 100m users” Competition with Zynga, and being sunk by Spam Facebook, Groupon, Zynga, LivingSocial, Twitter, LinkedIn, Pandora ($3bMarket Cap = 16x Revenue), Zillow: $3.5 billion revenue; $200bn Market Cap. Demand Media Enterprise Value/EBIDTA: 18-19x ($1bn Market Cap) Copyright/Trademark infringement issues detracted from market cap <$1bn Do Not Confuse with Cloud 2.0 or Hosting 3.0!

3. Hosting Evolution Phase 1 Phase 2 Phase 3 Courtesy of onvirtualization.com

4. Cloud Computing: Market Separation Public to Enterprise

5. Hosting 3.0 What Changed? The Opportunity Challenges Hosters will Face What can you do? Where to next?

6. ChangeWave U.S. IT Spending Indicator –Net Score August 2006 – July 2011 6

7. ChangeWave U.S. IT Spending Indicatorvs. S&P 500 August 2006 – July 2011 7

8. Impact on SMB Budget

9. Economic Impact

10. What’s changed in the business Psyche? Consumerization of IT Era

11. Enterprise Capital Budgets

12. Hosting 3.0 What Changed? The Opportunity Challenges Hosters will face What Can you do? Where to next?

13. Courtesy: Jack of all Clouds/Cloudkick The Distribution Shift Number of sites in samples

14. The IaaS Opportunity Cost CAGR 70% IaaS Revenue Estimates Revenue $USM Source: Tier1 Research/The 451 Group

15. Which format of Cloud?

16. Aggregate Cloud ‘As a Service’ Market CAGR ~25%

17. Growth in the Rest of the Market

18. Revenue growth – Shared hosting Shared Hosting Revenue 2009-2013 Shared hosting revenue has been growing at 7-9% per year

19. Revenue growth – Dedicated hosting Dedicated Hosting Revenue 2009-2013 Dedicated hosting revenue has been growing at around 5% per year

20. Internet Infrastructure Revenue Mix

21. Revenue growth – Managed hosting Managed Hosting Revenue 2009-2013 Managed hosting revenue has been growing at around 20% per year

22. Top Apps driving cloud computing Cloud Computing: Top 5 Areas that Companies Currently Support Applications Running on Public Cloud Computing Services. Current Share - Jul 2011

23. Hosting 3.0 What Changed? The Opportunity Challenges Hosters will face What Can you do? Where to next?

24. Threats to your Hosting Business New Entrants & Rivals Legacy Processes: slow, laborious, manual Spending more to be more efficient SEO suboptimization Commoditization Trusting your vendor Lack of Cross/Upsell Lack of Stickiness Cultural Change Time and Timing Where to start in the Cloud game Price Wars in Cloud Era Perceptions around cloud Getting it wrong

26. “Google launches new Page Speed Service (on top of SPDY): for Google Sites, Picassa, AppEngine, Apps” (July 2011)

27. “Businesses with Microsoft Volume License can run existing Windows Server application licenses on Amazon EC2” (July 2011)

28. “Apple has added volume purchasing to its App Store in a bid to entice the enterprise segment: B2B apps for $9.99.” (July ‘11)

30. Perception wrt Security

33. Hosting 3.0 What Changed? The Opportunity Challenges Hosters will face What Can you do? Where to next?

34. Options Virtualize & Automate Parallels, Citrix, VMware, HyperV, ISP System, etc IaaS stack in a box (plumbing) Cloud.com, Onapp, Flexient, Eucalyptus, Canonical PaaS in a box Hexagrid, Joyent, Opsource, Morphlabs, Elasticstack Don’t forget to focus on Management and Control Sciencelogic, Nimsoft (CA), BMC .. and on Security, reliability and assurances to Customers Means SLAs and more high touch involvement Don’t get into the habit of price wars – you can’t afford it!

35. Ultimately a decision needs to be made Partner, build, be acquired, change shape, compete ?

36. Venture Capital Expectations % of VCs who expect investments to increase in 2011 in companies related to: Source: National Venture Capital Association Survey, results Dec 2010

37. Hosting 3.0 What Changed? The Opportunity Challenges Hosters will face What Can you do? Where to next?

38. The next phase of cloud computing http://www.cloudgirlfriend.com/

39. Framing the Consolidation Other (MSPs, VARs, Social media) Telecom Providers Hosting Providers ISVs Systems integrators Global Regional National

40. SaaS/Apps Marketplace Opportunity Cloud Value Web Conferencing E-Learning Team Collaboration Test and Development SMB - ERP CRM/SFA HCM Procurement* SCE-TMS Email CRM/Marketing Automation CRM – Call Center SMB Complex Loosely Coupled SCP Manufacturing And Operations Software EAM FMS Time 2010 -2006 2011 -2012+

42. Not a fad… This is Next-Gen Business

43. Questions? Antonio Piraino Vice President, Tier1 Research www.tier1research.com