According to a report by International Data Corporation (IDC), IBM (www.ibm.com) has acknowledged the web hosting market as a key area of concentration in its efforts to increase revenue growth as the company expands its leading role in the medium-sized business market for hosting services. The IDC reports states that IBM’s share of the web hosting market grew to 24.8 percent in 2003, up form 23.5 percent in 2002 and 15 percent in 2000. In addition, IBM’s hosting business has grown at a compound rate of nearly 20 percent in the past three years. In the last quarter, the company’s hosting business grew by 30 percent compared to the same quarter of the previous year.
The report notes that IBM’s web hosting revenue in 2003 was $1.37 billion, which is more than the combined revenue of the next five largest web hosting providers. Larger part of the company’s growth is attributed to existing customers turning over more management of their technical operations to IBM. The company’s existing base of outsourcing customers gives it the opportunity to spend less on marketing than its competitors in its efforts to attract customers. According to IDC, many of IBM’s largest hosting competitors such as Cable & Wireless, MCI and Verio lost market share, while others such as AT&T and Equinix registered market share growth.
