Consolidation of the Web Hosting Industry in Singapore
Sunday, September 16th, 2007Rapid increases in datacentre prices and the lack of datacentre space (foreseeable till end of 2007) as well as the steep increases in electricity bills which are pass on to the web hosting companies made it increasing difficult for a typical web hosting company to survive in Singapore.
Taiwan earthquake and the resulting repairs resulted in increased prices of bandwidth also. The typical scenario of a Singapore Web Hosting company
1. Rivalry is strong among the companies, there are more than 200 companies doing web hosting in Singapore.
2. Suppliers’ power is strong, datacentre is few, less than 20. Datacentre space is scarce at this moment. ISPs are few, 2 main ISPs providing bandwidth.
3. Buyers are weak, this is the only bright spot. Buyers typically are individual or companies without monopoly powers.
4. Substitutes is plentiful for the lower end of the web hosting market, USA, UK web hosting are far cheaper than Singapore.
5. Barriers to entry are low, anyone can buy a server and a controlpanel and he is in web hosting business.
6. Barriers to exit are low, anyone can leave at anytime. That applies to the smaller web hosting companies. For the larger ones, they are bound by contracts to the datacentres as well as investments into equipment which would be worthless should they exit. But typically exit barriers are low.
There is only one bright spot in the analysis. Showing that Singapore web hosting business in general is a tough market to be in. Only the strongest survive.