What does the web hosting market look like in 2025?

We asked two specialists and managing directors from the industry about the developments in the hosting market in recent years and the projected developments in the coming years.

For this purpose, we interviewed Michael Schinzel (MS), Managing Director of IP-Projects GmbH & Co. KG and Oliver Werner (OW), Managing Director of netcup GmbH.

Good day, could you briefly introduce your company
OW: netcup is an Internet Service Provider based in Karlsruhe. Felix Preuß founded the sole proprietorship, which became netcup GmbH in 2008. Since 2016, netcup, under the management of Felix Preuß, Alexander Windbichler, and myself, has been part of the Anexia Group. We offer high-quality services related to the provision and support of web hosting accounts, domains, and servers. We cater to individuals as well as well-known companies. Our customers appreciate the wide range of products with high quality standards at fair prices.

MS: On 24.05.2007, I founded the IP-Projects sole proprietorship with around €1,500 in starting capital and €0 in monthly revenue. At that time, I wondered how the "big players" managed to generate millions in revenue with €2.50 products - while I only reached a handful of customers in the early days. Even back then, I had a very high demand for quality and reliability, which our customers still greatly appreciate to this day. Personal contact with a reliable partner, thanks to many recommendations, helped me in 2011 to take the next step and rebrand with a long-time business partner to IP-Projects GmbH & Co. KG. Since then, our company has been growing steadily. I believe this is mainly because we have remained true to ourselves. Healthy growth where quality and reliability are paramount is key, which is why we have not established a marketing or sales department to this day. Additionally, we are 100% owner-managed, so we have no sales pressure from investors, for example. We especially notice this in our employee satisfaction. We look forward to many more years in the market and to many more exciting projects with our customers.

Could you describe the development of your view of the hosting market over the past 5 years?
MS: Overall, it can be said that the market has changed. Whereas we used to rent out more low-budget servers in regular PC towers back then, the industry is becoming more professional today. Even for private customers, continuous availability has become increasingly important, and they are also willing to pay for it. I have images from back then when we, as an Internet Service Provider, rented a cage in a data centre and set up wooden shelves to rent out game servers with PC towers connected to a 100 Mbit/s uplink. That would be unthinkable in today's time. Nowadays, we rent out more high-availability servers with redundant power supplies in rack enclosures than low-budget servers.

OW: The hosting market is constantly and rapidly changing. The major cloud service providers shape how we work and what we offer, as they shape the market. However, this does not mean that smaller providers no longer have a place. On the contrary, we continue to see an increase in customers at netcup. The B2C market, the average person, is often overlooked. With netcup, we position ourselves and consciously say: state-of-the-art technology at fair prices should also be accessible to individuals.

The topic of cloud computing has been omnipresent for years. However, I cannot observe a decrease in demand for our products as a result - quite the opposite. The fewer providers of traditional hosting products there are in the market, the stronger the demand is for us - that's my personal impression. Many customers still prefer traditional dedicated servers and consciously choose against a cloud solution. There are not as many providers of traditional hosting products outside of the major players as there were 5 years ago.

How has the changed demand for hosting services specifically affected you?
MS: Naturally, one must always stay technologically up to date and be willing to rethink old technologies/methods/software solutions. We are constantly evolving – introducing new software solutions, enhancing monitoring to oversee more services, implementing a modern ticket system, etc. Over the years, new products have been added to our portfolio, creating new challenges. The professionalisation of our customers has also led us to reconsider our dependencies on service providers. We now assess and advise service providers and work on reducing dependencies. A significant step was the establishment of the data centre location FRA1 and the setup of our own AS in Frankfurt on 01/07/2020. This has allowed us to independently organise aspects such as our routing and carrier set without spending days discussing prices, carrier neutrality, or feasibility with a service provider. Thanks to this move, we have gained numerous new customers in a completely new segment for us in recent weeks.

OW: We mainly observe that demands are becoming increasingly international. A service provider like netcup is no longer perceived solely as a German or European provider. We receive inquiries from all over the world. Therefore, we are gradually expanding our international sector. Why are we seeing these inquiries from abroad? Because our services can certainly compete. This is not by chance: for years, we have been consistently investing in expanding and improving the hardware and software we use. In the Anexia Group, we clearly see the future here and dedicate our development efforts to better meet the requirements. This commitment pays off – with a steady increase in loyal customers.

What do you expect for the next 5-10 years? How will traditional hosting change?
OW: To keep up with the technological advancements shaping the market, hosting providers need the appropriate manpower in their R&D departments. I believe this need, in particular, will continue to drive further consolidations. However, even in 10 years, there will still be requests for dedicated servers from the B2C sector. We believe that the market will leave room for individuals who, while not always IT professionals, still want to know where their IT infrastructure, where their servers are located.

MS: I recently attended the SP-Summit in Frankfurt and discussed this topic with other participants. Many believe that in the coming years there will be a "turnaround" in this area, as most company migrations to the cloud have been completed and it is now being realised that this step was/will be more expensive than initially thought. Therefore, controllers in companies will now start to reconsider this step and in some cases move out of the cloud. We are already seeing this on a small scale – customers who switched to the cloud about a year ago are returning and renting a Dedicated Server again, as it has been found that the resources are simply much more expensive than anticipated. In my opinion, there will always be a coexistence. There are use cases where the cloud is very well suited, for example, when rapid and significant scaling is required but these resources are only needed temporarily for a few hours or days. However, if very few resources are needed and they are very consistent, traditional hosting is still the significantly cheaper option. Even with a single server, it is now possible to achieve extremely high availability. Looking at our specific growth in traditional hosting, it is still consistently increasing. However, due to the professionalisation of our customers, certification issues are becoming more and more important - especially regarding the data centre side. This will become an increasingly important issue in the future, and we are already noticing with some of our customers that we are winning tenders because our FRA1 location has more certifications than other locations. We are generally a "small business" compared to SMEs. When I look at our order situation and the long-term nature of our contracts, I believe that we will still be around in 5 years and will still be offering traditional servers in 5 years. At the end of the day, the foundation of the cloud is just technology – servers, switches, racks, data centres, ... the service does not come from a cloud. We already have customers who use us as a reliable partner for operating their own cloud platform. Therefore, I see us more as infrastructure service providers who, due to years of know-how, provide the technical basis for operating such solutions alongside our additional services.

As in previous years, the market for small hosting providers will definitely shrink. This is mainly due to market consolidations and technological advancements. To continue participating in the market, we ourselves have to invest a lot of money every year to be able to provide our customers with new technologies. I can imagine that many hosting providers will resign or cease operations.

Thank you all for the great interview!

The interview was conducted by Marco Keul - Operator of hosttest

Profiles

Name: Oliver Werner Position: Managing Director Company Type: GmbH Employees: netcup is part of the Anexia Group with nearly 300 employees. Nearly 50 people work for the netcup brand. Established Since: 2008 (GmbH foundation) Customer Base: nearly 100,000 Products Offered: VPS hosting, Dedicated Servers, Storage Servers, Web hosting, Domains, and more.	Name: Michael Schinzel Position: Managing Director Company Type: GmbH & Co. KG Employees: 6 2 Shareholders 3 Freelancers Established Since: 2013 Customer Base: approx. 4,000 active customers Products Offered: SP Services – Web hosting, Dedicated Servers, VPS hosting, Exchange, Domains, SSL Certificates, and more.

Photo: vodicka on Pixabay