"Why is Amazon Web Services partnering with NaviSite?"

Because the folks at NaviSite know an opportunity when they see it.

1. I read about NaviSite's S3/EC2 monitoring service in Amazon's developer newsletter. Priced at $20 per instance per month, the solution offers a web interface (Flash demo) where you can manage the capacity and monitor the performance of your S3/EC2-hosted infrastructure.

At first I wondered why NaviSite, which normally offers managed hosting to large enterprises, would launch such a low cost service. But if you think about it, the revenue this initiative generates is irrelevant. It has already allowed NaviSite to reach the 265,000+ members of Amazon's developer community. And it will give those who sign up ongoing exposure to NaviSite's customer portal, making them much more likely to provision other NaviSite services through the same interface.

2. A few months ago I had the opportunity to speak with PlanetWide Media CTO Ralph Seibert, whose online comic book creator takes advantage of a wide range of available technologies. He uses VMWare for internal development/testing, a virtual private data center at LayeredTech for primary hosting, Limelight for ad delivery, and Amazon S3 for storage.

Plenty of other companies - including Rackspace customers Webmail.us and Smartsheet - operate blended infrastructures that include S3 storage.

3. In an interview last October, The Planet CEO Doug Erwin said his goal is to win his fair share of every customer's outsourcing dollars - in his terms his fair share being 100%. Many other web hosting execs I know feel the same way.

But NaviSite is pioneering a future in which web hosting success will be defined by a vendor's ability to design/assemble/manage solutions that combine internal and external building blocks - rather than its determination to keep customers under its own roof.

4. In other words, web hosting providers should start thinking like Amazon Webstore owners, who have the ability to sell other merchants' products alongside their own. While you might have set up shop to promote merchandise in your warehouse, there's no reason not to give other items shelf space if they are marketable and profitable?

Comments

[Merlin83b]

Steve Grushcow of edit.com touched on this subject in his HostingCon session, albeit in terms of a collection of services web hosts can resell to their customers - in effect promoting companies such as NaviSite that offer add on services that hosts might not want to take time to provide themselves.

[Isabel Wang]

And why not take the time?? When large numbers of web hosts resell the same collection of services, such add-ons will quickly become commoditized through price competition.

BTW, if you take a look at the average web hosting plan, it already contains more features than any web hosting company can effectively support. If you ask any sales or support person, they most likely would not be familiar with every single item on the list. More importantly, they wouldn't know how/why/by whom each tool tends to be used.

I don't think the goal is to stock the most products. As with Amazon's WebStore, the key is to understand customers' purchasing behavior and recommend combinations accordingly. In other words, maybe web hosts should consider layering Amazon-like business intelligence collection/personalization functionalities atop their add-on services?

[Merlin83b]

I believe Steve's session was mainly aimed at smaller hosts who may not have the resources to do everything themselves. He presented (in the form of a handout) a bewildering array of products that could be resold, each offering a cut to the host for recommending them.

As for hosts not being able to support what's on offer, perhaps they should train their staff better, or have specialist teams able to support different feature sets. Either way round the customer gets the support they need.

Offering the right products to each customer is simply a CRM issue; a matter of knowing who your customers are.

[Isabel Wang]

I've probably asked hundreds of web hosting CEOs who their customers are. The most common answer? "People who need web hosting"! Followed by fuzzy labels like "SMBs", "developers" and "large enterprises".

At the same time, the topic that comes up over and over again at any web hosting gathering is the importance of getting to know one's customers.

So it seems the CRM issue isn't all that simple. So many people say it's a priority, but so few do anything about it.

[Merlin83b]

I considered putting a ;) next to the simply CRM sentence.

In this case it might be a case of needing to know individual customers, I guess by employing competent account managers. Budget hosting, in my opinion, doesn't have enough of a margin to emply those.

I agree with the point of the post, though!

[Isabel Wang]

Instead of account managers, Amazon has auto-recommendation software. It's supposedly responsible for 30% of Amazon's ecommerce revenue. I think web hosting companies need to develop automated solutions too.

[James Urquhart]

From my blog (linked from my name above):

"1. NaviSite is providing an interesting service here, and one I think will need to evolve to an automation model eventually. Today it looks like your same old monitoring-only "management" environment, but with a few interesting hooks who knows.

2. I love the PlanetWide Media story only because it is one of the first example of "Web 2.0" infrastructure mashup that I've seen. Why not Web 3.0? Because I would bet right now that Planet Media is economically locked in to LayeredTech for the foreseeable future.

3. Hmmm. Perhaps the future goes so far as to divide mindshare into recombinable building blocks. (OK, sorry, the BS meter pegged on that one...)

4. Isabel wraps up with a comment about the long tail of computing itself, which I believe is the real next revolution in IT that will drive new businesses and perhaps even industries. I believe Nicholas Carr agrees, but we shall have to wait an see."

[Isabel Wang]

Oops - your blog URL didn't make it somehow:

http://servicelevelautomation.blogspot.com/

Dividing mindshare into recombinable building blocks? I'm not sure how that works, but it sounds like fun :)

I agree that PlanetWide's infrastructure is not yet Web 3.0 because resource usage isn't auto-magically optimized without human interference. Ideally, applications should know which types of data to send to LayeredTech, S3, Limelight, etc. based on cost/performance parameters you provide.

[Merlin83b]

Auto recommendation would be excellent, and is something we do to a certain extent. Try telling that to Rackspace with their army of BDCs, though. At least from the outside, Rackspace seems pretty successfuly and have fairly obviously got the mix just about right.

[Isabel Wang]

I used to be a RackSpace customer and I had a great experience with them. They've accomplished the amazing feat of recruiting/retaining 1,300 employees with the right expertise - and they plan to do so with 4,000 more. 4,000 is a lot of people!!

So the question is, will anyone be able to catch up with Rackspace by duplicating their process? Or will tomorrow's Rackspace (who might be the folks in San Antonio - or someone else) be a company that offers "SLAutos" instead of "SLAs" by automating everything from business intelligence to CRM to infrastructure delivery...

It's a matter of man vs machine:

http://www.isabelwang.com/2007/08/man-vs-machine-.html