VPS Market Ripe for Disruption?

Are Amazon Web Services and other cloud computing providers preparing to capture market share from hosting companies' virtual private server (VPS) products?

Rich Miller

July 1, 2009

2 Min Read
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I sometimes grow weary of the prognostications of some cloud enthusiasts who insist that cloud computing will "put the data center out of business." All the applications and data in the cloud today reside on servers housed in data centers. Every cloud app to come will live in a data center somewhere.

That's not to say that cloud computing won't impact the data center business. It will drive a gradual shift in who runs the facilities that host some of your apps and data. Data center infrastructure will continue to evolve - a process that predated the emergence of cloud computing - influencing which data centers become obsolete and what kind of new facilities are built.

Having said that, the growing interest in cloud computing has business implications for subsets of data center users and businesses. That includes the web hosting industry in general, and one hosting product in particular, according to Randy Bias at Cloudscaling.

"There is an imminent threat to hosting companies of any kind that provide VPS services today," Randy writes, referring to virtual private servers. "Larger clouds, including the AWS behemoth and Rackspace, are already launching and preparing to launch price competitive services to capture the VPS market. The threat is serious in that not only do these clouds provide value based on pricing, but they also provide the traditional values of cloud computing around self-service."

Virtual private servers are hosting accounts that run inside a virtual machine (VM) on a hosting company's server. VPS accounts offer more resources and security than a shared hosting account, but less than a dedicated server. Hosting companies can run multiple VMs on a server, with each housing a customer account.

Conceptually, it's a short hop from a VM on a hosting provider's server to an instance on a cloud platform. As such, the VPS market may be an early indicator of whether customers can get comfortable with cloud computing.

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