SMBs Look to Hosting Companies for Cloud Computing Services

AMI Partners Report: 

According to AMI Partners (, hosting companies — pure-plays, telcos and MSOs — will provide nearly half of the cloud services purchased by U.S. small and midsize business.  The firm predicts SMBs will have invested a total of $34 billion in the cloud by the end of the year. According to the report, hosting providers such as telecom firms, MSOs and pure-plays are uniquely suited to handle the high level of customer service demanded by SMBs because of their long history of providing Web access solutions to the sector.

“A key reason that hosters are becoming a leading cloud channel for SMBs is because they have proven they can effectively handle critical infrastructure, while providing the necessary level of support,” said Monik Sheth, research analyst at AMI-Partners. “Poor service can be an immediate deal breaker for any company, and SMBs are no different.”

AMI Partners is including telecommunications providers (telcos and cable companies) in the “hosters” category is because many of the solutions offerings are beginning to overlap, especially around IaaS and related cloud offerings, Sheth told Channel Partners. “Telecom firms are making strategic plays in the hosting space, as you can see for example by M&A activity among major telecoms in the U.S. (e.g..Verizon acquiring Terremark and Time Warner Cable acquiring NaviSite),” he said.

SMB cloud services spend includes investments in IaaS, SaaS, web hosting, UC and remotely managed IT services. Two areas where AMI Partners found  SMBs see clear benefits, and are aggressively moving to the cloud, are hosted infrastructure, such as servers and storage, and remote management of IT systems and related applications. That’s because SMBs have very limited, if any, internal staff dedicated to managing technology, so deploying these solutions in the cloud, with the support of a trusted provider, is quickly becoming the norm, the research firm explained.



We see Savvis-Century Link and Terremark-Verizon as the telco leaders in providing cloud services to SMBs.  Of course, that’s why Century Link and Verizon acquired those two formerly independent companies!  It remains to be seen what competive telcos will do in the cloud space. Those include: TW Telecom, Level 3 Communications, AboveNet, XO Communications, Windstream, and Globe Telecom (amongst others).

Meanwhile, MSOs (multiple system operators)  are becoming a bigger threat to telcos in the business end services and wholesale market,  as more SMBs and wireless operators (e.g VZW) look for alternative providers to meet their needs.  We see Comcast Business as particularly strong in Carrier Ethernet and VoIP to SMB, but they haven’t announced anything definitive for cloud computing.

Perhaps, it takes web hosting and IT service management expertise that’s beyond the reach of most telco’s and MSOs.

What’s your opinion?