Hosting market heats up: Smartyhost challenges Melbourne-IT

Stuart Corner
Tuesday, 28 August 2007 02:06

IT Industry - Market

Melbourne-based Web hosting provider Smartyhost is claiming 40,000 customers and says it will be Australia's largest provider of web hosting services by the end of 2007.

The company said it expects customer numbers to surpass the 50,000 mark by Christmas, underpinned by strong growth in its shared and dedicated hosting business units, and its new virtual infrastructure business, Vigabyte. It claims that its new pricing packages are under-cutting those of its rivals and that it can afford to offer lower prices because its network is built on low-cost open source software, rather than Windows.

Smartyhost's latest offering, 'The 40 Buck Website', provides a domain name, website building tools and templates and 20MB of hosting services for $40 a year.

Smartyhost managing director and founder, Anoosh Manzoori, said the company was also eyeing a number of possible acquisitions but expected to pass the 50,000 customer mark without these.

Earlier this year Smartyhost secured a $2 million investment from Melbourne investor Daniel Besen, which has substantial investments in shopping centres and property and which has also invested in online employment agency Seek and Internet audience measurement firm Hitwise. "We are examining a potential listing on the Australian Stock Exchange in the next two years," Manzoori said.

As a private company Smartyhost does not disclose revenues, but with its focus on the SME market it is unlikely that its hosting revenue will exceed that of Melbourne IT which in 2006 acquired Australia's largest hosting provider, WebCentral.

It is no longer easy to get a handle on the size of the Melbourne IT/WebCentral hosting business as this is now part of Melbourne IT's overall operations. In its annual results for its last year as an independent entity (2005) WebCentral claimed to host 25 percent of Australian web sites and to have 25 percent of the SME hosting market ($500 to $4000 per year), 16 percent of the corporate and government market ( $25,000 to $1 million plus per year) and an unspecified share of the wholesale hosting market with revenue per customer in excess of $1 million.