Ike.ninja

Is it possible to estimate the revenue of a hosting company based on its public presence — that is, is the number of websites it hosts directly proportional to its market value? By using the market capitalisation (or acquisition purchase price, where appropriate) as a valuation and examining the number of web-facing computers, a striking patterns emerges.

Valuation of a hosting company against the number of web-facing computers found in August 2013.
Blue = “pure” hosting company; Orange = significant other areas of business. The dashed line is based only on pure hosting companies.
†Go Daddy’s valuation is based on its 2011 buyout offer, adjusted for growth in web-facing computers and for inflation.

Amongst the hosting companies examined, there is a fairly strong correlation between the number of web-facing computers and the valuation of the hosting company: the more computers visible at a hosting company, the higher the valuation. Considering only pure hosting companies (without significant other business, marked in blue), the average value per web-facing computer is circa $43,000.

An average company value per web-facing computer on the order of tens of thousands of dollars may seem surprisingly high, but there is, of course, more to it than the cost of a single computer. The number of web-facing computers does not take into account the potentially large number of computers used behind the scenes, which may vary from hosting company to hosting company depending on business model — there are likely to be fewer hidden computers at a shared hosting provider than at a cloud hosting provider.

Even with the same number of web-facing computers, the valuation of a hosting company can vary due to the quality of the physical hardware, the network infrastructure, and also sales and support staff. Most important is the current and future revenue, and hence profit, that each web-facing computer can generate.

This average value per web-facing computer masks a great deal of variation between hosting companies:

Value (USD) per web-facing computer. Companies marked with a * have significant other areas of business.

Comparing two competitors in the managed hosting market, Rackspace and Peer1, highlights a significant difference in the valuation based on web-facing computers. Each web-facing computer at Rackspace is valued at twice as much as one at Peer1; perhaps this reflects the value of Fanatical Support and the flexibility of Rackspace’s OpenStack-based cloud.

Go Daddy’s valuation of $4.1bn is based on a deal in 2011 (adjusted for both inflation and computer growth), which reportedly amounted to $2.25bn for 65% of the company. This valuation is greater than expected from the number of computers at Go Daddy, but this difference could be explained by its equally prominent role as the largest ICANN-accredited domain name registrar.

SoftLayer is in the process of being acquired by IBM, who say the acquisition will strengthen their leadership position in cloud computing and help speed business adoption of public and private cloud solutions. Financial terms were not disclosed, but the deal is speculated to be worth more than $2bn.

The correlation between computers and market value can be used not only to estimate the value of private companies which have never been sold before, but also to estimate the value of the hosting divisions within much larger companies, such as Amazon.

Amazon’s market capital stands at around $131bn today, but the majority of its revenue comes from online retailing. A valuation based on computer counting would suggest that its hosting division, Amazon Web Services, could be worth approximately $7.8bn, around 6% of Amazon’s entire market value. Based on its Q2 2013 earnings report, Amazon’s AWS division (within the Other category) accounted for 5.7% of its total revenue between 1st April and 30th June 2013.

Netcraft has developed a technique for identifying the number of computers (rather than IP addresses) acting as web servers on the Internet, providing an independent view with a consistent methodology on the number of web-facing computers at each hosting location worldwide. For more information, see our Hosting Provider Server Count.

The following issues have been fixed:

[-] (Linux only) Customers could receive the “Mail Not Delivered” messages even if their email was delivered successfully. (119925)
[-] (Linux only) The virus definitions of Parallels Premium Antivirus by Dr. Web were not updated if the default trial license key was used. (139833)
[-] (Linux only) After Panel was upgraded from version 11.0, PHP scripts could no longer be processed by nginx if SELinux was turned on. The following error was recorded in /var/log/php-fpm/error.log: “php-fpm.sock failed (13: Permission denied)”. (140941) [-] (Linux only) In some cases, Panel did not validate DNS record conflicts if CNAME records were manually modified. The DNS server failed to start. (141147)
[-] (Linux only) The RoundCube webmail was not working due to various errors (PHP errors, memory exhaustion, and so on) if certain classes or functions such as ini_get were disabled in the server-wide php.ini file. (141201)
[-] (Linux only) After upgrading Plesk from version 9.5, customers could no longer back up domains that had subdomains. The following error occurred: “Cannot savedir: Permission denied”. (141214)
[-] (Linux only) The subscription command-line utility could not change the PHP handler for websites. (141238)
[-] (Linux only) Subscriptions could not be synchronized with a service plan if the plan was created using command-line utilities and access to shell was not allowed or was set to chroot. (141254)
[-] (Linux only) The allow and deny access directives of Apache .htaccess worked incorrectly if a reverse proxy in nginx was enabled. (141265)
[-] (Linux only) If Panel was installed without updates, and updates were installed afterwards, email messages could not be sent. The following error occurred: “Warning: the Postfix sendmail command must be installed without set-uid root file permissions”. (141283)
[-] (Linux only) Administrators were unable to turn off the nginx reverse proxy. The following error occurred: “Service /etc/init.d/nginx failed to stop”. (141297)
[-] (Linux only) Customers could not disable DomainKeys email signing on domains after it had been enabled. (141316)
[-] The help page of the dns command-line utility was not localized. (141368)
[-] The help page of the server_dns command-line utility contained errors. (141374)
[-] Backing up to external FTP repositories did not work properly. (141100 and 141338)
[-] Updating of reseller service plans via API-RPC could result in the following error: “PHP Fatal error: Call to undefined method”. (141439)
[-] After upgrading from Plesk 9 it was impossible to remove email accounts with mail forwarding. The following error occurred: “PHP Fatal error: Call to undefined method”. (141453)
[-] Customers could use webmail on their domains even if the domains were suspended. (84187)
[-] (Linux only) Qmail did not accept email messages sent to mailing lists on domain aliases. The following error occurred: “550 sorry, no mailbox here by that name. (#5.7.17)”. (107619)
[-] (Linux only) Panel failed to migrate the Mailman data and settings if the default locale of the source server was German. (133147)
[-] Panel failed to migrate mail relay settings from Plesk 9.x with the error “Unable to set relaying type”. (140277)
[-] (Linux only) Panel failed to migrate databases that use latin-1 character set. In the migrated databases, non-ASCII characters were replaced with question marks. (141027)
[-] Panel did not pass database user passwords to event handlers. (141261)
[-] (Linux only) When administrators executed the statistics utility for a single domain, Panel removed FTP log records for other domains. (141378)
[-] Email notifications about resource overuse that were sent on behalf of the administrator contained wrong sender email addresses. (141380)
[-] Administrators had to complete the post-install configuration of Panel before they could use the server_dns command-line utility. (141502)
[-] Security improvements. (141537)
[-] (Linux only) Kaspersky Antivirus could not be switched on via the API-RPC. (141491)
[-] (Linux only) Message submission did not work after installing updates on Panel 11.5.30. (141740)
[-] (Windows only) Domains could not be migrated from Plesk 9 if mail accounts on source servers had a password containing a quotation mark (“) (141054)
[-] (Windows only) AWStats statistics processed log files very slowly because of excessive DNS lookups. (137500)
[-] (Windows only) IP addresses that were no longer used could not be removed from the server IP pool. The following error occurred: “The IP address x.x.x.x is already used for hosting”. (141139)
[-] (Windows only) Panel did not include some DNS records from the server-wide DNS template into DNS zones of newly created domains. (132577)
[-] (Windows only) Users were unable to log in to Control Panel from Customer & Business Manager by clicking Business Operations > Subscriptions > <subscription name> > Log In. They encountered the following error: “Internal error: SQLSTATE[42S22]: Column not found: 1054 Unknown column ‘externalId’ in ‘where clause’.” (141454)
[-] (Windows only) Users were unable to import database backups through phpMyAdmin. (141524)