Application Hosting Market

Application Hosting Market by Hosting Type (Managed, Cloud, & Colocation), Service Type (API Management, Database Administration, Backup & Recovery, Application Security), Application Type, Organization Size, Vertical, and Region - Global Forecast to 2022

Report Code: TC 6087 Mar, 2018, by marketsandmarkets.com

[126 Pages Report] The application hosting market accounted for USD 36.91 billion in 2016 and is projected to reach USD 72.50 billion by 2022, at a Compound Annual Growth Rate (CAGR) of 12.2% during the forecast period. The base year considered for the study is 2016, and the forecast period considered is 2017–2022. The availability of comprehensive hosting solutions with an array of complementing services over the core offering, and the software-centered competitive advantage approach is expected to drive the market.

Application Hosting Market

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The mobile-based application type segment is expected to grow at the highest CAGR during the forecast period

The mobile-based application type is expected to grow at a faster rate, due to the increasing adoption and deployment of applications in the mobile environment. The rising number of smartphones across the globe has compelled organizations to invest in mobile applications. Mobile applications are now one of the main components of enterprises’ growth strategy. Furthermore, mobile applications in various industries, such as banking and eCommerce, help increase the sales of products and also enhance customer services. These applications require high security and maximum uptime. Therefore, companies are investing heavily in application hosting services.

The large enterprise segment is expected to have a larger market size during the forecast period

The large enterprises segment is expected to have the larger market size during the forecast period. Large enterprises are highly focused on data security and data security compliances. Therefore, they are investing heavily in securing the external hosting infrastructure and associated services. They are also deploying various customer-centric and business-centric applications to gain a competitive advantage over the other market players.

The Banking, Financial Services, and Insurance (BFSI) vertical is expected to have a larger market size during the forecast period

The BFSI vertical is estimated to have the largest market share in 2017, due to the adoption of omnichannel business models. Moreover, enterprises in the BFSI vertical are expanding their service offerings across various delivery channels, such as internet banking and mobile banking. To ensure seamless functioning of mobile and web applications, banks need 100% uptime along with high data security. For this, they are partnering with some of the leading hosting service providers to transfer their workload to the cloud environment.

Application Hosting Market

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Asia Pacific is expected to grow at the highest CAGR during the forecast period

Among the regions, Asia Pacific (APAC) is expected to grow at the highest CAGR during the forecast period. The major countries that are expected to witness high growth rates in the APAC region include India, Japan, China, Australia, and the rest of the Association of Southeast Asian Nations (ASEAN) countries. Enterprises in this region are rapidly adopting new digital technologies in their business ecosystem. Furthermore, this region has a well-developed cloud infrastructure. Competitive pricing with a list of delivery models and myriad websites is likely to drive the growth of the application hosting market in APAC

Application Hosting Market Dynamics

Driver: Software-centered competitive advantage approach is gaining industry agnostic acceptance

Software applications have the capability of providing a distinct identity to any product or service. Today, companies of all sizes and industries have a unique core application that contributes to their business success. Application hosting vendors provide an environment for building applications, making it easy for businesses to get their applications up and running. Depending upon the type of solution, a whole range of processes and responsibilities can be delegated to the hosting vendors. Application hosting has transformed the way traditional Independent Software Vendors (ISVs) used to produce, deploy, and sell their software offerings. The SaaS industry is thriving on the support offered by the application hosting technology. An array of business process automation tools, such as Human Resource (HR) or sales software, is SaaS solutions. These applications help organizations organize and automate their business processes. For instance, enterprises are increasingly implementing applications, such as Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM), to reinvent their business process management capabilities. ERP enables organizations to integrate business processes, such as HR, finance, supply chain, procurement, and manufacturing, into a system. It empowers executives to make data-driven decisions in real time. It facilitates organizational governance by ensuring compliance and reducing risks. Technological disruptions across industries are creating inter-dependencies, thereby creating business use cases that did not exist a few years ago. Hybrid products such as connected cars and smart meters have dependencies on various industries. This has made software applications even more vital to act as a bridge between processes and implementations. Critical applications performing tasks such as predicting optimal route or utility consumption pattern are an essential part of revenue streams. Companies utilize hosting services to build and operate a central business software, which can be used by internal or external stakeholders.

Restraint: Security and privacy concerns acting as an inhibitor to organizational change

Application hosting has transformed the way companies process data and applications. However, hosting, more specifically in the realm of cloud computing, has introduced a host of new security threats. With the volume of data going up on the cloud, particularly deployed as public cloud services, the list of security issues keeps on increasing. Despite the implementation of thoroughly thought out measures on the part of organizations and hosting vendors, errors can easily make the system vulnerable to attacks. Moreover, there are privacy issues regarding hosting applications for different companies within an industry.

Security threats faced by companies range from data breaches and losses to account hijacking and masquerading legitimate user to circumventing policies and denial of service. Despite tall claims by vendors regarding the security of their offerings, an administrative error or a successful encryption breach by a hacker remains a possibility. In a multitenant environment, different businesses that share the same data center would be at risk. Executives need to carefully examine the services they are opting for the business to minimize the number of risks. Poorly secured services can lead to malicious attacks on the company.

Opportunity: Steady expansion of cloud computing creating new growth areas, augmenting the offerings and micro-differentiating the vendors

The growth in the cloud computing market has been exponential. According to Cisco, the global data center Internet Protocol (IP) traffic is expected to grow 3-fold over the next 5 years, growing at a CAGR of 25% from 2016 to 2021. The annual global data center IP traffic is expected to reach 20.6 Zettabytes (ZB) (1.7 ZB per month) by the end of 2021, up from 6.8 ZB per year (568 exabytes [EB] per month) in 2016. By 2021, 94% of workloads and compute instances would be processed by cloud data centers, 75% of which will be SaaS and 6% will be processed by traditional data centers. The PaaS and IaaS hosting models are the primary drivers responsible for an increase in the number of companies offering SaaS software.

The boundaries between cloud, managed, and colocation hosting types are slowly and steadily becoming non-existent. Cloud integration has enabled the seamless integration of legacy and present technologies. Large enterprises need multiple hosting environments due to their use case-specific applicability and sets of benefits. Application hosting vendors are tapping into these instances to create solutions suited to a variety of combinations. Furthermore, data storage, analytics, and disaster management services are gaining popularity among enterprises that opt for application hosting solutions. Vendors are looking to augment their core offerings by providing complementing services to attain a competitive advantage over others.

Challenge: Vendor lock-in for cloud hosting, reducing the flexibility desired by organizations

Application hosting provides a multitude of benefits, but vendor lock-in is a challenge that many organizations have to face. Enterprises transitioning to external hosting solutions must factor in the risks associated with vendor lock-in and formulate strategies to minimize the impact of vendor switch. Each vendor provides solutions that would be different to its competitors in terms of configuration and functionality. As a result, the proprietary nature of technologies creates incompatibilities. Additionally, there might be process inefficiencies or contractual obligations that might not allow seamless transition between vendors. There are risks of changes in vendor product portfolio, incapability of vendor to address the future business needs, or vendor going out of business. Organizations operating in an unstable market with changing demand cycles need to find a vendor best aligned to their needs. Business faces challenges in terms of transferring data, reconfiguring applications, aligning infrastructural requirements, and retraining staff about the new platform. Migrations between vendors can incur substantial costs, defeating the purpose of the initiative. Organizations fear the loss of control over the data and infrastructure that powers their business. Loosely coupled applications with separation between business and application logic, and implementation of the multi-cloud strategy can help mitigate risks associated with vendor lock-ins.

Scope of the Application Hosting Market

Report Metric

Details

Market size available for years

2017–2022

Base year considered

2016

Forecast period

2018–2028

Forecast units

Billion (USD)

Segments covered

Hosting type, Service type, Application type, Organization size, Vertical and Region

Geographies covered

North America, Europe, APAC, Latin America, and MEA

Companies covered

AWS (US), IBM (US), Rackspace (US), Google (US), Liquid Web (US), Microsoft (US), Sungard AS (US), DXC (US), Apprenda (US), and Navisite (US)

The application hosting market considers the market size of the hosting type, service type, application type, vertical, organization size, and region segments to arrive at the global market size of the market during the forecast period.

By hosting type

  • Cloud hosting
    • Infrastructure-as-a-Service (IaaS)
    • Platform-as-a-Service (PaaS)
    • Software-as-a-Service (SaaS)
  • Managed hosting
  • Colocation hosting

By Service type

  • Application monitoring
  • Application programming interface management
  • Infrastructure services
  • Database administration
  • Backup and recovery
  • Application security

By application type

  • Web-based applications
  • Mobile-based applications

By organization size

  • Small and Medium-sized Enterprises (SMEs)
  • Large enterprises

By vertical

  • Media and entertainment
  • Banking, Financial Services, and Insurance (BFSI)
  • Telecommunications and IT
  • Healthcare
  • Retail and eCommerce
  • Manufacturing
  • Energy and utilities
  • Others (government, travel and hospitality, education, and transportation and logistics)

By region

  • North America
  • Europe
  • APAC
  • MEA
  • Latin America

Key Application Hosting Market Players

The major vendors profiled in the report include AWS (US), IBM (US), Rackspace (US), Google (US), Liquid Web (US), Microsoft (US), Sungard AS (US), DXC (US), Apprenda (US), and Navisite (US).

AWS has adopted a strategic mix of organic and inorganic growth strategies, such as new product launches, and mergers and acquisitions, in the application hosting market. In 2017, AWS announced a new bare metal instance offering for Amazon EC2 and introduced a new storage optimized instance family (H1 instances). The new product launch enhanced its capabilities in application hosting and also helped attract new customers. In line with the inorganic growth strategy, in August 2017, AWS collaborated with VMware, a US-based firm and a global leader in cloud infrastructure and the digital workspace technology, to support hosting applications and add value to AWS’ businesses through the combination of VMware’s enterprise capabilities

Recent Developements

  • In October 2017, Microsoft entered into an agreement with Wipro, an Indian global IT, consulting, and business process services company, to host Wipro’s business-critical enterprise applications on Microsoft Azure
  • In September 2017, Google partnered with Merkle, a US-based firm and a leading data-driven, technology-enabled, global performance marketing agency, to provide its cloud platform for hosting and developing Merkle’s marketing applications on the Google Cloud Platform (GCP).
  • In August 2017, AWS collaborated with VMware, a US-based firm and a global leader in cloud infrastructure and digital workspace technology, to support hosting applications and add value to AWS’ businesses through the combination of VMware enterprise capabilities.
  • In May 2017, IBM signed an agreement with Verizon, a US-based telecommunication firm, to acquire Verizon’s cloud and hosting business to enhance its offering in the application hosting space.
  • In September 2016, Rackspace extended its agreement with Microsoft, an American multinational technology firm, to enhance its application hosting services that provide customers 24/7 access to applications and Microsoft Azure experts.

Key Benefits of Buying the Report

The report would provide the market leaders/new entrants in this market with information on the closest approximations of the revenue numbers for the overall application hosting market and its subsegments. It would help stakeholders understand the competitive landscape and gain more insights to better position their business and plan suitable go-to-market strategies. It also helps stakeholders understand the pulse of the market and provides them with information on key market drivers, restraints, challenges, and opportunities.

Critical questions the report answers:

  • Where will all these developments take the industry in the long term?
  • What are the upcoming trends for the application hosting market?
  • Which segment provides the most opportunity for growth?
  • Who are the leading vendors operating in this market?
  • What are the opportunities for new market entrants?

Frequently Asked Questions (FAQ):

To speak to our analyst for a discussion on the above findings, click Speak to Analyst

Table of Contents

1 Introduction (Page No. - 14)
    1.1 Objectives of the Study
    1.2 Market Definition
    1.3 Market Scope
    1.4 Years Considered for the Study
    1.5 Currency
    1.6 Stakeholders

2 Research Methodology (Page No. - 17)
    2.1 Research Data
           2.1.1 Breakdown of Primaries
           2.1.2 Key Industry Insights
    2.2 Market Size Estimation
    2.3 Assumptions
    2.4 Limitations

3 Executive Summary (Page No. - 24)

4 Premium Insights (Page No. - 28)
    4.1 Attractive Market Opportunities in the Global Application Hosting Market
    4.2 Market By Application Type, 2017 vs 2022
    4.3 Market By Hosting Type, 2017 vs 2022
    4.4 Market By Organization Size, 2017 vs 2022
    4.5 Market By Vertical, 2015–2022
    4.6 Market Share Across Various Regions
    4.7 Market Investment Scenario

5 Application Hosting Market Overview and Industry Trends (Page No. - 33)
    5.1 Introduction
    5.2 Market Dynamics
           5.2.1 Drivers
                    5.2.1.1 Software-Centered Competitive Advantage Approach is Gaining Industry Agnostic Acceptance
                    5.2.1.2 Application Hosting Facilitates Focus on Core Business Processes By Providing Business-Specific IT Solutions
                    5.2.1.3 Comprehensive Hosting Solutions With an Array of Complementing Services Over the Core Offering
           5.2.2 Restraints
                    5.2.2.1 Security and Privacy Concerns Acting as an Inhibitor to Organizational Change
                    5.2.2.2 Regional IT Development Posing an Infrastructural Challenge for Implementing the Hosting Technology
                    5.2.2.3 Local Regulations Acting as a Barrier to Entry Into the Market Ecosystem
           5.2.3 Opportunities
                    5.2.3.1 Steady Expansion of Cloud Computing Creating New Growth Areas, Augmenting the Offerings and Micro-Differentiating the Vendors
                    5.2.3.2 Managed Services Gaining Ground Over Traditional Approaches of Application Hosting
                    5.2.3.3 Innovative Service Delivery Positioning to Edge Over Rivals in A Fiercely Competitive Market
           5.2.4 Challenges
                    5.2.4.1 Vendor Lock-In for Cloud Hosting, Reducing the Flexibility Desired By Organizations
    5.3 Application Hosting Architecture of Enterprises

6 Application Hosting Market, By Hosting Type (Page No. - 40)
    6.1 Introduction
    6.2 Managed Hosting
    6.3 Cloud Hosting
           6.3.1 Infrastructure as a Service
           6.3.2 Platform as a Service
           6.3.3 Software as a Service
    6.4 Colocation Hosting

7Market By Service Type (Page No. - 48)
    7.1 Introduction
    7.2 Application Monitoring
    7.3 Application Programming Interface Management
    7.4 Infrastructure Services
    7.5 Database Administration
    7.6 Backup and Recovery
    7.7 Application Security

8 Application Hosting Market By Application Type (Page No. - 51)
    8.1 Introduction
    8.2 Mobile-Based
    8.3 Web-Based

9 Market By Organization Size (Page No. - 55)
    9.1 Introduction
    9.2 Large Enterprises
    9.3 Small and Medium-Sized Enterprises

10 Application Hosting Market, By Vertical (Page No. - 59)
     10.1 Introduction
     10.2 Banking, Financial Services, and Insurance
     10.3 Telecommunications and IT
     10.4 Media and Entertainment
     10.5 Retail and Ecommerce
     10.6 Healthcare
     10.7 Manufacturing
     10.8 Energy and Utilities
     10.9 Others

11 Application Hosting Market, By Region (Page No. - 69)
     11.1 Introduction
     11.2 North America
     11.3 Europe
     11.4 Asia Pacific
     11.5 Middle East and Africa
     11.6 Latin America

12 Competitive Landscape (Page No. - 92)
     12.1 Overview
     12.2 Market Ranking Analysis
     12.3 Competitive Scenario
             12.3.1 Partnerships, Agreements, and Collaborations
             12.3.2 New Product Launches
             12.3.3 Mergers and Acquisitions
             12.3.4 Business Expansions

13 Company Profiles (Page No. - 97)
(Business Overview, Solutions Offered, Recent Developments, SWOT Analysis & MnM View)*
     13.1 AWS
     13.2 IBM
     13.3 Rackspace
     13.4 Google
     13.5 Liquid Web
     13.6 Microsoft
     13.7 Sungard as
     13.8 DXC
     13.9 Navisite
     13.10 Apprenda

*Details on Business Overview, Solutions Offered, Recent Developments, SWOT Analysis & MnM View Might Not Be Captured in Case of Unlisted Companies.

14 Appendix (Page No. - 119)
     14.1 Discussion Guide
     14.2 Knowledge Store: Marketsandmarkets Subscription Portal
     14.3 Introducing RT: Real-Time Market Intelligence
     14.4 Available Customization
     14.5 Related Reports
     14.6 Author Details


List of Tables (66 Tables)

Table 1 United States Dollar Exchange Rate, 2014–2017
Table 2 Application Hosting Market Size, By Hosting Type, 2015–2022 (USD Billion)
Table 3 Managed Hosting: Market Size By Region, 2015–2022 (USD Billion)
Table 4 Cloud Hosting: Market Size By Region, 2015–2022 (USD Billion)
Table 5 Cloud Hosting: Market Size By Type, 2015–2022 (USD Billion)
Table 6 Infrastructure as a Service Market Size, By Region, 2015–2022 (USD Billion)
Table 7 Platform as a Service Market Size, By Region, 2015–2022 (USD Billion)
Table 8 Software as a Service Market Size, By Region, 2015–2022 (USD Billion)
Table 9 Colocation Hosting: Market Size By Region, 2015–2022 (USD Billion)
Table 10 Market Size, By Application Type, 2015–2022 (USD Billion)
Table 11 Mobile-Based: Market Size By Region, 2015–2022 (USD Billion)
Table 12 Web-Based: Market Size, By Region, 2015–2022 (USD Billion)
Table 13 Application Hosting Market Size, By Organization Size, 2015–2022 (USD Billion)
Table 14 Large Enterprises: Market Size By Region, 2015–2022 (USD Billion)
Table 15 Small and Medium-Sized Enterprises: Market Size By Region, 2015–2022 (USD Billion)
Table 16 Market Size, By Vertical, 2015–2022 (USD Billion)
Table 17 Banking, Financial Services, and Insurance: Market Size By Region, 2015–2022 (USD Billion)
Table 18 Telecommunications and IT: Market Size By Region, 2015–2022 (USD Billion)
Table 19 Media and Entertainment: Market Size By Region, 2015–2022 (USD Billion)
Table 20 Retail and Ecommerce: Market Size By Region, 2015–2022 (USD Billion)
Table 21 Healthcare: Market Size By Region, 2015–2022 (USD Billion)
Table 22 Manufacturing: Market Size By Region, 2015–2022 (USD Billion)
Table 23 Energy and Utilities: Market Size By Region, 2015–2022 (USD Billion)
Table 24 Others: Market Size By Region, 2015–2022 (USD Billion)
Table 25 Application Hosting Market Size, By Region, 2015–2022 (USD Billion)
Table 26 North America: Market Size By Country, 2015–2022 (USD Billion)
Table 27 North America: Market Size By Hosting Type, 2015–2022 (USD Billion)
Table 28 North America: Market Size By Cloud Hosting Type, 2015–2022 (USD Billion)
Table 29 North America: Market Size By Application Type, 2015–2022 (USD Billion)
Table 30 North America: Market Size By Organization Size, 2015–2022 (USD Billion)
Table 31 North America: Market Size By Vertical, 2015–2022 (USD Billion)
Table 32 United States: Market Size By Hosting Type, 2015–2022 (USD Billion)
Table 33 United States: Market Size By Cloud Hosting Type, 2015–2022 (USD Billion)
Table 34 United States: Market Size By Application Type, 2015–2022 (USD Billion)
Table 35 United States: Market Size By Organization Size, 2015–2022 (USD Billion)
Table 36 United States: Market Size By Vertical, 2015–2022 (USD Billion)
Table 37 Canada: Application Hosting Market Size, By Hosting Type, 2015–2022 (USD Billion)
Table 38 Canada: Market Size By Cloud Hosting Type, 2015–2022 (USD Billion)
Table 39 Canada: Market Size By Application Type, 2015–2022 (USD Billion)
Table 40 Canada: Market Size By Organization Size, 2015–2022 (USD Billion)
Table 41 Canada: Market Size By Vertical, 2015–2022 (USD Billion)
Table 42 Europe: Market Size By Hosting Type, 2015–2022 (USD Billion)
Table 43 Europe: Market Size By Cloud Hosting Type, 2015–2022 (USD Billion)
Table 44 Europe: Market Size By Application Type, 2015–2022 (USD Billion)
Table 45 Europe: Market Size By Organization Size, 2015–2022 (USD Billion)
Table 46 Europe: Market Size By Vertical, 2015–2022 (USD Billion)
Table 47 Asia Pacific: Market Size, By Hosting Type, 2015–2022 (USD Billion)
Table 48 Asia Pacific: Market Size By Cloud Hosting Type, 2015–2022 (USD Billion)
Table 49 Asia Pacific: Market Size By Application Type, 2015–2022 (USD Billion)
Table 50 Asia Pacific: Market Size By Organization Size, 2015–2022 (USD Billion)
Table 51 Asia Pacific: Application Hosting Market Size By Vertical, 2015–2022 (USD Billion)
Table 52 Middle East and Africa: Market Size, By Hosting Type, 2015–2022 (USD Billion)
Table 53 Middle East and Africa: Market Size By Cloud Hosting Type, 2015–2022 (USD Billion)
Table 54 Middle East and Africa: Market Size By Application Type, 2015–2022 (USD Billion)
Table 55 Middle East and Africa: Market Size By Organization Size, 2015–2022 (USD Billion)
Table 56 Middle East and Africa: Market Size By Vertical, 2015–2022 (USD Billion)
Table 57 Latin America: Market Size, By Hosting Type, 2015–2022 (USD Billion)
Table 58 Latin America: Market Size By Cloud Hosting Type, 2015–2022 (USD Billion)
Table 59 Latin America: Market Size By Application Type, 2015–2022 (USD Billion)
Table 60 Latin America: Market Size By Organization Size, 2015–2022 (USD Billion)
Table 61 Latin America: Market Size By Vertical, 2015–2022 (USD Billion)
Table 62 Market Ranking, 2017
Table 63 Partnerships, Agreements, and Collaborations, 2016–2017
Table 64 New Product Launches, 2016–2018
Table 65 Mergers and Acquisitions, 2015–2017
Table 66 Business Expansions, 2016–2017


List of Figures (37 Figures)

Figure 1 Global Application Hosting Market Segmentation
Figure 2 Global Market Research Design
Figure 3 Research Methodology
Figure 4 Data Triangulation
Figure 5 Market Size Estimation Methodology: Bottom-Up Approach
Figure 6 Market Size Estimation Methodology: Top-Down Approach
Figure 7 Market Size, 2015–2022
Figure 8 Market Analysis
Figure 9 Fastest-Growing Segments in the Market, 2017–2022
Figure 10 Availability of Cost-Effective Cloud Hosting Services is Expected to Drive the Growth of the Application Hosting Market
Figure 11 Web-Based Application Type is Expected to Hold the Larger Market Share During the Forecast Period
Figure 12 Managed Hosting Segment is Expected to Hold the Largest Market Share During the Forecast Period
Figure 13 Large Enterprises Segment is Expected to Hold the Larger Market Share By 2022
Figure 14 Banking, Financial Services, and Insurance Vertical is Expected to Hold the Largest Market Share By 2022
Figure 15 North America is Estimated to Hold the Largest Market Size in 2017
Figure 16 Market: Market Investment Scenario
Figure 17 Market: Drivers, Restraints, Opportunities, and Challenges
Figure 18 Hosting Architecture
Figure 19 The Cloud Hosting Segment is Expected to Grow at the Highest CAGR During the Forecast Period
Figure 20 Web-Based Application Type is Expected to Hold the Larger Market Size During the Forecast Period
Figure 21 Large Enterprises Segment is Expected to Have the Larger Market Size During the Forecast Period
Figure 22 Banking, Financial Services, and Insurance Vertical is Expected to Have the Largest Market Size During the Forecast Period
Figure 23 North America is Expected to Have the Largest Market Size During the Forecast Period
Figure 24 North America: Market Snapshot
Figure 25 Asia Pacific: Market Snapshot
Figure 26 Key Developments By the Leading Players in the Application Hosting Market for 2015–2018
Figure 27 Market Evaluation Framework
Figure 28 AWS: Company Snapshot
Figure 29 AWS: SWOT Analysis
Figure 30 IBM: Company Snapshot
Figure 31 IBM: SWOT Analysis
Figure 32 Rackspace: SWOT Analysis
Figure 33 Google: Company Snapshot
Figure 34 Google: SWOT Analysis
Figure 35 Liquid Web: SWOT Analysis
Figure 36 Microsoft: Company Snapshot
Figure 37 DXC: Company Snapshot


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Report Code
TC 6087
Published ON
Mar, 2018
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