Managed hosting is dead

If you ever feel the need to run your own servers but you lack the skills or time to set up, manage and maintain all of that, you hire a managed hosting company. The managed hosting company will set up your server, configure it for you, install patches, and make sure everything keeps running. You pay them a montly fixed fee for the servers and a variable fee for the maintenance work. Sounds good so far.

Now let’s assume you decide to move your applications to the cloud, for example Amazon Web Services. Suddenly you are able to scale your servers up and down. There’s a huge toolbox of managed services for databases, caching clusters and data processing farms. You have a lot of developers who are already familiar with Ansible or are willing to learn. And they learn fast because they know this stuff! It’s just code, and they can create and maintain their infrastructure with it.

In this scenario, ask yourself: what’s left for the managed hosting company to do?

In this age where cloud is the new normal, managed hosting companies are trying their absolute best to maintain their current business model. Yet they fail miserably at it. You are now paying Amazon directly for your infrastructure, your developers are able to write code to manage the infrastructure and the same code can download patches for your servers on a monthly basis.

In order to try and stay relevant the entire hosting market is consolidating. They try to win the game by scaling up, by being the biggest loudest elephant in the room. Unfortunately for them, the march towards a DevOps mindset, in which everything can be managed with APIs and code, has been going for a long time. And the hosting market is just too late.

There will be a market for managed hosting in the near future, but in the long term I strongly believe it will disappear. Unless they adapt. Fast.