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Cloud Industry Overview 2021: Web Builders is the latest tool against hypercompetition

The total annual revenue of the cloud industry is $111 billion, but with big shots like Amazon, Microsoft and Google Cloud dominating the market, smaller web hosting providers are using website builders as a way to stifle hypercompetition in the industry. 

Amazon, Microsoft and Google Cloud are currently dominating the cloud industry with Amazon occupying 33% of the market share, Microsoft occupying 17% and Google Cloud occupying an additional 9% market share of the cloud industry. Smaller web hosting providers, such as Bluehost, Godaddy, Elementor and Wix, are up against some stiff competition and need to find innovative ways to increase their share of the market if they want to compete with Amazon, Microsoft and Google Cloud. 

This is exactly what they did. To increase their share of the web hosting market, smaller players like Bluehost, Godaddy, Elementor and Wix, to mention a few, all incorporated the use of free or inexpensive website builders into their web hosting services as a means to circumvent hypercompetition in the cloud industry and erode the existing competitive advantage that bigger market players suchs as Amazon, Microsoft and Google Cloud possess. 

Why incorporate website builders into web hosting services?

Unlike Amazon, Microsoft and Google Cloud, web hosting providers with smaller market shares need to do everything possible to improve their market share, and adding free or inexpensive website builders to their collection of hosting services is the latest trend. By doing this, they are able to attract new customers, and not from the web hosting market but from the website builder market. Web hosting providers can use their website builders to attract new customers, specifically those interested in building their own website which later needs to be hosted. The best website builders make the most impact, and this additional source of new customers can have drastic implications for improving their total market share. 

Take for example some of the more popular website builders, the Wix website builder is one of the most popular website builders on the market, with a market share of 25.18% and more than 1.1 million websites built. Godaddy’s website builder, GoCentral, is also a big market player, with a market share of 14.27% and Elementor is another popular website builder with more than 3 million websites built using its website builder. Upon reflection, it becomes overtly clear that smaller web hosting providers like Elementor, Wix and Godaddy are benefiting greatly from their website builders. 

Website builders have the potential to create new streams of customers and revenue for web hosting providers attempting to expand their market share. Web hosting providers that do not offer website builders as part of their service packages cannot tap into or capitalize on this alternative source of new customers, which consequently gives those providers who do offer website builders an advantage over their competitors.   

How do website builders work against hypercompetition?

Before we get into how website builders act as tools against hypercompetition, let’s first define hypercompetition. Hypercompetition is a market condition where competition is so intense, it creates instability in the market where competitors often challenge each other using very aggressive strategies to obtain new or retaining existing customers. 

In the cloud industry, free or inexpensive website builders are the perfect lure for web hosting providers in search of new customers. Web hosting providers like Godaddy, Elementor and Wix, use their website builders, which are all free or relatively inexpensive and easy-to-use, as tools against hypercompetition in the cloud industry. Due to the fact that they are able to gain access to new customers through their website builders, their website builders erode the competitive advantage that bigger competitors such as Amazon, Microsoft and Google Cloud have. By attracting new customers in ways that not all web hosting providers are capable of, smaller market players, including the likes of Godaddy, Elementor, Wix and several other smaller market players are able to improve their market share of the cloud industry. 

Free or inexpensive website builders give smaller web hosting providers a better chance to increase their market share in relation to the cloud industry’s top players, which also means they can avoid hypercompetition in the market altogether.  

A quick summary:

The cloud industry is to this day still dominated by the likes of Amazon, Microsoft and Google Cloud which together hold more than half of the total market share. However, the growing trend among smaller market players to incorporate free or inexpensive website builders into their web hosting packages in order to lure in new customers, which inadvertently also reduces the chances of hypercompetition in the cloud industry, may undermine the dominance of big market players in the cloud industry as smaller web hosting providers increase their market share by tapping into the website builder market. 

Adriaan Brits

Adriaan Brits is a multi-sector analyst and business consultant with notable commentary on the S&P500. He loves to evaluate fast-movers and to be ahead of the trend.

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Adriaan Brits

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