SWSOFT GLOBAL HOSTING SUMMIT 2006 Industry Trends and Challenges SWsoft Products, Corporate Update and Future Plans Serguei Beloussov, CEO Kurt Daniel, VP Marketing and Alliances Ezequiel Steiner, Director of Business Development May 2006 www. swsoft. com
Agenda • SWsoft intro – why should you listen? • Strategic Industry Challenges and Trends ▪ Automation and SWsoft products are formed around addressing them • Some of the tactical service provider challenges ▪ Virtuozzo as a solution • More tactical service provider challenges ▪ OPEN FUSION as solution ▪ Plesk, other products and product strategy • SWsoft corporate ▪ Overview, status and plans ▪ Partnership update by Ezequiel Steiner ▪ Marketing update by Kurt Daniel • Summary and Executive Q&A 2 www. swsoft. com
Why Should SWsoft Have a Perspective? • Serving Web Hosting Industry since 1999 • The global market leader in Web Hosting service provider software ▪ Over 10, 000 service providers in over 100 countries ▪ Control Panel Automation powering more than 150, 000 physical servers ▪ 15, 000+ additional physical servers each month ▪ Over 400, 000 VEs on over 10, 000 Virtuozzo servers ▪ 1000+ Virtuozzo servers (for hosting) every month, accelerating ▪ Over 10 mln domains/active sites, over 50 mln mailboxes • Product and services portfolio which covers all aspects, all major platforms for all types of Web Hosting in 21+ languages 3 www. swsoft. com
Strategic Hosting Market Challenges • Lack of Investment community interest ▪ Large players failed ▪ Perceived small market ▪ Results • Lack of capital led to slower than possible growth • Unique purchasing and payment patterns • Lack of Media & Analyst coverage ▪ Large players failed ▪ Results • Higher customer acquisition costs • No medium to educate customers and partners about service differentiations • Persistent confusion about the market size, structure and players 4 www. swsoft. com
Unique Industry features • Mass Market Hosting defined ▪ Not Telco/ISP, Not Colo, Not Online Services and Not Enterprise IT Outsourcing ▪ Low-end, mid-size, high-end up to 20 K$/service unit per year ▪ Sells - Domain, Shared, VPS, Dedicated, Managed, Application, Access, Certificates, Colo and Marketing – focus on the large numbers • Different competitive landscape from general IT ▪ 75%+ Linux only slightly changing with Microsoft push ▪ Dell is by far No. 1 branded server vendor ▪ Germany is the most advanced market with the highest service penetration and sophistication, lowest prices but highest profits • Web Hosting is a very segmented market ▪ The largest players less then 5% in revenue share ▪ Each geographical market has its own leader ▪ On top of that variety of generalized and specialized players • Full service, dedicated, managed, application, mail, shared, registrar, certificates, VPS-only, ISP/Telco, marketing monsters ? , domain portfolios ? , community sites 5 www. swsoft. com
Market Trends as Suggested 1 Year Ago • More Full Service providers • VPS & DS, DDS – Virtualization • Advanced Windows hosting • Discounted Dedicated • Advanced & Managed Dedicated • Registrar and HSP convergence • Telco/ISPs moving back in • BLOG hosting • Discounted Advanced Shared 6 www. swsoft. com
Potential Trends & Opportunities as of 1 Year Ago • Potential Trends ▪ Hosted Exchange, Share. Point, LCS ▪ Market Consolidation ▪ DSL & other connectivity ▪ Marketing Services ▪ Game Hosting • Opportunities ▪ ▪ Resurge of free web and email hosting ▪ Complete and easy-to-use CMS hosted ▪ Full service and easy-to-use e. Commerce hosting ▪ Even more application hosting (CRM, etc) ▪ 7 Virtualized low to high-end dedicated/managed services Resurge of investment community/press interest & IPOs www. swsoft. com
Future Trends As We See Them Now • Virtualization everywhere • Secondary domain services, domain hosting • Managed, complex and high-end dedicated • Shared hosting threatened by community sites, free hosting and monsters • Rich email/collaboration • Certificates resurge • More full service providers including registrars • Industry consolidation, continued interest from investment community and increasing valuations – 0. 3 x > 1 x > 2 x > 4 x > what’s next? • IT/Software as a service? • Virtualization for complex hosting? 8 www. swsoft. com
Automation as Enabling Technology Marketing 50% of success ▪ Good Products ▪ Good Pricing ▪ Good Promotion Hosting Business Service & Support 20% of success ▪ Efficient ▪ Satisfying Operations & Finance 10% of success Service & Support Marketing Operations & Finance ▪ Process Driven Enabling Technology 20% of success ▪ Ticket to the game ▪ Must be single transparently integrated system 9 Automation & Virtualization www. swsoft. com
SWsoft Product Portfolio • • Server Automation and Virtualization Software Hosting Service Provider and Enterprise Markets Windows and Linux/Unix Platform Support Complementary Solutions: ▪ Powerful Server Virtualization and Tools ▪ Leading Hosting Control Panel ▪ Innovative Web-based Website Builder ▪ ▪ 10 HSPcomplete Comprehensive Hosting Automation Solution Carrier-Grade Datacenter Automation Solution www. swsoft. com
Tactical Industry Challenges • Facility Related Challenges ▪ Data center inventory is shrinking ▪ Building out from scratch is long and capital intensive ▪ Rising power use, costs and capacity • Hardware Related Challenges ▪ Hardware vendors offer bigger/faster servers per unit price – but it usually exceeds customer requirements ▪ How easy is it to provision, manage and support 1000 s of servers over many years? ▪ What to do with the old hardware? • Customer Related Challenges ▪ Low End: Shared hosting competition from Google, Yahoo!, and Microsoft ▪ Mid Level: Budget-conscious customers drive down prices of low-end dedicated servers. They prefer direct control over their hosting environment, but use only a fraction of server’s capacity ▪ High End: Developers of fast-growing web-applications demand rapid, seamless scalability 11 www. swsoft. com
Historical Architecture vs. Virtualization Operating Systems History and Today 1000 s of Specialized Servers Management Costs Software Costs user super user Inefficient IT Infrastructure App 4 App 3 App 2 App 1 Hardware Costs IDC Costs OS • Single Task Single User • Per Applications or User Group • High cost • Multi-Task Single User • Physically provisioned/managed • Hard to automate • Multi-Task, Multi-User • Poorly utilized <10% • Inflexible Service Levels “…Virtualization is a framework or methodology of dividing the resources of a computer into multiple execution environments. . . ” http: //www. kernelthread. com/publications/virtualization/ 12 www. swsoft. com
Virtualization Provider Benefits • Enables dedicated-like services with sharedlike economies and infrastructure ▪ Efficiency: direct cost savings, cashflow savings and oversell opportunities • Hardware • Electricity • Datacenter ▪ Simplicity and Flexibility: • • Zero cost of provisioning and automated management Comprehensive self management decrease support Better security Upgrade and migrate customers dynamically with no downtime • Main result: GROW REVENUE FASTER! ▪ More customers with new high margin services and pricing ▪ Upsell existing customers automatically ▪ Differentiate from Google, Yahoo! and Microsoft Live! 13 www. swsoft. com
Virtualization End-Customer Benefits • Pay less: ▪ Better price for better service ▪ Easily upgradeable ▪ Burstable service • Get more: ▪ Easier and less to manage ▪ Comprehensive self management ▪ Higher availability and performance: • more reliable and faster hardware and disk systems • zero downtime migration • faster management operations ▪ Sophisticated backup/restore capabilities • Why not: There is nothing to lose! ▪ Suitable for low-end, mid-level and high-end customer 14 www. swsoft. com
Service Provider Virtualization Scenarios • True. VPS ▪ Better alternative to shared and cheaper than low-end dedicated • DS/DDS ▪ Better alternative to low-end dedicated • Split Dedicated ▪ Enable your channel/customer to leverage virtualization • Split Shared ▪ Increase density, availability, security and manageability of shared • Managed. VPS and Advanced Shared ▪ More flexible and powerful shared or easier and managed dedicated • Virtualized Infrastructure ▪ Benefit from virtualization for all of your infrastructure 60% of US hosting, over 6. 2 billion $$ by ’ 08 per IDC 15 • The opportunity - Complex Hosting www. swsoft. com
Virtualization Momentum • SWsoft Vision Plesk vs. Plesk in Virtuozzo VPS Plesk ▪ Virtualization software will be used for all computing including server, desktop and even thin clients, and as such Will Run On Every Computing Resource • Facts confirm the momentum ▪ 60%+ of Plesk licenses sold Virtualized, compared to <30% 12 months ago ▪ Rate of Virtuozzo licenses shipped increased 7 x from 12 months ago, 50 x from 24 months ago ▪ Over 20, 000 Virtuozzo partitions were sold in Feb’ 06 compared to 10, 000 Feb’ 05 5 X 4 X 3 X 2 X X 0 Q 2’ 05 Q 3’ 05 Q 4’ 05 Q 1’ 06 Virtuozzo : Physical Servers 6 x 5 x 4 x 3 x • SWsoft believes 2 x ▪ Within the next 36 months majority of the new revenues in the hosting market would come from virtualized infrastructure 16 Plesk in Virtuozzo VPS 6 X 1 x 0 www. swsoft. com Q 2’ 05 Q 3’ 05 Q 4’ 05 Q 1’ 06
Different Types of Partitioning • Hardware partitioning Execution Environment #1 Execution Environment #2 Execution Environment #3 Users Applications System Apps OS OS OS Hardware Execution Environment #1 Users Execution Environment #2 Users Applications System Apps Guest OS Virtual Machine Monitor Host OS Execution Environment #1 Execution Environment #2 Execution Environment #3 Users Applications System Apps Operating System Virtualization OS Hardware 17 ▪ IBM, Sun, HP, Unisys, more • Virtual Machine Monitors ▪ Virtualizes access to hardware ▪ Host OS and each guest has full OS running ▪ VMware, Microsoft Virtual Server, Parallels, XEN, UML Hardware CPU ▪ Multiple OSs run natively • OS Virtualization ▪ Virtualizes access to the OS ▪ Single kernel is running ▪ Virtuozzo, BSD jail, Solaris Zones www. swsoft. com
: Operating System Virtualization Virtuozzo creates multiple isolated Execution Environments or partitions or Virtual Environments (VEs) on a single physical server to share DC, hardware, software and management effort with maximum efficiency. Works as light add-on for commodity operating systems and hardware • Mass Management – Tools and OS & Application Templates to enable automated mass management/deployment/updates of 1000 s of VEs and 1000 s of servers 18 Virtualization OS OS www. swsoft. com Provision Update user root Virtualization App 1 Execution Environment #4 App 4 user App 2 Execution Environment #5 App 3 App 2 App 4 App 1 user root Physical Server #2 App 1 Execution Environment #3 App 4 root user App 3 Execution Environment #2 App 4 root user App 2 App 1 Execution Environment #1 #6 • Migration allows VEs to be moved between physical machines w/zero downtime App 1 • Dynamic Partitioning of servers into hundreds of VEs with full dedicated-server functionality - root access, re-bootable, install any application, change any file, any IP settings • Resource Management – CPU, memory, disk, I/O + min/max values and full isolation root user App user root 2 App 1 App 2 App 1 1 App Execution Environment #7 user Physical Server #1
Momentum 750+ 5+ years 10, 000 Servers 400, 000 VEs 250+ 19 www. swsoft. com
: Unique Advantages for Hosting • Efficiency • Management Tools ▪ Highest Density • 500+ VE/server in production • Lowest TCO per virtual server ▪ Performance • Zero overhead, especially I/O ▪ Scalability • Each VE can scale up to the resources of the whole physical server • Manageability ▪ Designed for 10 s of 1000 s of VEs ▪ Full multi-server API/SDK ready for integration ▪ Browser Based and GUI ▪ Unique VE Owner recovery UI • Zero-Downtime Migration ▪ With or without shared storage • Extensive Platform Coverage ▪ Manage Once ▪ Windows and Linux ▪ Fast Management Operations ▪ x 86, x 86 -64 and IA 64 ▪ Dynamic, Near Real-Time and Fair • Full Isolation and Security As-Needed Resource Allocation Mature & Complete & Proven Since early 2001: 400, 000+ VE, 10, 000+ servers, by 750+ providers 1000 s of provider requested features in the product 20 www. swsoft. com
Lack of Automation - Another Industry Challenge • Losing Money ▪ Low density levels ▪ High provisioning and management cost with manual operations ▪ Wasted marketing dollars with inefficient ordering processes • Losing Customers ▪ Low service levels, multiple sign-on ▪ Lack of self management ▪ Incomplete service offerings • Losing Opportunity ▪ Lack of automatic upsell, multiple control panels ▪ Extremely hard to launch new advanced services ▪ Lack of differentiation makes marketing difficult • Automation is the key ▪ Must be fully integrated single system ▪ Also must be Complete, Comprehensive, Flexible and Different ▪ Single system/vendor could not deliver all – cooperation is required > 21 www. swsoft. com
OPEN FUSION: A Vision for Integration OPEN FUSION is service provider automation integration platform to be used by all SWsoft products and fully open for 3 rd party and in-house developers Core Ingredients Example: OPEN FUSION with HSPcomplete • Consolidated API • Pluggable, Integrated UI • Authorization Engine (AE) • Common Licensing • Unified Versioning • Unified Safe Updates • Consolidated Localization • Documentation • Open Fusion SDK • Open Fusion Community 22 www. swsoft. com
Plesk: The Most Important Product • Aggressive development from 2003 to date ▪ 5 x development team size resulting in 9+ major releases in 3 - year ▪ Plesk 6 > Plesk 6. 5 Win > Plesk 7 Reloaded > Plesk 7 Win Reloaded > Plesk 7. 5 Win > numerous point releases > Plesk 8 ▪ Plesk Expand 1. 0 > Expand 1. 1 > Plesk Expand 2. 0 and Plesk Antivirus PSA 5 Plesk 6. 5 Plesk 7 Reloaded Plesk 7. 5 Reloaded Plesk 8 23 www. swsoft. com
Plesk Future R&D Directions - QUALITY • We are not stopping ▪ Focus on quality of releases and upgrades ▪ Longer development and release cycles – move to 12 -15 months, multi month public Beta > RC > RTM ▪ OPEN FUSION and better Virtuozzo integration ▪ Flexible and more support of 3 rd party (mail, webmail, app server, cms, ecom, backup etc) ▪ Rapid and complete distribution and component support ▪ Ease of use, more server administration, distributed and provider feedback • Specifically – visit Plesk session 24 www. swsoft. com
Other products update and roadmap • - newest and simplest ▪ Transparent Plesk integration and OPEN FUSION ▪ More full CMS features one way or another ▪ Free on Windows until September 30 th 2006! • HSPcomplete - committed ▪ OPEN FUSION will quickly make it more solid and complete (effectively 10 x development team) ▪ Over time complete small to mid-size provider packaged BSS ++ ▪ Any service shall be possible • – 5 x development team ▪ Aggressive development – advanced shared Linux/Windows, packaged Exchange, game, virtualized, high availability, streaming ▪ 15+ implemented reference live accounts, many in implementation ▪ Soon - 100% native Microsoft PEM + more Microsoft applications ▪ Future – stronger customer focus, quality, flexible, complete and OPEN FUSION • BM – new as standalone product! ▪ Sophisticated, flexible and scalable Billing, Ecommerce, Marketing, CRM and Support ▪ Stellart RAD platform, proven process and very experienced separate team 25 www. swsoft. com
Overall R&D Direction – QUALITY and Completness • Longer development cycles – 12 -15+ month • Longer release cycles – few months for beta/rc/rtm • Much higher attention to quality and upgrades • Open complete API/SDK specifically OPEN FUSION • More 3 rd party • Native Windows and continued Linux support • Continued evaluation of customer feedback ▪ Carefully study how product changes could decrease support load • Lots of work – perfection is very distant still 26 www. swsoft. com
SWsoft Corporate Overview and Growth • Headquartered in Herndon, VA } Offices in USA, Europe and Asia • Privately funded, strong financials } } } Founded end ‘ 99, financed to profitability by founders SWsoft is profitable, revenue at tens of millions, growing at 170+% Jun’ 05 closed 12. 5 mm$ round by Bessemer, Intel Capital and Insight • Expert team 700+, 450+ top-notch engineers and 100+ support London, UK Sales & Marketing } } } Alexey Kuznetsov, TCP/IP in Linux kernel Unique hiring model at MIPT, NSU; Headquarters Washington DC hiring gradually as revenue allows Sales & Marketing 28+ patents pending Support, Services Moscow, Russia R&D Novosibirsk, Russia R&D Frankfurt, Beijing, Germany China International Sales & Operations Marketing Tokyo, Japan Sales & Marketing Singapore Sales & Marketing • Successfully expanding to Enterprise Market 27 www. swsoft. com
Growing Ecosystem of 500+ Technology Partners 28 www. swsoft. com
Strategic Partners – Update and Plans • ▪ ▪ Joint Windows Site. Builder offering Microsoft HCM automation through PEM, Plesk Cooperation on Windows-based DDS/VPS enablement through Virtuozzo Product certification • ▪ Developing automation to acquire, resell, manage SSL certificates ▪ Introducing new online services through automation tools (like news feeds) • ▪ Efficient server technology, especially designed for Internet Datacenters ▪ Server certification; cooperation to provide complete solution • ▪ Product certification; support of RH/Virtuozzo & SUSE/Virtuozzo kernel • ▪ Server certification; future cooperation on virtualization and automation solutions • ▪ Advocating to raise awareness of the hosting opportunity/strategic implications 29 www. swsoft. com
3 rd Party Solutions – Update and Pipeline • Overall Strategy: OPEN FUSION ▪ Facilitate integration of new products & services • Some Recently Added • Types of 3 rd Party Solutions in Pipeline ▪ ▪ ▪ 30 Collaboration More antivirus/antispam options Secondary domain Marketing, CMS and e. Commerce Hosted Web Services www. swsoft. com
SWsoft Marketing – How We Can Support You • Joint PR ▪ Contact info directly on our website • Hosting Analysts/Hosting Association • Events/Seminars ▪ Industry, Yours, Others • More/Better Communication ▪ Added documentation to website ▪ Communicating product launches/roadmaps in future in advance • • • 31 Whitepapers/Tools/Other Product Marketing International Support Pre-packaged Content/Demos for Your Website More Partner Marketing jointmarketing@swsoft. com What can we do better? www. swsoft. com
Marketing – Direct/Indirect Support Metrics Selected Deliverable Annual # Product launches (betas, major/minor releases) 50+ Customer/partner emails 80+ Press releases 70+ Media interviews 50+ Articles/media coverage 500+ Analyst briefings 40+ Events/seminars 70+ Advertising vehicles (print and online) 15+ New case studies 5+ New whitepapers/bylines 10+ New/updated brochures 6+ Partnerships/deals 32 30+ www. swsoft. com
New SWsoft Branding – Snapshot • Why are we doing it? ▪ Many products, multiple acquisitions, OPEN FUSION ▪ More professional, cooler ▪ Customer and partner clarity, ease • New Logos, New Website, Stronger SWsoft ▪ Elevation of company brand (many don’t know Plesk is SWsoft’s) ▪ Completely new company and product logo SYSTEM ▪ New corporate style for ALL marketing materials • Business system • Emails, whitepapers, case studies, datasheets • Upgraded www. swsoft. com website • Full Implementation this Summer/ASAP ▪ Process included 10+ interviews/feedback from trusted partners, analysts 33 www. swsoft. com
Branding – Vision/Promise and Who We Are • Brand Vision ▪ Virtualization + Automation = Optimization ▪ Virtualization and Automation for the Real World ▪ We envision a world where computing and can infinitely optimized for business success • Brand Positioning ▪ No company is more relentless about optimizing computing and business than SWsoft • Brand Promise ▪ “I am confident SWsoft will always deliver the most efficient solution for my business” 34 www. swsoft. com
New Corporate Logos (Work in in Progress) Branding – Corporate Logo (Work Progress) 35
Summary • SWsoft is committed to Web Hosting market ▪ Product strategy built around addressing industry challenges and trends ▪ Who could be your best and most independent partner today? • SWsoft is real, stable and rapidly growing • Attend. Virtuozzo session ▪ Virtualization is inevitable as both threat and opportunity ▪ Will Virtuozzo bring you higher ARPU enterprise customers soon? • • • 36 Attend OPEN FUSION session Attend Plesk session Attend all other sessions! Meet our people and provide feedback Network! Lots of interesting/useful people to meet Have Fun and Ask Questions NOW and tomorrow! www. swsoft. com
SWsoft Executive (1 st) Public Q&A • • 37 Serguei Beloussov – CEO/Chairman Yakov Zubarev – COO/Head of Worldwide Sales Kurt Daniel – VP of Marketing and Alliances Soeren von Varchmin – Head of International Sales and Operations Alexei Kandikov – Head of Hosting Automation Engineering and Support Ezequiel Steiner – Director of Biz Development Another and complete executive Q&A/feedback tomorrow Do not hesitate to ask any question and provide direct feedback – they are welcome! www. swsoft. com
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