"Enterprises are streamlining their internal business processes and opening new channels for customer service and product/service delivery, distribution, and procurement by leveraging application servers to Web-enable their core business applications and using the Internet as a transactional and connectivity medium for intra- and inter-company exchanges," said Melanie Posey, program director, Web hosting. "In other words, the market is evolving away from the dot-com era model of 'Internet-as-the-business' to the post-bubble notion of 'business on the Internet.'"

The primary factor behind the Web hosting slowdown is the state of the economy, IDC said. In 2000 there were many components helping to drive growth in Web hosting including a robust U.S. economy, a vigorous IT industry and the Internet. All of that changed in 2001 but nevertheless, enterprises are only just beginning to leverage the full potential of Web hosting based opportunities and the market will continue to grow.

IDC's new report, U.S. Web Hosting Services: Market Forecast and Analysis, 2001-2006 covers the market opportunity for U.S.-based Web hosting service providers and examines the changes currently affecting the U.S. market. The report provides an overview of market structure, segmentation, typical service offers, pricing, and HSP market strategies. Finally, the report presents service providers' projected 2001 market shares, as well as detailed profiles of the top industry players. See IDC's Web site for purchasing details.