GoDaddy to Shift Web Hosting Data Centers to AWS Cloud

Written by: , Mar. 29, 2018

Cloud Transition: Majority of GoDaddy Web Hosting Services to Run on AWS with Kubernetes

GoDaddy made a joint announcement with AWS in a press release this week stating that the company, known as the world's largest domain name registrar and most recognized brand in the web hosting industry, would be conducting a multi-year transition from independent private cloud data center management to investing in public cloud hardware and software services from Amazon.com for business operations.

It can be argued that the investment in and maintenance of large scale data center operations on a private basis by web hosting companies has been one of the most distinguishing traits in the industry among the major brands.

GoDaddy is one of the largest of the major web hosting companies to shift to AWS for hardware and platform tools that allow them to operate on massive scale of over 17 million registered users. It should be noted that GoDaddy already runs their managed WordPress hosting plans on AWS hardware using custom web server stack software optimized for the CMS, as WPengine, Pantheon, Acquia, & many other startup companies also currently do in competition. GoDaddy will continue to manage client domain name registration information on private data center hardware & facilities while most of the shared, VPS, & dedicated server web hosting plans will be transitioned to AWS public cloud hardware for easier maintenance with better pricing, security, & upgrades. GoDaddy also seeks to leverage AWS's available "machine learning, analytics, databases, and containers" platforms such as Amazon Elastic Container Service for Kubernetes (Amazon EKS), Elastic Compute Cloud (Amazon EC2), & P3 Instances for AI/ML/DL generated product recommendations on domain appraisals. Although this is a major deal for both companies, the financial terms of the agreement were not disclosed. It looks like a major capitulation by GoDaddy/MediaTemple to AWS.

GoDaddy After Bob Parsons: Domain Name Registration, Cloud Servers, & Managed WordPress PaaS

GoDaddy has been one of the most popular web hosting companies since it was founded in the Web 1.0 or "DotCom" era by Bob Parsons in 1997. The company used major media marketing campaigns to create a national brand with TV commercials, similar to ETRADE, while also being very active in reseller hosting and online affiliate marketing. GoDaddy has a market capitalization of $9.8 billion USD today, where it trades on the New York Stock Exchange (NYSE:GDDY). Amazon.com was founded by Jeff Bezos in 1994, with AWS launching in 2006 at the beginning of the cloud hosting era. Amazon.com has a market capitalization of $692 billion USD today, where the stock price (NASDAQ: AMZN) has risen from $40 in 2006 to $1430 in March 2018. Much of the increase in revenue and profitability at Amazon.com over the last 12 years has come from the massive growth of AWS, which largely pioneered the public cloud model and currently has around 62%-68% of the total enterprise IT spend for cloud hosting. As popular of a website for ecommerce that Amazon.com is, AWS has even greater scale for supporting the largest companies in the world for web hosting and data center requirements, where all of the media traffic of Netflix and all of the domain name or web hosting traffic of GoDaddy together would still represent just a small percentage of AWS's overall data center capacity. Other companies cannot compete with AWS financially in operating data center hardware at scale independently for web hosting & software development. GoDaddy's announcement is symbolic of the continuing change of the public cloud model impacting even the largest or most established IT brands. AWS is the main industry leader, competing with Google, Microsoft, IBM, Apple, & Oracle for the title of largest public cloud company, where this is dependent on sales percentages in the enterprise, small business, government, education, & NGO sectors.

About the deal, Charles Beadnall, the Chief Technology Officer at GoDaddy, stated:

“As a technology provider with more than 17 million customers, it was very important for GoDaddy to select a cloud provider with deep experience in delivering a highly reliable global infrastructure, as well as an unmatched track record of technology innovation, to support our rapidly expanding business. AWS provides a superior global footprint and set of cloud capabilities which is why we selected them to meet our needs today and into the future. By operating on AWS, we’ll be able to innovate at the speed and scale we need to deliver powerful new tools that will help our customers run their own ventures and be successful online.”

The use of AWS cloud hardware for web hosting has been increasing over the last 10 years where it has become more common in startup companies than major brands owning their own hardware. In demanding 24/7/365 data center operations, cloud provisioning at AWS can be more affordable under "pay-as-you-go" bulk-rate billing with server hardware upgrade costs already priced into the bottom line along with dedicated expert security teams. The public cloud model lowers the bar to entry for entrepreneurs in the web hosting industry, where programmers can scale their code gradually or rapidly, as customer use demands, on the AWS architecture. This eliminates the need for major advance investment in web server hardware and real estate for software startup company operations, as well as requiring less full-time systems administration staff on hire in enterprise corporations. Another part of the agreement is that "AWS will sell some GoDaddy products like Managed WordPress and GoCentral for domain and website management." That GoDaddy is entering the AWS Marketplace to compete for retail business can be seen as a smart move, as there is not a lot of cross-over between AWS and retail hosting plans due to complexity of systems administration, but the platform has a wide popularity in the consumer sector. The market has left the fully mature and "publicly listed on NYSE" GoDaddy corporation at about the same valuation as an open source unicorn in the venture capital startup world after Parson's exit & KKR's stewardship over the last 7 years.

KKR, Silver Lake Partners, and Technology Crossover Ventures reportedly paid $2.25 billion USD for 65% of GoDaddy stock in 2011, with the IPO in 2015. GoDaddy acquired MediaTemple in 2013. From 2016 to 2017, GoDaddy operated a Cloud Servers platform built using OpenStack with Bitnami snapshots for full-stack web server provisioning which was very unique, well made, and innovative.

"...the Cloud Servers business was originally launched in March 2016 as a way to offer AWS-style services to GoDaddy’s 17 million hosting customers. The idea was to tap into the recent vogue for cloud services, capturing new business from existing customers who were considering or starting to make early moves into cloud-based apps and services, before they made the leap to AWS, Google, Microsoft or others in the space."

This followed major upgrades in their VPS infrastructure based on Parallels software solutions for virtualization using the MediaTemple talent to implement across GoDaddy's large base of registered customers. GoDaddy has always lagged in upgrading hardware and software on their shared hosting plans compared to other web hosting companies. In 2017, they inexplicably chose to close the Cloud Servers platform. Analysts suggested it was originally intended more of as an experiment to compete with DigitalOcean, Dreamhost, & Linode and not challenge AWS, Google Compute Engine, or Microsoft Azure as a public cloud service provider. Cloud Servers was one of the best examples of how powerful an OpenStack environment could be for web hosting, using Bitnami stack snapshots, but apparently GoDaddy had already lost trust with many innovators to other companies due to brand tarnishing and reputation for performance, where the retail hosting sector had little reason to switch and use more complex tools for web development at a higher cost. TechCrunch (2017) noted:

"The company has been acquiring businesses in other categories: they have included Sucuri to 'enable customers to secure websites without being security experts'; ManageWP and WP Curve for customers to administer sites built on publishing platform WordPress; and FreedomVoice for communications services on websites. All of these point to more features and support of websites themselves rather than a deeper move into cloud apps for businesses."

The proposal to use AWS's AI tools to add machine learning capability to GoDaddy's domain appraisal and auction recommendation engine is not overly significant as very few people still use GoDaddy's domain resale services. It more points to how prevalent the AI apps are becoming in enterprise software and how easy it is to integrate the features through APIs on the AWS platform. Google is in the first stage of a 10 year "AI First!" business cycle that promises to be as industry changing and socially transformative as mobile, but these announcements basically camouflage the point that GoDaddy is losing business and money in its core sector, essentially closing down the operation of multiple independent data centers in exchange for running on AWS hardware more affordably & efficiently.

Mike Clayville, the Vice President of Worldwide Commercial Sales at AWS, commented: “As a large, high-growth business, GoDaddy will be able to leverage AWS to innovate for its customers around the world. Our industry-leading services will enable GoDaddy to leverage emerging technologies like machine learning, quickly test ideas, and deliver new tools and solutions to their customers with greater frequency. We look forward to collaborating with GoDaddy as they build anew in the cloud and innovate new solutions to help people turn their ideas into reality online.”

GoDaddy appears to be much like EIG (Endurance International Group) that has collected hundreds of major and minor web hosting brands under the umbrella of a publicly listed/traded corporation, each with independent data center operations & staff, building synergies and efficiencies between the organizations. Both companies invest heavily in mass media marketing for their web hosting brands and use this to maintain legacy "dotcom" era customers through goodwill vs. churn rates & promotional discounts on bulk shared hosting plans for multi-domain clients. GoDaddy's corporate decision to run their data centers at AWS rather than independently leaves Bluehost, HostGator, and Dreamhost as the major web hosting companies with the largest self-owned and operated data centers outside of the public cloud companies and edge/CDN startups like DigitalOcean or Cloudflare. The other main companies operating in this sector are telcos, colocation centers, SaaS companies, and minor web hosting brands. GoDaddy's AWS announcement represents a leveled field effect for entrepreneurs in the web hosting industry that are building new cloud solutions on AWS platform tools, web server hardware, and custom stack software, or competing in the cloud ecosystem to provide IT services.

Amazon Guard Duty, Macie, & Inspector: 'Amazon Web Services (AWS) has officially announced that all of its products and services are fully GDPR-compliant, meaning any businesses looking to beef up their policies for the incoming law change are covered if they use the platform. The company said it drafted in "security and compliance experts" to audit its inner workings as a data processor, who approved it as fully compliant. AWS explained the aspects that ensure it's compliant with GDPR include the encryption of personal data, assurance that any data processed on its platform offers ongoing confidentiality, integrity, availability, and resilience and that data can be restored quickly should a physical or technical incident occur. It also said it regularly tests, assesses and evaluates its operation to ensure it complies with security.' Learn More About GDPR Compliance.

GoDaddy & Kubernetes: "Just a year ago, former GoDaddy CEO Blake Irving told GeekWire that the company was considering hooking up with cloud providers as it added workloads in new geographies outside the U.S. while maintaining its own infrastructure in the U.S., but it would appear something has changed under new CEO Scott Wagner. AWS noted that it plans to work with GoDaddy to offer domain-related services as part of the deal, which might have provided some additional incentive for the two companies to get together." Learn More At GeekWire.

Author:
Eliran Ouzan is the Co. Founder and designer of HostAdvice and also owns Moonshot Marketing LTD, a leading web design & development firm and was a member at GreenPeace.

Widely known for his pixel-perfect and high conversion rate web designs. Over the course of his web experience he experimeneted with over 200 web hosting companies and have a superior knowledge on what defines a good hosting company.

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