Virtual Private Server Market Size By Type (Managed, Unmanaged), By Operating System (Windows VPS, Linux VPS [Ubuntu, CentOS, Red Hat Enterprise Linux (RHEL), Debian]), By Organization Type (Large Enterprises, SMEs), By Application (IT & Telecom, BFSI, Healthcare, Government & Public Sector, Retail, Manufacturing), Industry Analysis Report, Regional Outlook, Growth Potential, Competitive Market Share & Forecast, 2019 - 2025

Virtual Private Server Market Size

Virtual Private Server Market size in 2018 was around USD 1 billion and is estimated to grow at a CAGR of over 15% between 2019 and 2025.
 

The demand for VPS hosting is expected to rise over the forecast timespan due to rising need among organizations to have more control over their servers as compared to shared servers. A virtual server acts as a dedicated server as it allocates a specified amount of hard drive space, computing power, and memory to each client. Each user on the VPS server can access the virtual machine running on its own copy of an operating system, thus enabling users to set up their website with guaranteed resources. VPS hosting acts as a viable solution for organizations, who want the capabilities of a dedicated server but do not possess the resources to physically host and maintain the server hardware. Another factor driving the virtual private server market value is the growing demand for secure hosting. In VPS hosting, each virtual server is separated from other servers on the same physical server, thus providing a high level of security from cyber-attacks.
 

Furthermore, with the rising penetration of virtualization technology to reduce hardware installation and maintenance costs, the demand for cloud server hosting will increase as it supports the on-demand provisioning of resources for web hosting.
 

Virtual Private Server Market Analysis

The managed VPS hosting market is expected to witness the fastest growth rate over the forecast timespan. In managed VPS hosting, the managed hosting provider is responsible for VPS server configuration, maintenance, server security, and software related updates. A service provider also constantly checks for any vulnerabilities on the sites as well as malware or suspicious traffic patterns to keep user’s websites safe from viruses. The demand for managed VPS hosting will increase and it will save time as the client only needs to handle the website and online business performance, whereas all the technical issues are handled by the web hosting provider.
 

The Linux VPS hosting segment held a major market share of over 60% in 2018 and is projected to maintain its dominant position in the market over the forecast period. Linux operating system is one of the widely used operating systems for web hosting as it is an open source, easy to install, and supports multitenancy, making the allocation of resources such as space and email accounts an easy task. Linux VPS hosting is gaining more popularity as it is more cost-effective & secure as compared to Windows operating systems and helps its customers to upload multiple files, manage multiple domains, and run business applications with no hassle. Among all the Linux web hosting options, the Ubuntu operating system held a major portion of the market revenue share in 2018 as it is ideal for both remote desktop and server applications.
 

Small and Medium Enterprises (SMEs) segment in the virtual private server market is projected to exhibit the fastest growth rate from 2019 to 2025 due to the rising trend of VPS hosting to reduce costs. VPS enables organizations to avail the capabilities of a virtual dedicated server and minimizes the overall hardware required in the data center infrastructure. With a growing startup ecosystem, small enterprises and startups do not have resources to build their own servers. Thus, they are relying on the VPS providers for managing their network resources in a cost-effective way. The companies operating in the market are offering several VPS plans to empower small businesses and enabling them to add extra value to their business without any hardware investments.
 

The retail VPS market size is expected to witness the fastest growth from 2019 to 2025 due to the increasing proliferation of e-commerce platforms. The retail industry is witnessing rising adoption of digital platforms to establish a strong omnichannel presence and improve customer experience. This will result in a surge in demand among enterprises for private web servers with dedicated resources to host several websites for business purposes. E-commerce platforms often require dynamic scalability of bandwidth and other server resources to accommodate the periodic increase in traffic flow on the website. Hosting service providers offer such flexible resource usage for e-commerce companies, which results in significant cost savings on the IT infrastructure.
 

The Asia Pacific virtual private server market revenue is expected to grow at a CAGR of over 15% from 2019 to 2025 due to the increasing internet penetration, a rise in the number of smartphone users, and the growing utilization of cloud-based platforms by emerging SMEs in the region. With a rapidly growing start-up ecosystem in major markets such as India and China, the demand for VPS services is likely to proliferate consistently over the forecast timeline. Also, government initiatives for the digitalization of administrative and industrial infrastructure in the region are supporting the rising adoption of server hosting services. With the growing internet penetration, the uptake of VPS by organizations of all sizes will increase swiftly during the forecast period.
 

Virtual Private Server Market Share

The companies operating in the market are focusing on expanding their customer base by introducing their advanced VPS offerings in the key regional markets. For instance, in 2018, GoDaddy announced its next-generation VPS hosting solutions in India. The fourth-generation VPS hosting service enables users to get access to their servers in minutes to save time and increase performance for their customers' sites. Some of the key players operating in the market include

• Amazon Web Services, Inc.
• A2 Hosting
• DigitalOcean, Inc.
• DreamHost, LLC
• Endurance International Group
• GoDaddy Operating Company LLC
• Hostwinds, LLC
• InMotion Hosting
• Linode, LLC
• Liquid Web
• OVH
• Plesk International GmbH
• Rackspace Inc
• Savari Technologies
• United Internet AG
• TekTonic
• Vultr Holdings Corporation
• Hostinger International, Ltd.
• Just Host, Inc.
• Namecheap, Inc.

Industry Background

Traditionally, enterprises have been using shared web hosting, where multiple websites reside on a single web server. Such sites share server resources such as storage, memory, and IPs. The model is economical as different customers share the overall cost of server maintenance. With growing broadband penetration and digitalization, there has been a significant increase in the amount of content generated and exchanged over the internet. Consequently, the companies have started demanding independence with dedicated servers. VPS offers the independence of managing the entire resource of the server with no partner. The VPS scheme works basically by having many kinds of virtual web servers on top of an actual or physical web server.