The impact of recent news on control panel and hosting markets

At first blush, it was a shocking development in the world of hosting control panels. DotNetPanel, a Microsoft Windows-based control panel, jumped from  the world of paid softwareinto the realms of open source “free” software. Such a jump is common for older, legacy, and unprofitable products or when the owners of an application grow bored or frustrated and want to walk away from the responsibilities of keeping software up with the times and technologies.

But DotNetPanel was different. Over that last few years—as the Parallels organization acquired competitors in this arena, consolidating and concentrating the market segment—DotNetPanel started picking up steam. Sometimes because smaller companies often found it frustrating to work within the Parallels sales channel system, but more often because DotNetPanel was priced competitively and was making real innovative gains in their products and services.  Further, over the last few months DotNetPanel was cranking up the promotional angle. They participated in industry initiatives (e.g., WebsiteSpark), issued press releases, and launched new offerings (e.g., the first HyperV control panel). This is not the behavior of a disinterested or disaffected ownership. These are the activities of entrepreneurship.

So what is really going on and how will it impact the control panel and Web Hosting industry?

This deal has Microsoft’s fingerprints all over it

Feodor Fitsner, the CEO of DotNetPanel, is remaining uncharacteristically closed-lipped about the details. He is a successful entrepreneur and has a reputation  of being very accessible. His sudden change has the distinct aroma of the kind of Non-Disclosure Agreement (NDA) common to corporate acquisitions. Further, his business was, by all accounts, profitable, growing, and had a loyal customer base. An entrepreneur does not walk away from a situation like this unless he sees a direct and tangible benefit of doing so. Possible conclusion? He was incentivized to go open source. But who might have the resources and desire to put such a deal together?

If you reflect back upon the first three paragraphs of this article, you will notice that two programs were specifically mentioned: WebsiteSpark and HyperV. WebsiteSpark is a development germination program founded and run by Microsoft to promote applications and sites built on Windows Server. We are familiar with the program because SmarterTools worked with AppliedI to donate $400,000 in SmarterTools software to the seeding effort.  HyperV is the Windows Server virtualization technology owned by Microsoft. Coincidence?

What is in it for the Mighty MS?

The short answer is, a lot. Microsoft is going head to head with the Intel/Zen Server and Cisco/VMware alliances. Microsoft wants SPLA revenue from now until Judgment Day. To support this ultimate objective, Microsoft might benefit from the tactical advantage of a no-cost, professional grade control panel to support its HyperV technology inside Windows Server without the cost, time, legality, liability, or formal support structure of internal development. Microsoft might enjoy the plausible deniability engendered by the “unofficial support” of an open source product when they are getting cozy with Parallels for their speaking slot at the next Parallels Hosting Summit.

In short, Microsoft wants domains—as many as it can get, as fast as it can get them—inside HyperV virtualized containers running on Windows Server boxes. I think it likely that some market research on their part suggested that a free professional grade Windows control panel with the flexibility to run in dedicated, VPS, and shared environments that is already integrated into industry standard third-party applications (such as the entire SmarterTools line up, among others)—with a special emphasis on HyperV environments—means more market-share and more SPLA revenue for Microsoft.

I think that they may be right.

What is the Impact to Hosting Companies?

There is now a professional-grade Windows control panel available on the market that—according to the official DotNetPanel announcement—will continue to be supported and advanced in open source land. The code can be fully customized to accommodate individual environments and applications. It’s ostensibly free—adding precious pennies of margin in a competitive and crowded marketplace.  The question will be whether the advent of DotNetPanel “going open” means more choice and lower costs or does it mean more control for Microsoft?

What is the Impact to Parallels?

Well then… There is now a professional-grade Windows control panel available on the market that—according to the official DotNetPanel announcement—will continue to be supported and advanced in open source land.  This is in direct competition to their core offerings.  One can argue whether Mercedes Benz or BMW are the better cars, but if BMW starts giving their cars away for free you can bet that it will impact sales at Mercedes Benz.

Parallels has deep penetration in the hosting markets—especially at some of the larger companies. Microsoft and Parallels have sponsored and presented at each other’s events.  The Microsoft/Parallels relationship has long been as “Fren-imies” (½ friend, ½ enemy). Parallels has their eponymous Apple virtualization product—which will likely not be affected.  The rest of their economic apples are in the service provider business segments—hosting. The service provider business is in virtualization (Vitruozzo) and control panels (Plesk and the acquired Helm, Hsphere, etc.) and Paralles makes these products to run on Windows Server. Microsoft is now giving away HyperV virtualization and—in the opinion of this author—they are the hidden sponsor of the DotNetPanel open source project. If I am correct, this decidedly tips the friend/enemy ratio to the latter side of the scale, even if Microsoft denies it.

What does SmarterTools think?

DotNetPanel has been a distribution partner of SmarterTools for a long time. Feodor Fitsner, the CEO of DotNetPanel, has been good to work with and very responsive over the years. How can we wish him anything but the best and—even though he has said little—offer our hearty congratulations on what we see as an entrepreneurial victory and likely payday. We look forward to see what the future holds for the product and the staff of DotNetPanel.

Parallels is a current distribution partner and SmarterTools has participated at their events and in their promotions. There are literally millions of SmarterTools users operating within the Parallels family of environments right now.  We want both Parallels and DotNetPanel to succeed.  SmarterTools will continue to maintain our commitment to open APIs, automation, and feature advancement across all of the major control panels for all of our products.

Important Disclaimer: SmarterTools is an independent software vendor (ISV) not directly associated with Parallels, DotNetPanel, or Microsoft Corporation and we do not pretend to have inside knowledge of their intents or objectives. We have conducted our own additional research and inquiries into this topic. As such, this post reflects our opinions, understanding, and experience on the subject and in the industry.

Microsoft, HyperV, and WebsiteSpark are trademarks of Microsoft Corporations (MSFT).  Plesk, Virtuozzo, Helm, and Hsphere are trademark of Parallels.  SmarterTools, SmarterMail, SmarterStats, and SmarterTrack are the property of SmarterTools Inc.  All other trademarks and logos are the property of their respective owners and content owners are responsible for their respective material.

This post was written by Jeff H., vice-president of business operations for SmarterTools. If you liked this post, please consider subscribing to the SmarterTools Blog so you don’t miss an update.