Somewhere between 1,000 and 1,500 hosting providers, service providers and technology companies are attending this week's HostingCon conference in Austin, Texas. When I arrived at the conference, I openly wondered if the content and the chatter would involve smaller MSPs. But as I navigated HostingCon, I quickly heard plenty of MSP-oriented chatter in the halls. In fact, here are six MSP-related observations from the event.

1. Same Topic, Different Gathering: At many MSP events, small solutions providers worry about big vendors (Microsoft, Google, etc.) putting the squeeze on margins and hijacking customer accounts. I'm not suggesting the concerns are completely valid -- I've heard from plenty of MSPs who have profitable relationships with Microsoft Online Services and Google Apps. But that fear about "big vendors" working in the cloud is alive and well here at HostingCon.

How can small (and large) service providers survive? Jack Zubarev, president of Parallels' Service Provider Division, offered some interesting advice. Zubarev says service providers should focus on solutions that keep them 6 months ahead of rivals. When that six-month window has closed, you should be ready to launch the next service that gives you a six-month lead on rivals. Keep thinking in six-month intervals so that you're continually innovating with new services. The days of gaining a two-year lead on the competition are over, Zubarev added.

2. More Managed Security: Small MSPs certainly profit from managed security. The same trend is occurring at the high-end of the market. For instance, big hosting providers seem to be embracing AlertLogic, which has generated 34 consecutive quarters of revenue growth. AlertLogic's software helps hosting providers conduct vulnerability assessments, intrusion detection/prevention and log management.

3. More Partner Programs Shift to the Cloud: Emerging companies like Canonical (maker of Ubuntu Linux) continue to focus on traditional VARs and integrators. But increasingly, Canonical and other companies are making hosting partners their top priority. Toward that end, Canonical has shifted channel manager Robin Barley-Waegener from a solution provider-centric position to a hosting-centric partner position. Similarly, Microsoft essentially has a cloud channel chief working with Worldwide Channel Chief Jon Roskill.

4. Connecting All the Dots: To my surprise, several vendors told me they're striving to connect the dots between cloud hosting providers, managed services providers (MSPs) and end-customers. A prime example: The new Mezeo Ready Program attempts to link MSPs with Mezeo-based cloud storage providers and end-customers seeking cloud storage services. Mezeo expects roughly 30 hosting companies and service providers to run the company's cloud storage software by the end of this year.

Mezeo is talking up local backup combined with remote disaster recovery. It sounds similar to CEO Sam Gutmann's vision for Intronis.

5. Open Source Finds a Home: Generally speaking, I think most small MSPs grew up selling Microsoft-centric solutions. But within large service providers and hosting providers, open source increasingly is the norm. A few examples:
  • Eighty-percent of The Planet's hosted servers run Linux.
  • HexaGrid is building a cloud computing platform for MSPs that's based on KVM (Kernel-based Virtual Machine), the open source virtualization platform.
  • Zimbra, the open source email platform owned by VMware, is here at HostingCon talking up its channel strategy. (Hint: VMware is set to attack Microsoft Exchange.)
  • NeoSpire, a managed hosting provider, is preparing to launch a Drupal-oriented managed service. Drupal is an open source content management system that major web sites -- including the White House -- increasingly leverage.
6. Mergers and Acquisitions: Just like the small MSP market, consolidation seems set to accelerate in the hosting market. One rumor involves potential chatter between Softlayer and The Planet. Speaking of M&A, NCC International President Tom Millitzer hosted a session about cloud company valuations, mergers and acquisitions. Millitzer seems to be the real deal. He represents sellers and sold his first hosting company in 1997. Sounds like he's been involved in 300 M&A assignments since that time.

Bottom line: Small MSPs and large hosting providers frequently face similar business challenges ... commodity services, direct SaaS and cloud services, and the constant need to invest in new or emerging services for end-customers. I suspect small MSPs will increasingly partner up with large hosting providers. But the word of the day seems to be "coopetition" -- cooperating on some fronts while continuing to compete on others.

HostingCon concludes July 21, but I'm heading home a day early for deadlines that await me in New York. Back soon with more blogs. Thanks for reading.

Sign up for MSPmentorā€™s weekly Enewsletter, Webcasts and Resource Center. And follow us via RSS, Facebook, Identi.ca; and Twitter. Plus, check out more MSP voices at www.MSPtweet.com.