I've been reading a lot about hosting companies and since theres an entire forum community dedicated to hosting companies I'm curious, is the market flooded with companies offering crazy hosting for 2$ a month trying to entice people to use them while overselling their servers? Or is it still not enough, and does it need more and more competition?

I've seen hosting prices go from being 5.95 a month (A few years ago I used to pay that for a 500 MB shared server) and now I see people selling 5GB for 2$. Makes me wonder about the future of this industry, are we going to start seeing "5 cents per MB" in the near future?

I'm thinking of learning what I need to in order to start offering people hosting through my web design business, but I don't want to jump into the field if its overly populated.

There's a lot more to hosting than there was several years ago and there will be new demands that will require increasing knowledge and ability. 5 gigabytes may sound like a lot but, in the near future, with more people buying broadband connections, this won't be much. The standard will be bigger images, more movies, and better networks. There will therefore be greater demands on web hosts. Many will fail, especially those who compete solely on price or who lack the knowledge to scale and modify their network with time.

There's still room for hosting companies to join the market, there'll always be people looking for a good service, not all webhosts charge $2/mo to get any clients.

Who in the world would host with a $2/mo hosting company? You are paying for support, not space. Well, maybe some are paying for space. For that matter, I'd get a frame forwarder and grab space on a shell account somewhere and frame forward to it, that may be even cheaper.

A 500 GB SATA II hard drive is under $200 now. A RAID array (high quality) would run under $1,000. So space is cheap, it's the other stuff people will be paying for.

I've seen hosting prices go from being 5.95 a month (A few years ago I used to pay that for a 500 MB shared server) and now I see people selling 5GB for 2$. Makes me wonder about the future of this industry, are we going to start seeing "5 cents per MB" in the near future?

Changes of that magnitude, in my opinion, aren't ones to take seriously. There are MANY costs that any business will have whether it's locally run, running from another company like China, or one that is online only from whatever location it chooses. For hosting, you need to have a lot including people to handle support, billing, sales, development work, project management, etc. Sure, hosting companies may not start out with each of those, but planning for them is something that should be done.

The cost of the server is only a portion and may not be the biggest cost either depending on the size of the operation.

If someone wants to go with a host trying to sell 5GB for $2, they should probably think about it before doing so. This is not to say that it can't work and not even that I personally think it can work, but depending on what they're doing, 5.95/month for 500MB may not be that bad of a deal.

You are definitely correct. The market is filled with a lot of people who shouldn't be anywhere near a server.

You need a good brand to beat ur competitor.

you need to know what you're doing, and you cant expect business, let alone profits, for a while. Don't be cheap about it (like i've been :)) and try your hardest to provide quality. Quality web hosting is hard to find still. Most of the web hosts i've seen on here are very good (with the exception of a few of course) and its a very good thing that you wanted our opinions, that tells me you might have what it takes.

Well it's like with everything...how many real estate companies do you have who offer different programs in a town/city....tons and tons....it depends on the people, service, quality etc.

Thanks my opinion.

There is room for QUALITY hosts in the market, it is only flooded with fly-by-nights, those looking for a quick buck and those just trying to broker customers though. Pick something and don't try to compete with the Godaddy's and HostGator's. They picked their model, but that does not mean they are the best or right.

The market is flooded with hosting services that are improperly managed. There is plenty of room left for quality web hosts that know how to manage servers and a business.

Yes, there is still room. I wouldn't try to compete with the bigger companies so I would just try to target a specific niche, for example mydoghost.com could offer hosting to dog related sites. If you target a niche you can get higher conversions because you can adapt your plans to those webmasters' needs and can do more analysis (market, keywords, SEO, etc.)

Market: Overflowed or Never Enough?

Neither! ;)

It's exactly what you make it, if you fit in with the crowd, then sure, it's pretty crowded and isn't going to be easy to get somewhere. It's nothing short of what you make it, if you find a place that your company fits in then it can work well. This doesn't mean reinventing the wheel, maybe just simply having the wheel working so that it satisfies a certain group of people.

It's never to crowded to offer good service in this industry. If you provide good reliable service and answer emails you will succeed

Yep, the market seems crowded, if you see with a magnifying glass you'll find the competitor always leave a small gap there.

THe market does seem crowded, but thats what keeps hosts alive you see?
1)The established hosts sell resellers and dedicated servers to new hosts.
They either do real bad or do real good.
2)If they're bad, the clients will leave and join another better host which is a lot better which makes the client think that they're amazing cause they can reply to a support ticket within 30 minutes.

I say 20% of new hosts actually survive, but the rest will eventually die off (like IGS)... but the respawn someplace else. :) but i doubt IGS will ever come back =/

It require customer-centric approach to capture a market segment, I find a tremendous opportunity lying there for competitive differentiation.