I had played with the idea of a very narrow-focused niche such as what you suggested. But after some research and looking at the startup costs, I found it would be a bit too hard to make a profit for quite a while. While finding a niche and marketing towards that is an excellent idea, just be careful you don't get TOO focused and put yourself in a bind due to lack of new signups all the time.
So study the need in your respective market, see how much of a demand there is for a targeted hosting company, then try to project how many will actually use you rather than someone else, and see what you come up with.
I'm still working on an idea of a spinoff company to market a small group for hosting and design.. but I am waiting until my main company is stable and I'm making enough money to cover the spinoff as well, so I can see what it may take me.
It comes down to a matter of industry knowledge, IMHO. If you know something about a specific niche and can provide a solution that "many" in that industry can use, then you might want to consider focusing on them.
But my question to you is, are you going to offer them more than just "hosting?" Are you going to offer customized applications or services to automate or systematize their business to work with others in their industry?
If it's just hosting, then why specialize?
If you are going after local bands, realtors, auto dealerships, schools, manufacturers, etc. and offer them something to make their life easier, increase their exposure or decrease costs, then you have a reason to target. And if you can convince a few of them that your way is better, then it becomes easier to build traction.
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