I don't think it is, we are still seeing a lot of web hosting companies defending their niche and offering sensible web hosting space and services. I would say that the unlimited packages, leave it to the big hosting companies to fight it out. Concentrate on your niche and what you do best.
We started as as an unlimited provider to try to compete with the big hosting companies. A waste of time and attracts way too many abusers. We now have a solid non-abusing client base by offering structured and well priced plans. As opposed to cheap/unlimited and undeniably oversold plans.
Under structured plans we ended up with more reliable clients and even more stable services due to lack of abusers.
I think it depends on how you advertise and to whom you are advertising.
For example, if we advertise using "UNLIMITED EVERYTHING FOR $1!!!" as our marketing message.. then it's going to be very difficult to compete with the many many many other hosting providers who offer exactly the same thing.
However, if we advertise using "AMAZING SERVICE. NEVER WORRY ABOUT YOUR WEBSITE AGAIN!" as our marketing message.. we are going to attract the type of customer who doesn't care about "unlimited" things or even what bandwidth or disk space means. These customers are the "niche market" customers who are very happy to pay a lot of money to have their website reliably hosted by a competant provider.
I hope that helps.
My opinion is that the hosting market will always be split into these two "types" of customers.
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Unlimited space, Unlimited Bandwidth... Is this the future?
It's the present...
Even though we all understand that this business model is not viable on a long term
Depends on what you define as "long term". The companies offering unlimited have been offering virtually unlimited (eg. 1Tb space) before that. There are maybe 3-4 years since they've been doing that, and they're still at it, with no signs of going back to limited. If anything, there's now pressure on real prices going down. Space and bandwidth figures competition was more of a marketing play than a real way of comparing hosts and competing. The costs were not really affected when they went another notch towards unlimited.
The above members' advice is sound though. The unlimited hosting market is for the big hosts.
When they start selling unlimited hard drives, and data centers start offering unlimited bandwidth, and such offerings have 100% uptime to them, then we can schedule time to consider it for our customers.
There will always be gimmicks and other ploys to try and gain customers; you don't have to follow the crowd over the cliff.
It's just a marketing ploy, I don't understand why it bothers some folks so bad honestly. ATT, Verizon, MagickJack, Vonage (the list goes on and on) cannot offer unlimited either, but they do and everyone here buys it. They have more hard limits than we do honestly when a Sonus costs over half a million for 10,000 ports or so. Its just a marketing plan, like it or hate it that's all it is.
Worry with your own businesses and not all the trying to compete with others is how we have always operated. All of the unlimited hosts have very well laid out TOS/AUP that protect them from the abusers. You use disk space and bandwidth they use CPU and memory to limit. Its all limited in one way or another so yes it is here to stay like it or not. Decide if it is your route and then do the best you can.
Upload a 2TB website to any of the big guys shared plans and let me know if you ever go live.
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Unlimited hosting is like the all you can eat buffet. Case law seems to have upheld that you can claim you are an all you can eat buffet and still limit how much certain persons are allowed to eat, as long as the average user is capable of eating as much as they want.
most unlimited hosting providers limit you with a lot of other things, such as cpu usage, ram usage, the amount of files you can have, the type of files you can upload, and there is definitely a limit on space and bandwidth on the server as a whole which in turn affects the people on the server.
And as a host I've learned many people don't read the TOS so I'm just better off having hard limits on space and bandwidth than making my TOS much longer and detailed and having to deal with angry clients because they were suspended for hosting the kinds of files that were against the rules.