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As looking at the thurst/damn vps way. Looking through things even bigger companies can fail. "Iomart" own so much. Data centres etc they failed harsh.
same with burst.
And about every single EIG brand known to the world.
TBH I was really shocked with Burst closing their doors.
They were a really old company that grown too fast in WHT then simply disappeared.
Because their owners have to go back to school once break ends.
That's VC's for you
Basic supply/demand should also be mentioned here. Not to disparage the trade that many of you have chosen, but hosting is a commodity. It is not difficult to produce, and the vast majority of demand will seek the lowest cost producer. There will always be niches for the creme de la creme, but most customers want an undifferentiated, cost effective product. Simply put, most hosts fail because there is not an overwhelming need for new hosts. Except for those that will truly shake things up, most will fail because they neglect to do basic industry analysis.
This is pretty much on point. Besides what everyone else said, it's important to understand supply and demand. If the industry is already so large and companies are controlling it with good offers and people are happy with their service, there's no reason for them to switch over to a new host unless that host has something better to offer.
Well it all depends but from experience it's the competition, the hosting industry is so hard to get customers in unless you either go the LowEnd way or have a lot of capital to market yourself. My old brand closed because of MySQL issues which happened every week due to innoDB and I believed innoDB was supposed to be stabler than MyISAM, and customers came first, why should they suffer.
If I could turn back time I wouldn't even have started Webhosting because from 2011 the industry was full of kids, cheap unlimited hosts or EIG so haha.
Mooses, thats why they fail.
Nope! MooseVZ succeed!
I would say staying power and lack-thereof plays an important role. Not only is hosting as saturated as ever, but it isn't a new market anymore. People are more prone to view your new host in terms of longevity, but you haven't accumulated any of that yet. I remember it being a lot easier to find new clients 10 years ago and I think the biggest reason is that there wasn't as many established hosts around, simply because there couldn't have been. Hosting was still super saturated back then, but people were more experimental in their choices because they didn't have as many time tested, established safety nets to fall into. Now that era is gone and lots of hosts have proven themselves, so people can be more conservative in their choices.
The market is past 'the honeymoon phase' and people have settled in with their cranky spouses. If not, they'll at least want confirmation that you can weather the storm, which is something you can't convince them of in marketing buzz alone, and especially not through that hardware / knowledge / whatever that was handed to you on a silver platter when you were born yesterday.
Even if you study this thread closely and manage to avoid all of the pitfalls, people will still have almost no reason to try your service when an established host offering the same product posts an ad next to yours.
Or, I agree with @iwaswrongonce
Why do a majority of hosts fail?
Because they pander to people that often times behind their backs they call "idiots". Or maybe, when they're given a proposal to improve customer service (xen-based multi-seat environment with space left over to allow live migration in event of required maintenance and ease of backups) to money grabs (slabbing, the whole negative connotation). Or maybe they're like "Oooh, we should expand, but we shouldn't bother telling the guy responsible for attempting to improve customer experience until after we buy subpar hardware with unforseen issues".
Many hosts see the web hosting industry as a game, easy to play, not much loss if you lose. In reality, you need to be able to make cold, calculated, well informed decisions to provide optimal customer experience as well as a meaningful profit. Most people miss the customer experience spiele, and suffer the consequences as a result.
To "not fail" I think you need:
Wait, you mean you can't get depressed and blow everyone on a mountain?
If you're going to con someone into becoming a reseller, I think you should start by saying, "by the way, reselling is a recipe for disaster". It is okay to make a sizable income from selling to resellers and creating a market for it, as long as you're sure to tell them that they're being setup to fail.
Judging from the adverts here, servermania makes their recipes for disaster public. even as a white-paper.
@Hostnun - there is a difference between being a reseller - so buy a box from X company, mark it up and then sell it out for X% higher; or taking a box and using it to sell a valued added service - VPS, shared hosting, etc.
The comment about back-to-backing servers. Thousands do it and make a few % each month on these systems. But ultimately it ends up in tears for the endusers. One of the most famous cases was a guy who lived in Barcelona who was reselling OVH servers about 3-4 years ago, he had hundreds (at least 300) servers from OVH, he was making about €20/month on each system and offering nothing more than a resold OVH box.
After many (ab)users had caused problems at OVH, OVH sent him a 30 day notice of termination and cancelled ALL the servers. In that instance he kept accepting money for renewals and orders right up to the last day. Then did a runner.
The customers ended up with their servers gone and no recourse against him or OVH.
I don't think so. By now, parroting that line is more of a banal scapegoating tactic than anything imo. 'High end' providers stay in business by happily setting/competing at the same low prices and, in doing so, wiping out a lot of the entry level competition before it can get off the ground. If a host is successful at providing an expensive commodity elsewhere, it's relatively easy to expand into a lower end market and dominate it. The host will have lots of resources to spare, so why not? I would argue that such hosts are more responsible for 'bringing down the price people are prepared to pay' in that they sell low as a strategy rather than a constraint.
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Forsooth, after you're done building and securing the ol' multi-million dollar hosting megacorp, if you have any business sense at all, the next step is to move into the LEB market and start selling for peanuts. 'Pay monkeys and sell for elephants'.
Actually just a better solution to off-lease equipment. We make our money during the first 3 years by using the equipment to offer premium services at premium rates. When the equipment isn't the latest and greatest anymore then we can either return it at the end of the lease of pick it up for pennies on the dollar then dump the kit onto subsidiaries like Delimiter who can make a profit renting it out at dirt cheap prices. We don't need to make money off the equipment because its been paid for, we just need to cover the infrastructure cost and Delimiter needs to cover its administrative/support costs, the rest is bunces.
edit: nm, dead horse
They do the same stuff as everybody else, with nothing different, and customer laughs as providers slug each other out for unsustainable services at an insane price. Why would I spend $20-30 on a "better" VPS you are trying to sell when I'll be on the same node as $5-10, $15-20/year customers doing who knows what.
Fake sense of business. Most of them thinks the price is everything. Lower the price = more customers.
Thats like all the Tier 1 providers then!
@MarkTurner ruh roh
Very nice explanation.
I suspect often the customer doesn't know how to differentiate a failing company form a good one. could add, what goes into being good hosting infrastructure, or what to look for, maybe even - how to tell from the outside...