Do you think web hosting market is over saturated?


It seems there are thousands of web hosting companies out there and the market seems saturated. Do you think it's a good idea to start one? I am not talking about becoming an affiliate of another hosting company. Starting a new one which offers more services for lower price (even though there are free hosting and less than $3 hosting).

Starting one seems very easy with very low cost with a single server. To me, if it doesn't work out, I am no losing much. I still keep the computer and use it as a second computer.

There's also competition from providers like WordPress which offer free hosting but you can't do as much with a tool created mainly for blogging.

Addition: Web hosting is a side business. I still have a day job. Web hosting is easy to set up and it's a recurring fee service.


asked May 22 '10 at 02:20
Tony Henrich
85 points
  • You're going to have trouble offering a competitive level of reliability with one server unless there is a niche market for websites that don't have to be available. – Jeff O 14 years ago
  • I started web hosting years ago with the web server, mail server, ftp server, dns server, database all on the same server. When I got big, I added more servers. So yes, it works if done properly. Just add a ton of memory and powerful CPUs. Now with a 32G ram & a quad core machine, you can have a screaming one. I am re-entering the market. – Tony Henrich 14 years ago
  • You may want to look at my answer to this question: Black 14 years ago

4 Answers


No way. It is a run the mill business - unless you either get customers cheap (existing customer base) OR invest a LOT (with a small profit margin) it simply is not something with hugh profit potential in most cases.

OR: you find your niche. Cloud hosting seems to be the current thing.

answered May 22 '10 at 02:36
Net Tecture
11 points
  • I am not sure what Cloud hosting is. Seems like a big/huge investment to create your own "cloud". I want to do something starting with a single server and it's a side business. Not my bread & butter. – Tony Henrich 14 years ago
  • Thn you stand in line with hundreds of people who do it. Low barrier of entry + something every student with delusions tries out = hard to make a buck. Sorry, ths simply is how it is. If you HAVE customers this can be additional low income (and not too shappy at that), but to get custoemrs for it is - hard. – Net Tecture 14 years ago
  • That's why I asked the niche question. Henrich 14 years ago
  • The problem is - I simply do not see a niche there. It simply is too much a commodity. There may be niches, but they require - investments. Significant ones. – Net Tecture 14 years ago
  • To expand with an example of a niche: Server hosting / colocation... for financial trading applications. Server room close to exchange (1ms round trip time) and you ahve lower competition and a good market proposition. Not THAT many customers, but they are willing to pay a premium. Investment? A million upward. – Net Tecture 12 years ago


You cannot compete with places like GoDaddy and Host Gator for hosting on price. It's just not realistic.

You would need to find a market niche like:

  • Heroku - Ruby on Rails hosting
  • Engine Yard - Ruby on Rails hosting
  • - Early PHP focus
  • - Focus on hosting DotNetNuke CMS
  • - ASP .Net hosting

Hosting really isn't just turn a computer on setup some FTP accounts and let it rip. You have at a minimum to worry about:

  • Power (real hosting companies have battery & generator backup)
  • Connectivity (need multiple sources of highspeed internet)
  • Disaster recovery (must have offsite backups if trying to do it from your home)
  • Hardware (drives, ram, motherboards) on hand incase of failures

I wouldn't even consider hosting from a residential location. Buy a dedicated or co-locate a server at a local facility. Some place like or

Then you have to think about:

  • Marketing - where will you get customers
  • Signing them up
    • Online credit card collection
    • Recurring billing (could use
    • Provisioning their accounts
    • Control panels (cpanel / plesk etc.)
  • Many IP addresses available for clients who want SSL certificates
  • DNS servers

But if you want to host some friends and family on a machine in your basement go for it! That is no big deal but it would be irresponsible for you to sell it as business grade.

Best bet is to carve out a niche and specialize in hosting a specific programming platform, or open source project. Like Redmine hosting, or knowledge tree hosting, or name 1 of a million popular open source products out there. At this point in the game you need a niche.

answered Sep 22 '11 at 12:05
Ryan Doom
5,472 points
  • +1 for explaining what hosting *isn't* – Ray 12 years ago


If your going to be running the server from your own house, consider your hosting business doomed before it has even started. You are honestly better off leasing a server and some server rack space that is properly cooled in a secure and backed up environment.

You as a hosting provider will have a few responsibilities such as reliability, performance, speed and versatility. another caveat is that if you are running a server from your own home, even with a dedicated internet connection, you're most likely not going to be able to provide a decent connection speed to run the server, not to mention costs associated with electricity, cooling and bandwidth.

Try this site: - leasing a web server is probably your best bet and it'll allow you to upgrade much easier and expand out if you get big. The market is oversaturated without a doubt though.

answered Feb 22 '11 at 12:18
Digital Sea
1,613 points


"Starting a new one which offers more services for lower price."

Show me evidence people are changing hosts for more services. Clearly 99.5% of those services are solved by 99.5% of hosts already - the very reason there's a price war.

"Starting one seems very easy with very low cost with a single server." why do it...anyone can. Washing cars would be a better business. Really.

answered Sep 22 '11 at 12:45
249 points

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