Is "Web Hosting Business" an Opportunity?

We see thousands of online entrepreneurs opt for web hosting business and new web hosting provider come up on a daily basis. As a web entrepreneur we may sometime think, how such low priced hosting packages are available and what kind of profit do these hosting companies make?

To answer this question first we need to see how to become a web hosting provider in the first place.

The first step to setting up your own web hosting service is to become a reseller of some reputable and good web host. A good reseller account will provide you with tools that will help manage your customers and make it easy for your customers to not only buy the hosting but add other add-on products like domain names, email management…

Now let us see one of the top rated web hosting reseller program i.e. HostGator.

The pricing is a mere $25 per month and you get all you need to setup your own web hosting business.

Now all you have to do is find 5 customers for $5 per month you break even. A 6th customer is where you start making profit. Looks quite simple and this is one of the main reason we see lot of new hosts pop up every day.

Now if you planning to start your own web hosting services you need to look into couple of major issues.

Competition – Host resellers’ like HostGator made hosting business so simple that every single person can become a web host and so there is too much of a competition here.
Support – The reseller model is not scalable to a large extent. To scale up the model you may need to provide good support (24/7 support) and services.

So finally my question is – Do you still see “Web Hosting Business” an Opportunity? Share your thoughts in comments below.