For today’s post, I’m shifting focus towards starting your own web hosting company, rather than focusing on a particular web hosting topic. Even if you don’t want to start your own hosting business, you may still find this post helpful because you will gain better insight on how the web hosting industry works.

So anyway, you have decided you want to start your web hosting company. At this point, I’m guessing you are doing the grunt research work to learn as much about the industry as possible. By now, you have realized that there are literally tens of thousands of web hosting companies out there. You may ask yourself:

• How can you score clients if there is so much competition?
• Is my time worth the effort?
• How can I compete with these ridiculous web hosting plan offers?
• Is it too late to jump into the hosting market?

These questions are probably plaguing your mind as they did mine roughly 7 years ago when I started my web hosting company. If you go to any popular web hosting forum, you will notice that these types of threads are always popular. Half of the replies are ‘no, there are already too many web hosts’ and the other half of the replies are ‘yes as long as you have a niche’. Basically what Im trying to say is that even after all this time, these questions are still being asked and still get the same answers as they did back in 2002.

Surely more and more web hosts have started since 2002, right?

While yes, there are definitely more web space providers out there today than before, there are still only a select group of web hosts that remain popular and are well known today. Also, I will say that 70% of the start up web hosts never make it past the first year. That means only a small group of companies make it over to year 2, year 3, etc.

No! The hosting market is not over saturated.

Here is what you have probably read over and over – ‘it is not saturated as long as you develop your niche’. But what in the world does that mean? It basically means: do not try and compete with the top, most popular, hosting businesses out there. They have already cornered their ‘niche’ – cheap hosting with a lot of resources.

In order to be successful in todays market, you must put in a lot of effort to distinguish your company from the rest. So how do you do that? This is where you need to be creative. I can’t sit here and simply list the step by step procedure to making a unique hosting service.

I can only offer you examples.

Example 1: SquareSpace.com
Right off the bat, SS does not look like your typical hosting provider. While they are still just a web host at the core, they have spent a lot of time developing their own little web hosting environment.

Example 2: 0bones.com
0bones is a free web host with a spin on it. They have intertwined a social network into their service so that members can promote their website all over the 0bones social network. This service is still a free web host at the core, yet it offers something different than the rest – a way to get free traffic to your website and also making interacting with other 0bones members easy.

So in a way, you could say your niche is what you offer that is different than the other hosting services out there. You must be creative!

In todays 2009 hosting market, which is still relatively the same as it was in 2002, you must offer a unique service in order to succeed. It is also a good idea to get trying to compete with top web hosts like HostGator, LunarPages, 1&1, etc. out of your mind. These low cost, high resource web hosting markets have been cornered and, while not impossible to tap into, you will have a much harder time getting your company well known in for this niche.

Got a good idea for a web hosting business?

Think you have a good idea for a hosting company? Post a comment with a summary of it here and I will try and see if I can find a web hosting service that is similar to what your idea is.