trouble is currently the world economy is bad, so for extra income everyone is starting a hosting business as a lot of people think all you need is a website and a few ebay listings and you will make money. also prospective clients dont have the disposable income as they had 3 years ago, so when you list a plan at $3 a month and then some kid lists an unlimited plan on ebay at $2 a year where do you think the prospective client goes.

I would say you need to target your audience. In your advertising campaigns you might want to make various banner ads that display anything unique you have to offer that might appeal to a particular nitch. The right domain name will help with that, but is not limited to that either.

You might come up with something that is included in your hosting packages that appeals to the business world as one example, something unique no one else has or very few have. Use your imagination and don't be totally influenced by what is already happening in "most" companies. Create your own ideas that will appeal to a wide audience, or several ideas that will appeal to several smaller audiences. There are many ways to market your product and you are only limited by how far your imagination will go.

Best of luck

It depends on how you look at it. From one perspective it is while from a different one there's some space for you to enter and crack the competition.

IMO. most businesses often try to immitate the services that the others in the competition have already been offering. All their energies get consumed in this struggle. In fact if services and plans are prepared keeping the customer requirements in mind, I'm sure there no need to think of how saturated the market is. If you are a new business offering just the solutions that customers need, you can conveniently assume that you've cracked the competition.

Any kind of business could accept new competitors, if they could compete...

Man, there are some people in denial here

The hosting market is grossly oversaturated. Extremely low barrier to entry for new conpetitors, no room to raise prices, hundreds of cookie-cutter hosts, etc.

i dont think its too saturated with good genuine hosts as the WW is developing all the time.

but i think their are too many as you call them cookie-cutter hosts and others call them kiddie hosts who just get a cheap reseller/master reseller from ebay and think they are web hosts selling unlimited plans for $2 a year

I think the definition of oversaturation is that it's difficult to find hosts who offer something different.

Everyone claims five nines of uptime, full-featured services, friendly staff, concierge service, and has the same sitebuilder/cpanel/etc. offerings.

If I was going into web hosting - and I'm not - I'd think of two things:

1. What is different or unique about my service? Simply offering Litespeed web servers or "unlimited MySQL databases!" is not a differentiator. "Good service" is not a differentiator (though it may be true and others may not, to a potential customer, there are lots of people offering that). What's my niche? It could be that I target businesses and provide bundled web site design. Or I am an expert on $SOME_WIDELY_USED_SOFTWARE and I provide hosting that specializes in it, where I configure and manage and the customer uses. Etc.
2. Go local. Still a lot of businesses who'd like to talk to someone with a local phone number, or who will at least listen to your pitch because they're your drycleaner or you eat at their restaurant.

Marketing is the hardest part. The days where you could throw up a reseller account and people would flock to your gates are gone.

Over saturated, as in that it is creating a problem for established hosts, or as in there's an over abundance of start ups looking to go belly up in a few months.

There will always be new start ups, and like every other industry, most will fail. Do they affect my ability to sell hosting - NO.

Should the general public be wary of new hosts? Of course, but as in everything else business related, it pays to do some research upfront, and prepare for the worse.

Everyone has to start somewhere. Some of these will go on to become industry leaders.

Steve-Hostirian, I was about to post a reply until I read your post You are absolutely right. Its just like any other industry. Even in th supermarket industry, you see new supermarkets opening up 2 blocks away from a well established one. But in the end, they both have the capability to take out the competition. In the end, it was ultimately up to the business owner to open-up shop. But if everyone was worried about the state of an industry, Wal-Mart would have never been around. You just have to be willing to take that step. I read a quote in a Forbes Magazine that read, "The worst sorrows in life are not in its losses and misfortunes, but in its fears".