Originally Posted by bandboy
That is sheer sign of a company to collapse. It is not just overselling but a MASSIVE, MEANINGLESS OVERSELLING.
If they charge $2/client, they will make only $80 if they are overselling 100%. Servers of that configuration with cPanel/fantastico installed do not come for less than $90 unless server is Celeron and from lesser known data center or you are paying for entire year.
I dont tend to agree with this YOu mentioned in the thread as well (note quoted above) that they tend to shut down. Google, Yahoo, Microsoft, Rediff , Godaddy are NOWHERE near shutting down today or tomorrow or 10 years later.
Based on marketing strategies you forgot the important factor STRATEGY of the Second Provision.
Let me explain -
Godaddy sells domains. They earn considerable revenue from that. There are also outside investors who fund Godaddy and Partners like Google who buy domains through Godaddy. Basically Godaddy has enough profits where they can now use some of it and invest into servers and offer "the too good to be true" offers. They generally increase BRAND in the process and help improve their name status as a provider for many services.
Microsoft and Googles' GMail as well ...they provide unlimited free email though its def. overselling of what they really have. (or Yahoo's Unlimited Storage Emails)...but they make sure the earnings from the other sources (ads,etc) are utilized to offer more to the customer. They increase brand and they are no where near closing down.
So I can assure you overselling is not going to end up - again the MOST CONTROVERSIAL topic we know today is that of overselling. I can assure you, we don't oversell - however I can also assure you that overselling is not evil either - its mainly in the eyes of the beholder of the opportunity.
There is definitely points worth considering about a seconday income flow and then tuning those profits to provide low cost services for something else. That allows them to offer the "real good pricing" that everyone else feels is too good to be true.
Further if you build your own server and co-locate it Or even just buy your own server you pay the one time cost and not the monthly cost. getting a one time cpanel license as well (optionally) will break the overhead costs .... so a good server may cost you 300$ one time and nothing more than that. add 50$ bandwidht per month (or so). You again your deduction is flawed - though may be correct in terms of "Smaller companies" with "Lesser experience in the hosting business" but definitely not all.
This is based on a lot of analysis - business and marketing for the same.