The webhosting industry has been claimed to be near saturation point as there are hundreds of web-hosting providers clamouring to provide cheaper and better services to businesses and individuals. This upsurge of supply is largely due to resources becoming readily available (and at cheaper costs) with plunging diskspace and data-transfer prices. The barriers to entry in the web-hosting space is low as large resellers of server space provide cheap hosting and reselling plans that create opportunites for new webhosts to join in the market. With increasing number of suppliers with ever cheaper reselling plans, more webhosting businesses are sprouting up to provide web-hosting solutions to business and individual websites due to lower fixed costs and investment. In addition, this increase in supply is not caused by factors in any particular country. The internet is global and as such, datacenters in US, or in fact, any part of the world, can provide the server and webspace for a local webhosting company. It is taking place in internet space and consumers and providers can easily find each other and exchange services in the global space.
Increasing the supply is naturally a good thing for the customer who is on the demand side. This imbalance has caused new web-hosting providers to offer extremely low prices for their webhosting plans or packages in order to compete in the tough market. Customers get to choose from a myriad of hosting providers who are constantly lowering their prices. However, this might not be a good thing. By offering low prices, companies are earning small margins that may not cover their support costs. Support is vital in the webhosting business as most customers want to be able to get help with their web-hosting accounts. If the profits do not justify the costs, web hosting companies will easily close down – and take their clients’ sites with them.