Starting a Web hosting business

A question from Yahoo! Answers:

I am an IT student who looking 4ward to start a WEB HOSTING business, helping me with info about this business

Before or after graduation I want to start such a venture. Help me with information about this business and what is needed to start it?

I humbly suggest you reconsider. A good Web hosting company is a capital-intensive venture that requires enterprise-class hardware, reasonably skilled personnel (both technologists and marketers) and multiple secure data centers.

Let’s take a look at, say, IPOWER:

The company owns two data centers (Los Angeles and Phoenix) and has two more on colocation (one with AT&T in the U.S., another with Cable and Wireless in Europe). Those weren’t cheap, but they allow the company to take full advantage of the economies of scale.

More importantly, IPOWER’s 250 employees service 700,000 accounts. That’s 2,800 accounts per employee. Assuming that the average account pays $7/month (IPOWER offers three shared hosting plans at $3.95, $7.95, and $12.95/month, as well as virtual and dedicated servers), that’s $19,600 per employee per month…

To summarize, a profitable hosting company is all about large numbers. Unless you expect to land dozens of dedicated accounts and/or thousands of shared accounts within the first few months, I can’t see you survive in this business…

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April 15, 2008: IPOWER’s new Quick Facts page (the old one referenced above has been replaced) says: “IPOWER utilizes two data centers in the Boston, MA area. Combined, they occupy over 2400 square feet of space, comprised of over 800 Servers and ½ a Petabyte of storage.”

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