Thanks very much for your honesty. I fully understand and agree.
I think that in the US, there are some parallels in the hosting industry to what happened to ISPs a decade ago; the small guys are giving way to big players in the market. The biggest slices of the pie are just getting bigger while the remaining crumbs are few and far between.
For the small guys, there's a race to the bottom in pricing and most times this is at the expense of quality... There's really no other way to easily differentiate yourself from the other guys.
But there are important differences between the hosting industry and the mom & pop ISPs of yore, the big one being the target market. Having name recognition works to get the undiscerning, but the average VPS user is more knowledgable about the product they are getting. And the product itself is much more complex; the needs of any two businesses are quite different.
This presents opportunities. And the popularity and ultimate acquisition of the ISP Speakeasy by Best Buy shows that building a loyal base of knowledgable customers can pay big dividends.
Things have been pretty well saturated for a long, long time and there's still a niche market in the US for good quality hosting companies that care about the individuals they serve. (Although that niche becomes smaller as the big guys' quality, cost and ease-of-use improves year after year.)
Ultimately, hosting just isn't a business that can go viral. There's just too many physical limitations. It is lucrative and I think it can be a good long-play, but it's dependent on getting and keeping a relatively small critical mass and keeping those customers happy.
I really appreciate your feedback and honesty. Solving the difference problem itself is really the innovation in this business; there's not really many ways to distinguish yourself as a hosting provider, so how do you do it?