This is true now (Linode is a premium vps provider) but it was not always true. Linode started out cheap, like almost everyone in our industry does. Linode was one of the first in the market; they've been selling VPSs longer even than I have.
>Its nice that they are now increasing the bandwidth cap, but it was on the low side to begin with. My takeaway from this is that "linode finally joins everyone else in network speed and bandwidth."
Eh, the way the industry works is that price pressure is applied by new entrants. Linode used to be that 'incredibly cheap provider' - but generally speaking? as you develop a reputation, you increase your resource allocations more slowly than moore's law would allow, and Linode has a pretty good reputation, so they get to charge substantially more than new entrants to the market.
So yeah, if the new entrants aren't a way better deal in terms of resources? something is terribly wrong (and that new entrant probably won't gain the traction they need to survive long enough to be able to let their prices rise to a higher margin level)
I mean, personally, I would think I have been letting my own prices rise (comparatively, I mean, by not increasing resource allocation) more than my reputation would allow me to... but I'm still gaining customers (though not at an awesome rate) - Linode announcing a network upgrade is putting /incredible/ pressure on me to upgrade my network. I can be okay with a new entrant flying below me, but Linode has a better reputation than I do; I have to provide more resources per dollar than they do.
Now, the big counterexample here is slicehost. Slicehost started out fairly expensive (compared to the industry standard at the time) and they went from zero to twenty thousand customers in like two years. It was incredible. I don't know exactly what they did, but they had a reputation for providing managed hosting level service for (premium) unmanaged hosting prices.
Now, how much of that reputation was marketing, and how much of that reputation was that their support really was that good, I don't know, but I do know that was their reputation.