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I had the opportunity to see the start till the end of a web hosting company in a 6 weeks period. Very short and very sad by following a forum.
Firstly the hosting company was setup with the hosting server in Singapore, cost is much higher in Singapore than in say USA. I got a shock when I first came across this as the primary audience was for overseas customers. For such a setup, it would make sense to put the server in USA instead where you can take advantage of the cheap bandwidth and costs. I guess this is what that drove my attention to the company and its development.
First mistake I saw was they offer unlimited everything, bandwidth, web space and domains etc at under $20/year. From what I see this is already a suicide move. Even in USA, given their cheap hosting facilities, this is a very risky move, to do this in Singapore is a 100% suicide.
I saw the initial euphoria as the new clients came in full of joy at discovering such a cheap bargain and also the owner's enthusiasm . Clients with warez links etc sign up and basically it is a free for all with such cheap pricing. My experience was that high pricing attract corporate links while low prices attract individual clients and rock bottom pricing attract undesirable clients.
Problems started to occur in the 3rd week, I would expect so as the clients start abusing the everything unlimited features of their hosting packages. From then on the posts were all about problems being faced with the owner apologize and saying that this was solved and that was solved but the problems continued coming in. During this time, some clients were still coming in, drawn by the unlimited offerings.
One month plus and the forum was full of complaints and posts demanding the return of what was left of their one year payment. The host replies was also getting more and more frustrated.
As more problems started surfacing, after the 5th week, I could see that the forums were all customers' complaints and no news of the host. The customers were ganging up to do a charge back of the money they paid for. At the 6th week, the host own web site was gone and so was his web server. All domains hosting were down and remained down. A lot of customers were caught in a position where all their data was gone and there was no backup, with the host disappearing. What was new on the forum was other hosting companies posting to get the estranged clients of that host.
In 6 weeks we saw the start, rise, fall and finally the closing down of a host. A lot of users who were looking at bottom pricing were left cursing and swearing and the host is no longer online anymore.
That is really Internet speed.
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