The bottom line is the value/price ratio. We should all be working to add
value. By any means necessary.
The pitfall of low priced "services", is that it's hard to balance the
support level and lower price for services.
If Bluehost and lower end web hosters can completely do away with the
support aspect, certainly SAAS can scale. But if a significant part of your
value proposition is support, it's real hard to get down this low if any
human is ever involved, and if you pay a living wage to your workers. I
really expect at the ultra low end you have to be willing to do away with
live support, and just provide a product that works....with no support.
Would people want to buy a web host for $3.95 but if they engage support pay
$15/hour for it? Perhaps that would work... but I think the value
proposition gets skewed in this sense. Those customers paying this little
likely needs support in a variety of ways. The challenge is to do it all
right, so they don't...
I agree with Bob, more likely they are subsidizing costs with investment and
hoping to provide a profitable model in the future with enough market share.
Bottom line, is the industry needs to be increasing value, because the flip
side.... working for no profit, surviving off investment only... there's no
end-game. You see this cycle time and time again as market share is grabbed,
then underperforming companies are rolled up. In this process value is
Ultimately this is also why it's extremely damaging for investors to
constantly invest in companies that don't make a profit, and don't provide a
successful economical model for the services/products provided. These
companies largely live on investor money, lose money, and in their wake
destroy value for the entire industry. Of course the end-game for the
investors is to make money... I'm always surprised how strong
investment/gambles are for non-profitable companies. I guess there is no end
to those with too much money that have to place that money somewhere. As the
rich get richer, there will only be more dumb money cheapening the value
proposition. After all, who needs value when you have willing investors.
Bottom line is that if it's not worth doing... then maybe it should not be
done. Maybe the race to the bottom is not worth it. Maybe investments that
lose value for an industry should be limited.
The giant pool of money is now weaponized.