Hosting is like commercial airlines. Everyone wants excellent service, but they shop on price, and expect it to be low. Those who can actually spend a lot, do it themselves anyways (private jets). This could be the beginning of a consolidation phase in the hosting industry just like what took place with airlines.
The biggest deal with doing hosting is not even the server.
It's a) getting customers but actually even more important b) supporting those customers. c) A good online site to take care of the majority of the issues that come up. d) "c" helps keep down the "rtfm" type calls.
The "iron" and everything else is fairly easy.
So a hosting company is really people if you can solve the people problem you can definitely make money in hosting. Despite what Marco says the average retail hosting customer is not looking to switch their hosting if they get "good enough" service. Most don't even know that there site is down. (They do know when their email is not working of course because that they are constantly checking).
If you think this is the beginning of that phase you haven't been paying any attention at all. Just look up Endurance International Group. They own many (most?) of the major consumer brands and snag up new ones regularly. I can think of two big purchases this year already: DirectI ($110m) and A Small Orange (not sure on sale price)
Except airlines don't have SLAs. Since there are limited seats and limited departure slots the guy with gold membership and the guy with the, almost free, jumpseat are getting the same basic service. There is a lot more variance in hosting than price.
