Go Daddy Goes Unlimited. Resistance is Futile

Go Daddy has introduced an unlimited web hosting plan, with no quotas on monthly disk space or data transfer. The move by Go Daddy, which is the world's largest hosting company with more than 33 million domains, is a clear signal that quota-based pricing for shared hosting accounts is on its deathbed.

Go Daddy's decision comes a year after Yahoo's shift to an unlimited plan. At the time, we predicted that Yahoo's move "is likely to prompt an explosion of unlimited accounts from providers who feel the need to match Yahoo’s offer ... In a sense, Yahoo’s new plans could break down resistance to unlimited offers." By bestowing credibility on unlimited plans, Yahoo was opening the floodgates to broader adoption.

That is precisely what has happened. Providers like HostGator, midPhase and ixHosting now offering unlimited plans for $4.95 or less. DreamHost predictably turns the marketing hype volume up to 11 by offering "unlimited plus 50GB" for $5.95 a month. The continuing race to the bottom has has made Yahoo ($11.95 a month) and Go Daddy ($14.99 a month) the premium offers in unlimited hosting.

The unlimited hosting account has always been controversial within the hosting industry. Many see it as a marketing gimmick that promises more than it can deliver, while others say the focus on tiers based on disk space and bandwidth quotas is geeky and confusing to most customers. Other critics say unlimited accounts are “overselling” - promising disk space and bandwidth that the company doesn't already possess - and misleading to customers.

All You Can Eat, But Small Bites Only

The catch is that these "all you can eat" plans only work if the bandwidth is consumed in measured doses. Shared hosting accounts can be fine for low-volume sites, but don't usually scale for the kind of instant traffic that site owners probably envision when they see UNLIMITED.  In practice, these accounts are often capped or turned off during large traffic spikes.

Here's why: in the shared hosting model, several hundred customer sites are housed on the same server. When one site on the server gets Slashdotted and begins using more resources, the server bogs down. The operation of one customer site begins degrading the performance of other customer sites - which isn't allowed under most terms of service. 

The mainstreaming of the unlimited hosting plan is a clear admission that the old model is busted. Tier1Research and other industry analysts have been urging hosting companies for years to focus on features rather than specs and quotas. Companies that do this well may be able to succeed by gaining share from quota-focused competitors.

The cheap hosting market will remain under pressure from free hosting platforms from Google and Microsoft, along with social networks, blog specialists and photo-sharing sites. But history suggests that there is no shortage of customers who want enormous resources for their web site, but aren't willing to pay more than $4 to $15 a month for it.

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