Most people don’t realise that when they first find a web host for their small website, but most web hosts are just resellers. There are very little barriers of entry or exit into the market and so the market is just saturated with them.
How does it all work?
At the bottom are the data centers. They own the actual building and pay for the utilities (electricity, water, Internet). There is a lot of investment needed at this level because a reliable data center has a lot of equipment that needs to be purchased and serviced. Data centers have to worry about complicated air conditioning systems, water-less fire retardation mechanisms, backup diesel generators, and many other components in order to ensure that everything in the building can run without interruption. Not only is the investment expensive, there is also the risk of not actually finding sufficient business. Obviously this lends to the number of data centers being minuscule compared to the number of web hosts.
Data centers make money by leasing out either space or server equipment (and its corresponding space) to individuals, organizations, and resellers. Leasing out space is called co-location, and some data centers provide only this service. Data centers may also provide dedicated and managed servers. This is where they lease server equipment (and the space and resources that they consume) to its clients. Managed hosting is dedicated hosting but with the help of the data center staff to maintain the server. However, data centers tend to work with selling space and/or equipment for entire servers. They will not lease out parts of a server to different people. That’s shared hosting, and that’s where resellers enter the picture.
For a small website, purchasing an entire server is an absurd idea. A lot of CPU time, bandwidth, space, and hardware would go to waste. Shared hosting is favorable for a small website because the client is paying for only a small portion of a server. The rest of the resources available can go to other clients on the same server. To make the deal even more lucrative, web hosts can oversell resources on a server (like an airline oversells seats) under the expectation that not all of the clients will be using all of their “allotted” resources at once. This benefits both the web host and the client, because both parties are getting more out of their money. Those who sell shared hosting are resellers generally. They either own actual servers of their own (and thus co-locate) or purchase dedicated or managed servers directly from a data center.
While shared hosting does have its advantages, it also has some disadvantages. Since there is little barrier to entry to the market, it’s easy for anyone with a minimal amount of money to start their own web hosting business. Plus, the risk is relatively small. As a result, not all web hosts provide optimal levels of service. Some may fuel down time because their server administrators are not sufficiently-experienced. Others may hold a client’s data hostage in the light of a misunderstanding. Some may even go out of business with no notice and no contact information.
Above these problems, a growing website will quickly hit a ceiling. It’s not profitable for a web host to keep a large website on shared hosting and so the website must be moved to dedicated hosting. However, because the web host has to purchase servers from their data center, having the reseller resell dedicated hosting is not advantageous for either parties. At that point, a large website will usually get a notice that they have to find someone else to host with.
So who really hosts your website?
How do you know whether a web host is a reseller or not? Usually it’s easily identified by looking at the services that they offer. Shared hosting is usually a sign of a reseller. However, there’s a more reliable method to use to check the position of a web host on the hierarchy. Data centers, since they lease the Internet lines, also resell IP addresses to their clients. You can lookup the IP address of a web host’s website and then perform a WHOIS request on the IP address. This should tell you who is the true owner of the IP addresses and thus the true owner of the server and/or space.
This is another post from my old blog. I think this is from around 2014.
minutiae 