The internet continues to grow at a rapid pace, not only in terms of the amount of websites online, but also internet use and business done online. A very natural and good thing has happened as a result - the cost of “space” on the internet has gone down. Virtually everyone wins in this situation, with the exception of those attempting to make money in the web hosting business.

Having operated websites long enough to be complaining about web hosting costs in 1999, and also having headed a web hosting business that is alive 3 years later and now part of my Tilted Pixel venture, I’m going to take you on a tour of the web hosting industry and show you what happens when you choose to start a business that is snowballing towards commoditization. If you know what web hosting is skip the next two paragraphs and jump right in, otherwise I have a little intro to help you along.

In case you aren’t completely familiar with how internet services work, the internet is literally run by a whole bunch of computers. Some computers at the very top of the hierarchy hold the whole thing together, but beyond that anyone with a computer and internet connection can not only go online, but they can also make their computer a part of the internet by providing services such as a website. By providing services your computer is now deemed a server. This architectural quality of the internet is great because it allows anyone to contribute and makes it very difficult for any single entity to assert control of what the internet contains.

If you are running a website you typically don’t want to run it on your machine due to the administration involved, high bandwidth requirements (a cable modem doesn’t stand a chance), and increased hacker risk, so you purchase a set amount of space on a machine run by a hosting company. Reputable hosting companies have special equipment operating in data centers - large facilities with incredibly high speed connections, redundant power systems, and 24/7 technical staff.

The Business and Economics Behind Web Hosting

Renting space on a hosting company’s server 10 years ago was far more expensive than it is now. This is primarily a result of the fantastically decreasing costs of computer equipment powerful enough to operate a website server and the shocking price cuts in bandwidth itself - the cost of actually being hooked up to the internet pipes capable of handling web server traffic. Alongside this a host of web server administration products was released and evolved, making it far easier than before to operate a web server.

So prices fell and hosting became cheaper. Why the hell are you boring me with this Matt? Well these price cuts and user-friendly software eliminated the barriers to entry, an economics and business concept defining the obstacles to entering a certain market. These obstacles include everything from government regulations, cost of start-up equipment, patents held by competitors, special expertise, etc.

The brunt of this occurred several years ago when the cost of renting a web server suddenly plummeted drastically. At the heart of this was Server Matrix, a new venture by capital-heavy Texas company The Planet. Leveraging economies of scale and an aggressive growth strategy, Server Matrix pulled a Walmart and started renting web servers at insanely low prices. The rest of the major providers quickly fell in line behind them and began providing the same. The funny thing is that by this time computer technology was advanced enough that these new cheap servers were more powerful than far more expensive web server equipment bought two years ago.

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If you are running or considering starting an online business then your website design and content are key factors. Before you spend thousands on a Flash monstrosity come take a look at the underwhelming visuals of big name sites and why you may wish to go their route. In today’s line-up we have the following multi-billion dollar companies, all of which have no problems affording flashier graphics:

• Google
• Amazon.com
• e-Bay / PayPal
• Royal Bank of Canada (Canada’s Most Respected Corporation of 2005)

Wow, where is the flash? I’ve been mulling this simple look over and have come up with some key points that may answer the question.

1) Information Has Made a Major Comeback

For a while there the internet was trying very hard to be like the TV, and graphics often came before information, compatibility, and usability. However the intention of the original HTTP web was information based, and that’s how HTML was designed. This is what the web is returning to and for some companies it’s really paying off.

Google’s claim to fame is being able to intelligently deliver the content that people want. This technology extends to AdSense, which is making a fortune by displaying advertising that visitors are actually interested in. Amazon has a similiar story with their incredibly aggressive and effective delivery of personalized recommendations in various forms. They also have an associates program that capitalizes on the power of human beings recommending books that they have read, enjoyed, and wish to share with others. Both these companies are ultimately connecting visitors with products and services that they desire in a way that is a feature rather than nuisance.

A simple layout makes information easier to find and highlights it as the star of the show. More and more people familiar with the web know what they are looking for and are used to being able to find it easily. The graphics take a step into the background, working to provide a calm and pleasing experience, enhancing important information, but never trying to become the star of the show.

2) These Companies Realize People are Human

A slick design that makes you go “ooooh”, but which makes the information you are looking for difficult to find is for an art exhibit. If you are attempting to turn visitors into customers then content should (almost) never suffer for aesthetics. Web users give you a very short period of time during which your site either convinces them to stay or go elsewhere, so you better be easy to use and easy to understand.

Instead of focusing on creating complex graphical layouts, successful information-focused businesses are coming up with complex ways of making it easy for users to find the information that they want. Again, Amazon and Google are phenomenal examples.

3) Devices of Every Shape and Size Are Now Connected

It used to be that creating a mostly-compatible design meant designing for a minimum resoluton of whatever the current version of Windows came with. This is no longer the case, with alternative and widely different devices such as PDAs, cellphones, and televisions all connecting. Simplicity pays off in a big way for easy compatibility and a uniform browsing experience across all technology.

With so much of the world now using the net on so many different devices and in so many different configurations, leaving out a relatively small percentage of users can translates to large dollar figures.

4) A Certain Air of Legitimacy

This may be a controversial point, but I firmly believe that in some lines of business having a website that is too nice can cost credibility. Now that everyone can purchase a graphical template for $60 and have a site up, seeing masses of gradients can actually be a warning sign - just like a salesman that looks a little too slick. Again it comes down to context, but accounting and legal firms have long adopted a dull and professional look over colorful eye candy. There’s a lesson in that.

Get excited about simple design, but don’t forget the business basics - know your market!

Universal advice and universal truths are very rare. I have named some very successful companies that use simple layouts that put content at the centre of attention. Don’t read this article blindly and immediately revamp your looks. Each business and target market is unique, and for some products and demographics it makes perfect sense to be flashy. How boring would a hot new toy look if the website design consisted of a single image and tables with assorted pastel backgrounds? Put some thought into where your business fits and what strategy may work best for you!