First, you have Microsoft Live serving up free hosting in follow up to the 1and1 and GoDaddy boys playing in the low end of the hosting spectrum. Now Wiki is jumping into free hosting - and you keep the ad revenue!
Wikipedia founder Jimmy Wales said on Monday his for-profit company, Wikia Inc., is ready to give away -- for free -- all the software, computing, storage and network access that Web site builders need to create community collaboration sites.... Wikia, a commercial counterpart to the non-profit Wikipedia, will go even further to provide customers -- bloggers or other operators who meet its criteria for popular Web sites -- 100 percent of any advertising revenue from the sites they build.
Why is everyone in a race to the bottom??? Unless it is just a PR ply. A hoster needs lots of volume to make money on razor margins (or worse free).
The money is in the middle - the gap between the Fortune 1000 and the two-person shop. Success means you have to be willing to FIRE clients that are not profitable or do not fit into your client profile. And you have to be willing to disqualify these prospects as well. Quickly. Most companies find it easier to just take orders and hope it makes them a buck down the road.