As often, opinions in the hosting forums are all over the place on the impact of 1&1’s offer, ranging from” the end of the American hosting industry as we’ve known it” to “they’ll close within a year”.
It was surprising how many people in the US hosting industry simply hadn’t heard of 1&1. In terms of hostnames found by the Web Server Survey, 1&1 is the largest hoster in the world by a margin, and hosts fully 18% of the hostnames in Europe, making it plain why they felt the need to expand into the US.
Financially, the offer is not as reckless as it first appears: it is a time limited promotion until January 2004, restricted to US and Canadian residents, and counters 1&1’s lack of brand awareness in the US. In this respect, it may turn out to be “cheaper than advertising” although they will need to do that as well.
One of the more pertinent observations is that 1&1 may extend the size of the market, as it has done in Germany, rather than decimate the incumbent American suppliers.
Our Hosting Provider Switching Analysis shows that the great majority of sites appearing on 1&1's network over the last month are new sites rather than sites previously hosted with competitors.