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Here's the math at a 50% sell through: $7500 - $3000 - $700 = $3800/month as a gross profit.
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Technically your pretty close when presenting those numbers but there are more factors involved. Your assuming that every host is only hosting. For many of the smaller hosts they generate money by running their own sites. For example: using 10/Mbps of Cogent to generate $7,000 of revenue. 10/Mbps costing you $300 on a 100/mbps line. That's a very nice profit margin. Or take a 6/mbps site generating $20,000 in revenue a month, even better. It really comes down to the hosts business plan, if they know what they are doing they will be fine with or without Cogent. And $3800 gross profit is A LOT of money to a 1 man host. So there's nothing wrong with $3,800 gross profit.
For any "new" host to think they can sustain themselves on Hosting alone without a big bankroll is not going to make it. They have to have other revenue streams besides hosting to pay for the new hardware. Or a nice Credit Limit with Dell Business.
I also think you can't deny the fact that there is a market for Cogent bandwidth. NO mater how many people bash on Cogent, people are willing to pay for it. As an oportunists it only makes sense to sell what people want. If people want Cogent then I'm going to sell it to them [period]. The beauty of a router is if Cogent goes away tomorrow, we'll just reroute the traffic through Verio or whomever. So the threat of Cogent dissappearing tomorrow doesn't really exist to us. And if the host has a solid business plan, making a 500+/Mbps commitment to a Tier 1 provider won't be a problem. With that kind of commitment your cost per meg won't hurt the profit margins too badly.
So until Cogent goes away or gets bought out, enjoy the profit margins. Thats my philosophy.
p.s. Denis, you better have the AMG package on that bad boy.