GoDaddy.com, the domain registrar company that brought us cheap domains back in earlier part of this century, has recently doubled the storage space and data transfer of its already insanely oversold shared hosting plans. For example, 100Gb storage and 1,000Gb data transfer just costs you $6.99/month, or cheaper if you sign up longer terms.

Funny that, as Isabel reported here, you can actually get more space and data transfer than GoDaddy’s own dedicated server plans at 7 times the cost. How does that work? Unless GoDaddy never planned to let you use that much.

As I have previously written about the dark side of shared hosting in general, for today’s script-driven dynamic content sites, the limiting factor is usually the CPU resource than storage or bandwidth. From GoDaddy’s shared hosting SLA, it states,

Go Daddy prohibits the use of software or scripts run on its servers that cause the server to load beyond a reasonable level, as determined by Go Daddy.

So what is a reasonable level determined by Go Daddy? No one knows, and it only tells you that they can disable your sites at will. What about storage? Although there is no clause saying that you cannot have excessive amount of media files, it does prohibit you from using their space for off-line backup (which I was thinking of doing).

You shall at all times use the Services as a conventional and/or traditional web site… Specifically by way of example and not as a limitation, You shall not use the Services as a repository or instrument for placing or storing archived files and/or material that can be downloaded through other web sites.

Now, what does it mean by “material that can be downloaded through other web sites”? Go Daddy is probably trying to block people from using these shared services to mirror large files. Still, the definition remains ambiguous.

But why is Go Daddy doing this — promising something that most people cannot use? Even if all their customers used 20% of what they have been promised, they’ll still be loosing money on these plans.

Maybe because Go Daddy is so big that they’ll get heaps of customers who use only 1% of allocated resources, which makes overselling really effective for them. Maybe they just want to be a loss leader, competing with what 1and1.com has recently updated?

A comment this morning on WHT reveals something very interesting with a reference :

GoDaddy is buying market share with the huge offerings all with an eye towards the IPO they are releasing. They have never made a profit from day one and last year lost $11 million so far in 2006 they are losing even more.

Once the IPO goes through if it does and they are a public company I bet you will see these offers being trimmed back and existing accounts brought under control, prices rise, staff cuts, as share holders demand to see some plan for profit from them. It is an unsustainable business model, their own books show that, but it can make a company huge fast to get an IPO off the ground and make the current owners very rich.

Sure. With company valued at around $250 million, Go Daddy certainly looks like buying as many customers as possible before their IPO later this year.

Update: Well, a few days after I wrote this entry, Bob Parsons proved that I was all wrong as Go Daddy has pulled its IPO filing. It actually has a positive accounting cashflow, i.e. Go Daddy is profitable, and IPO might not seem to be a right thing to do in the current turbulent market.

So, Go Daddy is not trying to be a loss leader to gain advantage of IPO, by offering ridiculously large storage and data transfer for its shared hosting. How then do they continue to profit from it? That just leaves the overselling option.