Low-end hosting is a stable cash-flow business. You buy/install/operate/manage the equipment and recover original investment + operational cost + few more perce

Low-end hosting is a stable cash-flow business. You buy/install/operate/manage the equipment and recover original investment + operational cost + few more percentage in return over the life of equipment typically 3 years. After 3 years you replace the old equipment with new shiny ones and repeat again. But low-end hosting offers a good low-cost entry point for companies looking to enter IaaS/PaaS business like DO. Sooner or later DO will move upward in IaaS/PaaS vacating the low end hosting. Personally, I don't see DO catering to low-end for more than 3 years when the need for equipment replacement will come up to stay competitive. The competition has to survive couple of years by managing the expenses, managing customer churn, and extracting some additional life out of equipment. Once DO equipment ages, the competition can install new equipment investment and beat up DO on aging equipment and speed and feeds. It is very important in this business to not replace your equipment at the same time as your competition because value prop is always speed and feed at reasonable cost.