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I found out hostgator has their servers hosted with softlayer. I wasn't aware there was another company involved. Can someone explain to me what's the role of a company like softlayer exactly and what they do vs. what hostgator does?

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Softlayer recently acquired theplanet.com which acquired... well you get the idea. They provide data centers, server rentals, co-location and the like. Hostgator obviously uses them for their data center services which provide redundant sources of power and bandwidth, earthquake protection, etc, and then build their own line of products and services on top of that.

Don't forget there are always other companies involved - softlayer does not produce all of their electricity, they purchase large bandwidth pipes from various companies and of course someone has to supply the hardware for the servers and routers.

Softlayer and their various divisions and strategic business units also provide hosting services and compete with hostgator at various levels.

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Hostgator leases dedicated servers from SoftLayer a big Data Center company (thay maintain the hardware, network, etc.) all Hostgator does is manage those servers and provide tech support to its customers which are buying a portion of that server (as a shared hosting account which is a storage space in a web server shared between serveral customers)

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Most of the companies you deal with as hosting providers (in this example, Hostgator), are service resellers. They serve as a method of collecting the monthly charges, configuring and maintaining the software and services they sell and act as a monitor watch-dog on these services. They don't own any hardware or infrastructure, though in their service agreements with their partner, they get to specify/recommend what's on the rack, how it gets interconnected and what kind of routers and firewall it will be behind.

The companies like Softlayer whose services are being resold by the above mentioned, are the actual regional server farms, and network backbone to interconnect them and also bypass most of the internet traffic to bring out endpoints closer to the customer for better speed. Their job is to keep the infrastructure up and running 24/7.

It is a system that lets each segment concentrate on doing what it does best.

Depending on what you're willing to spend, the end hosting provider can do anything from cramming 2500 websites to a server and charging $4.95 a month with no monitoring and limited bandwidth to providing dedicated server clusters with their full configuration, management and unlimited bandwidth for $10,000+ a month.

This allows companies like Softlayer to be working with an aggregate demand which allows them to expand at will to fill server and bandwidth needs where an end company with limited resources would be limited in their expansion capabilities.

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Hostgator resells softlayer servers. Hostgator will pretty much just manage the server for you, softlayer actually owns and operates the hardware. Fyi, you have tons of choices when it comes to dedicated hosting providers, I can recommend reliablesite.net

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I wouldn't recommend reliablesite.net unless you want your site hosted in the same IP block as spammers. A little digging reveals that ReliableSite is hosted (possibly also owned) by Media Breakaway/Wholesalebandwidth/JKS Media--a collection of shell companies run by notorious spammer Scott Richter, who still operates a registrar in which spam activity was found in 17% of its domains. According to Wikipedia he also does ringtone scams now. – Lèse majesté Feb 1 '12 at 8:36

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