What I basically wanted to say is, that the installation of Wordpress is sooo easy and there are so many features built in, resp. plugins available, that there are not many incentives to use a dedicated blog host provider and maybe even pay for it. Why should I pay 5 Euro a month to a blog hoster, when I can get for the same price a full hosting, with more disc space, full control over the design, my own domain and certainly more features (I can not only run my blog there, but also other software and get dozens of email addresses).
He argues that since WordPress is such an easy install (and an easy thing to move), but you're also foregoing the benefit of having someone there to help/ask questions. He also notes, though, that a possible 90 percent of the population doesn't want to mess with installing WordPress (good for blog hosters), but of those, most probably wish they could have a more flexible solution (bad for blog hosters).
I don't say, that this counts for everyone, there is certainly a market for bloghosters (be it for free or paid), but Wordpress et al. made that potential market much much smaller. Like eg. Apache made the commercial Webserver market really small :)