What's interesting is that if anyone is going to have the best chance of breaking even with Bitcoin mining, it is going to be pbmining customers (and those of some competitors).  People who are buying their own mining equipment have higher costs and can't compete.

Eventually, people will temporarily stop buying mining contracts and equipment, because it is no longer profitable.  We can already see this happening here, as the general consensus in this thread is to no longer buy new contracts.

There is a longer lag time with pre-ordered equipment.  Customers have already committed to buying new equipment, and they may have to wait a month or longer to put it into production.  As a result, difficulty is still rising.

Difficulty will eventually level off until the next generation of cheaper and more efficient mining equipment hits the market.

I think there may be a time again in the future when the cost per GH will decrease significantly and the chance of profitability will increase.  I don't think the business model is necessarily failing.  It's just hitting a slow period.  I think things could turn around again.