I own a small publishing company that prints POD (I use Lightning Source as my printer and they're terrific). While I've never published any of my own work through my small company, I've published books for others who wouldn't have a shot with the biggies (at least not yet).
I believe that self-publishing has its place for those who are willing to take all the gains and all the loses. I know specialists who are in front of an audience all the time and they make good money selling their self-published books through their website and to their audiences (specialized niches). I know photographers who use LULU for their books/calendars and have been happy with it.
As a writing coach, I evaluate each of my client's potential and discuss their goals - from there we decide which route is best for them. I have a few novelists who are wonderful writers and I believe their books will be picked up by an agent/publisher. I also have clients who are better off going the self-published route. Then I've had clients that I recommend they take some writing classes before they consider publishing.
No matter who the author or what route they take, in the end the author sells the book and you've got to be willing to do the work - whatever that may be. There are a lot of wonderful books and podcasts out there on book promotion. Here's a good one:
All Things That MatterAs I tell my clients, "Be the Writer" - what they learn from me is that 70% of being a writer is marketing! That's why having a platform is so critical these days if the goal is a big publishing house.
Be realistic and Be the Writer.