extermination of LET providers

Bruce

OK, a controversial title, so let me explain. this all started from reading this on VPSboard today

negative effects for those of you who call yourselves providers :
1. more downward pricing pressure on VPS/"cloud" offerings and more pressure to implement "cloud"-like features
2. the dying breed of low end OVZ overloaders like bluevm/123systems/GVH etc will have even more trouble competing for customers and staying afloat (DO, Vultr, and the emergence of several good lower priced providers have been driving nails into these craproviders coffins for the past 2 years so really nothing new)

I think we can all see that DO / Vultr / Runabove / etc are looking to transform the market, and drive costs down. is that a loss-leader until they get enough traction, and price will rise? a bit like the amazon business plan - run at a loss for several years.

as a community here, being focussed on price, there's little or no loyalty to LET providers. some examples ... many members openly promote these cloud clowns with aff-links in their sigs. vFuse has a great service, NIXstats, but it's run 100% on cloud (no criticism here, just an example)

So, are LET providers as doomed as this poster on VPSboard makes out ?

doghouch

Umm, I don't understand what you're trying to say...

AnthonySmith

Sure, it is an adapt or die market as the 'little guy' there will always be room in the market but the pressure from do/vultr etc is obvious.

century1stop

big guns killing off small fry.........anything new?

Bruce

overheads of these bigger companies will be high. we should be able to compete

despite the nuggets approach, this is not get-rich-quick territory

Bruce

@century1stop said:
big guns killing off small fry.........anything new?

small guy just needs to run faster

KuJoe

I personally think that the market will only get better for us providers who can outlast the summer hosts and unsustainable hosts out there. The big guys are helping clean out those hosts and I'm not worried about the future of Secure Dragon nor am I planning on abandoning OpenVZ.

jbiloh

No question the market is becoming more competitive. If you aren't providing a good quality service you're not going to be successful.

J1021

Bruce said: small guy just needs to run faster

Run faster how? The majority of providers here are running a WHMCS/SolusVM mashup. That means..

• No hourly billing
• No snapshots/backup
• No custom ISO support
• Scaling/auto management of additional IPs etc

Just a few examples. Linode/Vultr/DigitalOcean all manage their platforms from top to bottom, in-house teams tweaking/adapting and adding new features constantly, listening to customers and adapting to their needs. No one man band here running a WHMCS/SolusVM mashup is ever going to be able to compete on that sort of scale.

Bruce

@kcaj said:
No one man band here running a WHMCS/SolusVM mashup is ever going to be able to compete on that sort of scale.

yep, we're fucked, give up now !

rather than copy them, do something different. WHMCS/SolusVM/cPanel/etc need to realise that their customer base is going to disappear unless they help with differentiating

4n0nx

I think the real "threat" are not all the fake "cloud" providers ($20 for 2GB lel), but instead bigger companies that offer VPS's and dedicated servers at competitive pricing.

cloudvps

Those running serious business sites would never signup based on low cost . They d prefer paying a little more to a reliable provider.

So instead of competing based on cost pricing providers who build a market based on a niche have better prospects to survive. Example - offering specialised team speak servers ...offering a vm targeting a local market supporting local language and local payment methods

hostnoob

Bruce said: 2. the dying breed of low end OVZ overloaders like bluevm/123systems/GVH etc will have even more trouble competing for customers and staying afloat

These providers killed themselves by providing a shit service and charging unsustainable prices

ksug

Don't know about Vultr, runabove, and others. But iirc Linode and DO are profitable. So they are not pricing low just to drive away the smaller providers. Their $/unit time is not that low, but the hourly billing makes their cost low in a different way (plus, love the referral program).

sin

kcaj said: No snapshots/backup

VULTR's snapshots have saved my ass a few times...I do keep a lot of remote backups but it's so nice to be able to just restore a snapshot within 2-3 minutes and have everything back to normal.

Maounique

You run your business badly, you cannot live. It is valid in all markets.
There was a time when you could undercut everyone in price, at first there was BuyVM and a couple of others undercutting linode and the like, then there were tons of others, undercutting BuyVM, then a ton of others undercutting those, etc. In the end it became unsustainable to the point that even the scams are no longer worth the effort.
DO might be profitable, I think any business having that kind of money should be, if it is not, then something is really wrong, but as OVH and others, they did make some controversial moves in the pricing area, so it was not so hunky-dory even for them.
But, 5$ for 512 MB KVM is not a terribly good price anymore, there are also issues with the ISOs, for example, which other people exploited in their advantage, like Vultr, but, they also had issues with price sustainability, which means the market is mature now, and you cannot continue to lower prices to undercut the competition, but you must do something else.
And what came out of it is choice, you can now have a full cloud instance at much less than 5$ a month, which can get random ISO, has HA, random disk size, full iso install, a choice of hypervisors, full ipv6, and, while the available locations are fewer as well as stability is slightly lower, there is a choice for everyone.
The solus/whmcs model still works, even without the cloud, our offer would still be profitable, but we do not offer the lowest prices in the market, nor smallest VM size, except for old customers. This is another change in thinking, we consider it is better to have good retention than to offer fantastic deals to any newcomer.
Since I started to post here and even before, people were thinking they are participating in the funeral of the market, but it was not so, even though many people did leave or disappeared, the market is still here and there are ways to make it work, even without hundreds of millions investment. Prometeus entered this market with 25k investment and grew it from there, now that is monthly income from only one of the brands, but it is true we benefited from other things, such as leftover space/bandwidth from the other businesses, as well as random equipment, such as switches and even an odd server now and then, but this small side business acted like an advertising and testing platform for customers which later went to the vmware cloud, or the enterprise cloudstack one which we put up given the experience got through the management of iwstack, this replaced the rhev6 one. So, an integrated model works, but it may work even without integration, but you cannot do it with a few hundred dollars without work worth hundreds of thousands for years.

desperand

I've only seen 3 provider that collect a lot of clients due to high quality services.
(Ramnode, Prometeus, Vultr)

Other providers like DO: it's a good adversting + very simple UI, or very cheap. (not quality)

impossiblystupid

This topic was recently covered in Big providers kills smaller ones?. I'll say again what I said there: I have zero interest in using a big provider like DO based on the amount of abuse I see coming from their existing customers. It'd have to be a lot cheaper in order for me to move into a bad network neighborhood like that.

inthecloudblog

Secure Dragon is top notch!! I love both their leb ovzs and shared

Maounique

impossiblystupid said: I have zero interest in using a big provider like DO based on the amount of abuse I see coming from their existing customers.

A smaller provider is usually having higher rates of abuse, proportionally. Many would take any customer until they "build up their business".
I suggest you look up some ASs in blacklists and see proportions, for example here:
http://www.uceprotect.net/en/rblcheck.php
Those guys are not reliable blacklists, but they give a pretty good picture on the proportion of abuse coming from various ASs compared with others.

hostnoob

@desperand said:
I've only seen 3 provider that collect a lot of clients due to high quality services.
(Ramnode, Prometeus, Vultr)

Other providers like DO: it's a good adversting + very simple UI, or very cheap. (not quality)

Not just quality. When you go with a company like DO, OVH, etc. you know it won't just stop working one night, with the owner never to be seen again.

Wintereise

I have no problems with DO's 'quality.'

ricardo

From my own little POV (and actually many others doing the same thing), lots of small providers is a good thing, because the non-homogeneity is a selling point. We've spent $xx,xxx on hosting over the past 12 months and know a handful of other people who've done the same.

ksug

Been using DO since 2013, never seen any quality problem other than the performance overhead of KVM which is quite significant.

On another note, isn't openvz supposed to be more elastic (it instantiates, resizes, and destroys faster) than xen/kvm? Why aren't there too many ovz providers who provide hourly billing?

Bruce

@ksug said:
Why aren't there too many ovz providers who provide hourly billing?

because you can't setup a node in 15mins using off-the-shelf whmcs/soluvm. they don't do hourly billing. not sure daily billing would even work

ksug

@Bruce said:
because you can't setup a node in 15mins using off-the-shelf whmcs/soluvm. they don't do hourly billing. not sure daily billing would even work

Ah I see. Tying commands to instantiate/resize/destroy to a web ui is actually not hard for me. Hosting the infrastucture is. Must be a case of domain bias on my end.

coolice

AFAIK any service can be offered hourly
http://www.docs.modulesgarden.com/Advanced_Billing_For_WHMCS#Hourly_Billing

Bruce

@coolice said:
AFAIK any service can be offered hourly
http://www.docs.modulesgarden.com/Advanced_Billing_For_WHMCS#Hourly_Billing

not the same as cloud stuff. I think that module destroys the VM instance, rather than suspending it. ideally you want to have space all setup, which costs a bit, then pay for CPU / RAM by the hour. that module is one I considered, but not yet evaluated. for me, I need support for virtualizor, which isn't listed.

impossiblystupid

@Maounique said:

A smaller provider is usually having higher rates of abuse, proportionally.

Which town do you want to go to on vacation, the one that has 1 serial killer on the loose for every 100 people or the one which has 1 serial killer on the loose for every 10000 people? Personally, I'm going to look for the town with 0 serial killers on the loose.

Absolute numbers are the only thing that matters, because 1 spammer in 1000 is just as likely to give a whole neighborhood a bad reputation at 1 in 10. The only difference is that the first spammer is allowed to do 100 times the damage as the second because they went with a big provider that doesn't seem to care.

Many would take any customer until they "build up their business".

And those are the small providers that should reasonably go out of business when they let that one bad apple spoil their bunch. I'm not going to favor the abuse of the larger providers based on some "too big to fail" nonsense. Abuse is abuse, and if they aren't properly policing their network, no matter how big or how small they are, I'm dumping all traffic from as many of their IPs as possible to prevent future problems.

HBAndrei

Competition will always be the best thing for clients, it'll force providers to either up their game and lower prices or simply crawl in a corner and die.

Certainly DO and Vultr aren't the first providers on this earth, they've just started their business thinking they need to change the game, older providers, which many I'm sure had the resources and funds to change the game before DO and Vultr came out, didn't.

Maounique

@impossiblystupid said:

You dont know what you are talking about.

impossiblystupid

@Maounique said:
You dont know what you are talking about.

Thank you for that insightful dissection of the points I raised.

dediserve

There is plenty of space in the market. As a smaller, European cloud provider, we've been in business 6 years now, are very profitable, and have clouds online in 14 locations, with pricing higher than most of the other guys in some ways, but less when you look closely like:like.

Provide a quality service, impress with your support and the experience, and you will win customers, in any market.

HostNun

@Bruce said:
OK, a controversial title, so let me explain. this all started from reading this https://vpsboard.com/topic/7424-what-is-your-favourite-raid-level/ on VPSboard

Fixed?

Bruce

@HostNun said:
Fixed?

are you on drugs?

HBAndrei

Bruce said: are you on drugs?

I actually laughed out loud when reading this

Thx.

Bruce

for those interested, I added a link to my first post

virtualizor

There are lots of factors to consider here. The reason low prices can be sustainable is because of technology Advancement's. Every year or two the cost of tech goes down to nearly half. There are definitely other factors but I guess like with any other market, there will always be space for small cheap providers.

Maounique

dediserve

@virtualizor said:
Every year or two the cost of tech goes down to nearly half.

We've been deploying HP Blades for the last 6 years. In that time, we're actually spending more now on the exact same blade config (high level) than we were 6 years ago. Enterprise hardware is surprisingly 'flat' in terms of cost, and new tech, even once it's bedded in (like SSD, or new Gen processors) hold their premium for several years too.

Providers putting 'real' datacenter SSD into their servers right now are doing so by cutting their margins to compete, not because the hardware is getting massively cheaper...

randvegeta

dediserve said: In that time, we're actually spending more now on the exact same blade config (high level) than we were 6 years ago

Hard to believe. If by config you mean Quad/Hex/Oct cores CPUs rather than CPU models then maybe. But CPUs from 6 years ago are cheap as chips. And if you believe that the older models are as good as the new, why don't you just buy the older ones which are readily and cheaply available.

In HK, you can easily pick up a Xeon X3430 box, complete with brand-new 80Plus PSU, brand-new HDD and 8GB RAM for under US$200. A more modern E3 model CPU would cost almost 4 times as much.

Maounique

randvegeta said: brand-new

Please allow me to doubt that.

randvegeta

@Maounique, doubt what? That the PSU and HDD are new?

Maounique

Yes, a new PSU even for "vintage" servers is more expensive than 200 $ in most cases..

randvegeta

@Maounique, Why would I need a vintage PSU? Standard modern PSUs work fine and are very cheap.

Maounique

Hum, I guess you are one of the lucky people where modern PSUs can be fitted without major modification on older servers. For me, it was never the case.

randvegeta

One our suppliers in China has hundreds of units of Xeon X3430 (or similar) CPUs and Intel S3420 ServerBoards just laying around. Being sold very cheap, mere minutes away from our DC.

We almost never buy second hand but I've given it some serious second thoughts given the performance is quite reasonable and fitted with new HDD/SSD, fans and an 80Plus PSU, those boxes actually end up costing very little and to my surprise use a tiny amount of power. Similar power consumption to an i3 machine.

Not sure how easily older model machines rent out for, particularly since HK costs are mostly bandwidth, space and IPs, but if you doubt the cheapness, PM if you want to buy some. Don't know where you are in the world but even with shipping, probably still get you a decent deal

concerto49

randvegeta said: Hard to believe. If by config you mean Quad/Hex/Oct cores CPUs rather than CPU models then maybe. But CPUs from 6 years ago are cheap as chips. And if you believe that the older models are as good as the new, why don't you just buy the older ones which are readily and cheaply available.

In HK, you can easily pick up a Xeon X3430 box, complete with brand-new 80Plus PSU, brand-new HDD and 8GB RAM for under US$200. A more modern E3 model CPU would cost almost 4 times as much.

No it's true. You're only talking about many many years back. Ever since E3 and E5 came out there has hardly been any change - E3 v1 / v2 / v3 / v4 - price has been flat and there hasn't been that much of a performance improvement. Maybe 5-15% between the generations over 4 years. Power might have gone down some, but cost on servers is overall similar.

randvegeta

concerto49 said: Maybe 5-15% between the generations over 4 years. Power might have gone down some, but cost on servers is overall similar.

Power consumption is a big deal though. Compare performance to power consumption and the improvements are clear.

Power costs in HK are not cheap, and its exacerbated by the fact that it gets damn hot in the summer, and cooling becomes a major issue.

Generally speaking, lower power means less heat. Or rather higher efficiency means less heat. Less heat translates to less cooling and thus lower operating costs. There is also a matter of lower operating temperatures which may translate to improved stability.

Performance may not have the same leaps and bounds as they used to, but the new stuff still has it's advantages.

With that in mind, after testing some of the older X3230 CPUs, seems the price of second hand equipment can somewhat offset the increased efficiency of some newer stuff. Depends on the needs.

randvegeta

Interestingly, RAM prices have more than doubled in the last 2 years. And second hand RAM isn't much cheaper than new. Not sure if I should be happy or sad.

Maounique

I have dell/HP DDR3 by the bucket, 4 GB each, so, if you need a bundle deal, I can give you some 300 GB or so.