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06-02-2011, 04:11 PM #1
Rent to Own, Routers Included, etc..
I am just curious if there are any COLO providers who do this?
I had a recent provider give me a bid that included a rack of Quads (Quad Xeons, Core2Quads), KVM, a router, and $5MB but it was contingent on taking the whole rack and they would even do a rent to own over 6-12 months.
I had a 2nd provider just last week offer me 40 Dual Cores (Core2Duos, Xeons, etc.), router, KVM, and so on for $6500.00 a month. Which is insanely high by industry standards IMHO.
My guess is, the reason that 'some' COLO's are doing this is based on needs (we can fill them up) and that some other client left their machines behind, abandoned them, old stock, etc.. So they are basically just taking this hardware and throwing it a new rack based client.
Thoughts? Would the assumption be correct, or this is something new with the rent to own model?
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06-02-2011, 04:49 PM #2Now renamed!
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Most dont do that, not enough profit (if any even).
6500 / 40 is 162$ / Server, not included the KVM and anything else - that IS pretty cheap.
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06-02-2011, 04:58 PM #3BLAZINGSWITCH | sales /@/ blazingswitch.com
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06-02-2011, 05:02 PM #4WHT Addict
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Brooks Brown, NOCIX, LLC http://www.nocix.net
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06-02-2011, 05:03 PM #5
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06-02-2011, 05:11 PM #6Web Hosting Master
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You can find RTO of new hardware, but you will most likely have to conform your orders to the standardized specifications available from that provider's dedicated server service line.
This way, if the RTO client ceases payments, they can easily re-integrate those RTO'ed servers back into their inventory.
Any server that the RTO client wants that uses motherboards, CPUs, hard drives, and chassis's that the host does not usually deal with, is going to be hard to get rid of if the client stops paying.
They wont be able to sell them as dedicateds as they dont conform to the providers normal offerings, so they will be relegated to getting rid of the hardware in some other form -- perhaps selling it as individual parts on eBay -- not exactly an enticing prospect.
So if you can conform your offerings to match what your RTO provider is offering, you will find people more flexible.
Though, you will have to sacrifice trying to build the cheapest machines possible and instead go with what ever the standardized motherboards/CPUs/RAM/HDDs the datacenter is using.
Your best bet with regards to network gear is to just buy it outright, as you most likely wont find someone offering you RTO on anything that they have to scrounge around on eBay for, as they may never make back their investment if you stop paying and then they have to sell it for a loss.
Network gear is cheap enough anyways, at the level of most start-up hosts, where if there is a budget issue with just buying a few couple hundred dollar switches and perhaps one main layer3 $2500 switch, then the whole "going colo and RTO" thought process should perhaps be delayed until the basic core networking can be afforded out right.Last edited by ItsChrisG; 06-02-2011 at 05:14 PM.
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06-02-2011, 05:15 PM #7
Well, again, I suppose that depends on each company's business model.
For example, we can do a standard Quad Core Xeon/4-8GB/1TB HD and use this for many different customer flavors. Whether dedicated, VPS, break into two Dual Cores whatever. Because we have a standard box that we can literally re-package 6 different ways, it allows us a lot of flexibility.
We do not need a mixed bag of servers. We can get by on a standard Quad box that first certain specs. So if a COLO hit those specs, and it matched their own, it's a win-win for them.BLAZINGSWITCH | sales /@/ blazingswitch.com
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06-02-2011, 06:22 PM #8Always there
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Most providers will consider to RTO / LTO at good prices, but it will generally be (a little) more expensive then leasing (more risk) and they will require some agreement and proof of identity.
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06-02-2011, 07:08 PM #9
Understood champ.
So it's more of a case-by-case basis, which was what I was trying to get at. If a COLO sees a good opportunity, they may float the capital expense (router, KVM, servers) assuming it fits inline with boxes they can use in the general inventory should something go a rye.
Just as I have seen the quotes received, some of them are looking for the 12-24 term contract, which is to be expected. For me, I would want the option to purchase in such an arrangement in a 6-12 month deal. At which point, those terms would end up changing or you need a new contract that reflects market bandwidth and COLO prices.
I think I can speak for others when I say, most would have some loyalty to their COLO provider, so I doubt many would purchase their hardware and then flee. But once the equipment is out of the equation. You would want competitive bandwidth and COLO prices.BLAZINGSWITCH | sales /@/ blazingswitch.com
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06-02-2011, 07:28 PM #10Web Hosting Master
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IMO, it would be easier to find RTO if you were only looking for 3-6 month terms.
The longer the term, the higher the risk, the less willing you will find providers to be a bank.EasyDCIM.com - DataCenter Infrastructure Management - HELLO DEDICATED SERVER & COLO PROVIDERS! - Reach Me: chris@easydcim.com
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06-02-2011, 07:32 PM #11
True dat.
I am actually just thinking out loud in this post. As previously mentioned, I think $6500.00 for some old Dual Cores is crazy prices. We had a quote today on a decent grade Cisco router, and switch that was 1/3rd the cost of other company on some mini-router they wanted $300.00 for.
It is typical mind you. If nothing else, it is a shell game of where to hide the costs (or profit), and close the deal. Some hide it in the bandwidth (i.e. $10 MBit) while others hide it in the equipment.BLAZINGSWITCH | sales /@/ blazingswitch.com
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06-02-2011, 07:59 PM #12Web Hosting Master
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We've considered doing something similar to that on a strictly dedicated server type model in the past (10-12 dedicated servers + L3 switch + kvm at one price) but we never really contemplated offering the Rent-To-Own part. Generally speaking it only makes sense for most providers to do a 'Rent-To-Own' if the customer is willing to pay above market rates for the rental period in order to get colo-only rates once the rental period is up. Definitely an interesting idea to consider though.
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06-02-2011, 08:09 PM #13
I would hazard a guess it really only applies after you have some sort of working relationship. For example, if you have 10/25/50 servers with a company and they know you are the real deal then you work the loyalty angle if you want that COLO business, and to keep them re-billing.
At some point, they are going to want a COLO and that business is yours to lose.BLAZINGSWITCH | sales /@/ blazingswitch.com
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06-02-2011, 09:33 PM #14
Any kind of deal is possible if it makes sense for the provider. Put yourself in their shoes and ask yourself if it would make sense for you. If it would, you'll probably find people willing to do it.
It comes down to cost, risk, and reward. If you're willing to pay a lot, you can get the provider to take on more risk with you. If you're willing to reduce their risk, you can get a better price. Simple as that.
As to package deals just offered to you without you asking, it's probably just old hardware they used to rent to people that they can't be bothered with anymore. Either it uses too much power, or is just plain obsolete. Selling the equipment isn't going to net them much of anything and is a huge hassle, and finding rental customers for it becomes a waste of time at some point as well. So just throw it in with a rack deal for people who just want "servers" without regards to what they are.IOFLOOD.com -- We Love Servers
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06-02-2011, 09:44 PM #15
True dat funkychicken.
However, we can't use just any old garbage any longer. However, for those who are looking to get into their first COLO deal. Something like this could be attractive. For us, they have to be a specific box type as previously mentioned. For the most part, all of our servers are standardized to Quad/4GB/1TB which we can use in various configurations. Plus are better as a long term solution.
I agree with you however to some degree. I suppose it depends on the end client, how much business they have, and how badly they want into that COLO without the capital expense.BLAZINGSWITCH | sales /@/ blazingswitch.com
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06-02-2011, 10:01 PM #16CISSP-ISSMP, CISA
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Separately from the servers, how much bandwidth are you looking to purchase and what do you expect it would cost?
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06-02-2011, 10:05 PM #17
At this point, a core2duo is basically a giveaway, and the core2quad (say, q6600) is not far behind. Sure, the hardware will work reasonably well for a wide variety of customers, but it is still all but obsolete now. With sandy bridge, you're probably looking at 2.5 times the performance even with slightly lower power usage, for a machine that costs maybe $800 to build new. Don't get me wrong, I still have a bunch of c2q's that are chugging along running some proxy sites of mine, but I built those servers about 3 years and 10 months ago, right when the q6600 dropped in price. I'm lucky to have gotten this much mileage out of them, but certainly won't be surprised to see these be considered throwaway hardware in 6-12 months.
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06-02-2011, 10:05 PM #18
The prices you see on 'quotes' are all over the map.
I have seen as low as $3.00 a MBit and as high as $10.00 ($6500.00 bid always highest on BW). The majority fall into the $5-6.00 range however. Although the speed of the pipe in another variable depending on who you talk to.
Just like anything in life, endless variables. The key is to find out what is the most important to your business model, and then you simply find a provider that caters to it.
If you are like some of these web hosts who brag about being Softlayer reseller, or in one of their DC's as a selling point, have at it. As long as you can CLOSE BUSINESS on that selling point, or effectively use that to your advantage. Others go for the biggest bandwidth pipe, and then you are going to typically have some trade offs, etc..
Each choice is a new adventure.BLAZINGSWITCH | sales /@/ blazingswitch.com
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06-02-2011, 10:08 PM #19
True dat.
I suppose it depends on how you are planning to build your rack. If you find the right 'partner' provider who sees you have a solid business plan, and is willing to set you up with Quad Xeons, enterprise grade, then that will go into the final decision on choice. Just like getting an enterprise grade router versus some mini junker.
Each is one of these things is a puzzle piece on if that will be long term, or short term, business deal.BLAZINGSWITCH | sales /@/ blazingswitch.com
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06-03-2011, 01:55 AM #20Corporate Member
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What I don't understand about all of your recent threads is that your signature says:
"BUYING: Established Dedicated/VPS Hosting Companies! Budget is $XX,XXX-$XXX,XXX"
If you have $100k laying around why would you "rent to own", and pay "the man" more than needed (in the long run). If you have a solid business plan take your money and buy your own hardware to save costs.
Don't mean to step on your bare footsies, just curious..... Old hardware / not hotswap etc is just a pain. Various people are offering brand new hardware (dedicated server rentals) for less than you're talking about renting out old hardware for (I see sandybridge xeons with hardware RAID at multiple providers for $100-$200). Why not treat your customers to a free upgrade, as they're so willing to pay big bucks for old stuff (and you can buy new stuff for less than the RTO cost).Last edited by gordonrp; 06-03-2011 at 01:58 AM.
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06-03-2011, 01:59 AM #21
Because we are proactively looking to purchase other companies? That is why it's in my sig.
As for the thread, it is a discussion topic. Not everything relates to myself, or my business. I could post up threads about bids that do not include hardware as well. Just as I could cackle about the endless different bandwidth quotes I see, and why one claims that you should be paying $10 versus $5. I just find some of the bids entertaining, and did not know that the RTO business model was so common (as demonstrated by the comments in this thread) that is being offered. I thought it was more of a one off type of deal where people try and sell off their old junk.
I hope you do not take everything in life literally, or at face value. No offense chief.BLAZINGSWITCH | sales /@/ blazingswitch.com
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06-03-2011, 02:04 AM #22
It is nice to see we have fans following our various posts around WHT and in regards to old business models built around Dual Cores. However, once we entered the VPS market it really gave a new way to look at how we do our servers via Smart Servers and virtualization.
Needless to say, it has been serving us well, and cut down on response times, as well has made things in general much better from a management point of view. The point being, having a rack of Quad Xeons is a better fit for the many different ways we slice up a box and all of the uses. We can still serve Dual Core clients just fine with a Smart Server. More importantly, our clients have come along for the ride.BLAZINGSWITCH | sales /@/ blazingswitch.com
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06-03-2011, 02:26 AM #23
I enjoy doing this from time to time. I remember a thread on digitalpoint where someone took extreme offense because I told them you could get bandwidth for less than $20 / meg in 2011. When they insisted that any bandwidth for less than that price was just oversold to the hills, and I replied by pointing out that even the "expensive" providers are easily hitting under $10 / meg on low commits, that's when the poster really started to get nasty with me. Those threads can be fun sometimes.
Yes, it's typically a type of deal where people try and sell off their old junk, but because old junk is pretty easy to come by, it's not necessarily a one off deal. A datacenter with 1000 servers might retire 200+ of those servers every year, which leaves quite a lot of inventory to do creative deals with.IOFLOOD.com -- We Love Servers
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06-03-2011, 03:05 AM #24BLAZINGSWITCH | sales /@/ blazingswitch.com
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06-03-2011, 10:33 PM #25BLAZINGSWITCH | sales /@/ blazingswitch.com
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