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09-17-2013, 01:40 PM #26Web Hosting Master
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09-17-2013, 03:02 PM #27
Yup, bingo. They're selling servers so cheap and releasing new ones so often, that people are just churning over to new servers too quickly. Given how cheap their new models are, they're finding extremely limited demand for the old models that people have given up. It seems every time they release a new model they lower the price. Maybe a smarter thing to do is raise the price when a new model first comes out, and lower it a bit over time (like everyone else).
I guess another thing is that OVH customers tend to use these as throwaway boxes. You wouldn't want to host anything really serious there, so people are more willing and able to move everything to new hardware as soon as it's released.
They say they're working to fix their back office, but it really just sounds like they need to figure out how to keep their old servers rented even after they release a new model. That's more of a business model problem, not a back office problem. They could always pull a hetzner and charge a setup fee (particularly on newly released models). That should discourage people from hopping to a new server when they don't need it.
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09-17-2013, 03:05 PM #28
The strange thing is, they're really only competing with themselves. Like if I'm offering something for $10 and someone offers it for $3, that's a bad day, maybe I can go curse and scream about my bad luck. If I'm offering something for $10, and then I offer something better for $3, and I can't sell the $10 item anymore, and everyone else is charging $50, it's my own damn fault, and the solution is very easy. This is the situation they find themselves in, and somehow didn't find this predictable? I mean come on.
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09-17-2013, 03:13 PM #29Always there
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I believe their business model does not allow for this, i suspect its far more complex then that. Are you aware of structural development funds in the European Union?
Suppose there is a company that makes unique, custom servers and it applies for EU grants for development and production of these servers, the amount of grant they can get is limited to (1) how much they can borrow from a bank, as 1/4th of the required funding must be supplied by a bank and (2) by the demand the market has for the product.
Good news on the demand side, as the same owners of said company also have a company that rents out dedicated servers... do you see where this goes? the company that produces the servers can make huge profits as long as there is a buyer for the servers. Profit is funded by the EU in a roundabout way, these profit can be invested in the company that buys the servers to sustain growth & lure investors to do the same.
Unfortunately, this type of funding is onky available until the end of 2013 and most applications for funding had to be in by now and are either accepted or rejected, i guess this creates a problem for a certain business model.
Just my personal suspicion here...
Until now there was no reason for them to discourage people to hop to a new server, they needed to sell them as fast as possible.Last edited by swiftnoc; 09-17-2013 at 03:20 PM.
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09-17-2013, 03:25 PM #30
I hadn't considered that. All sorts of strange distortions happen when you get the government involved with subsidies and taxes.... like 3 euro servers. I guess raising the top tax rate to 75% in France was really necessary in order to make sure OVH could make money while giving servers away for free.
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09-17-2013, 03:52 PM #31Poooooonnyyy :*
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Welcome to the VPS market for the past year. Companies keep competing on price alone and all they're doing is forcing heavy churn on themselves since their $4/m deal is just as good as the $25/m.
Hell, even the $7/m 2GB hosts are having to drop prices into the $3 - $4/m range just to keep signups going. All that happens from that, though, is those $7/m's cancel...and reorder at a better price.
Francisco
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09-17-2013, 04:01 PM #32Web Hosting Guru
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09-17-2013, 04:03 PM #33Poooooonnyyy :*
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True but the cannibalising is still happening. It's a different scale but it's still the same idea.
The hetzner way would likely be a good way to push both product lines. New gear gets a setup fee to cover some of the build cost where as old gear that has long since been paid off doesn't.
Francisco
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09-17-2013, 04:14 PM #34Always there
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Well, if its indeed created to stop people from hopping to another (cheaper) server, why not temporary stop orders from current users? allowing new users to signup?
Maybe make an agreement with current users that they can temporary only order servers that are more expensive then their current server (upgrades allowed). Alternatively, they could let people agree to a service lock for 3 or even 6 months of they order additional servers at low prices, making an agreement that they cannot cancel any current services in their account for that term.
A combination of above would have done the trick, an all out "sold out" is quite a strange response to the reported problem in my opinion.
They could also implement a setup fee, temporary raise prices of new servers.... but they chose to not accept any orders at all, that's really odd IMO.
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09-17-2013, 04:18 PM #35
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09-17-2013, 04:37 PM #36Poooooonnyyy :*
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Honestly I think some of it stems from them charging for V4's now.
Originally you saw everyone and their dog offering out of OVH but almost every OVH VPS provider is now pulled out of there in search of cheaper IP's.
While they make the capital from the IP's you have to wonder if it really worked out.
Francisco
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09-17-2013, 04:47 PM #37Always there
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09-17-2013, 04:56 PM #38Poooooonnyyy :*
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Sure but there's multiple providers that have been forging their new justifications just to try to 'hold through' that time. How does a company that has been sold out of inventory for the past 6 months still find some way to keep requesting /16's?
V6 just won't happen before the next 5 years. You might see toredo getting more popular but it won't go that far. Some ISP's just won't care to offer it since it'll require too much overhauling.
Francisco
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09-17-2013, 05:01 PM #39Web Hosting Master
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09-17-2013, 05:05 PM #40Always there
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Sadly not, as only the content clients (ie: VPS, Servers) will pay for the Ipv4 space they need and the content providers pretty much all support Ipv6, the eyeball providers have plenty of Ipv4 space and they do not implement Ipv6 in the near future. Result: Prices for Ipv4 (for endusers) will rise year over year.
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09-17-2013, 05:09 PM #41
I would agree that ISPs generally have more leeway here. They could put an entire neighborhood behind NAT and only a handful of people would notice or care. A lot of international ISPs don't give users "real" ips as it is. So the ISP networks have a lot of leeway to make their allotments last well past exhaustion, and it's a lot easier pill to swallow compared to overhauling everyones networks. Heck, if prices go to $10 / ip / month, ISP networks could put a few million customers behind nat and rent out that million IPs to content networks. Given the typical margins in the ISP business, they could make more money renting out spare IPv4 than they ever did offering internet service.
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09-17-2013, 05:19 PM #42Web Hosting Master
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09-17-2013, 05:21 PM #43Always there
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I understood this, however its not 'the way' that will force us all to move to Ipv6, Content providers are already Ipv6 ready, its the eyeball providers and carriers that will not implement Ipv6 fast enough and they will not notice any price increase of Ipv4, as they have plenty for their needs far in the future.
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09-17-2013, 05:31 PM #44Web Hosting Master
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I see, it was the "eyeball" bit that was baffling me
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09-17-2013, 08:00 PM #45Web Hosting Master
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they will be reopening the orders at the early 2014
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09-17-2013, 08:10 PM #46Web Hosting Evangelist
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09-17-2013, 08:39 PM #47
I read their statement as, "We've discovered a flaw in our business model that's draining our cash and we need to figure a way to fix it so we're shutting down the front end for a little bit."
I'm sure they're finding that instead of the 3-4 year life cycle they thought they'd have on a server they're seeing a year. Knowing what I know about their cost model, they still make money at a year but probably not enough to satisfy the lenders they've taken on for the new expansions and not enough, long enough to stop a cash hemorrhage.
They probably did a good thing. Stopped the flow to give themselves some breathing room. Much better than plowing full speed ahead and eventually imploding.
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09-17-2013, 08:39 PM #48
Possibly reading this, although that's not my interpretation of it.
They are still taking orders, but gently. They still have a backlog on the Kimsufis and cheaper OVH models (the SPs) but the higher ranges are still available.
Their biggest problem isn't cashflow - it's the fly-by-nights and wanna-be resellers. They're also limiting deliveries of the lower priced models to certain of their DCs so that they can deal with the existing backlog at the others.
If you're a regular customer drop your local office an email if you need a server. Works fine for meLast edited by Postbox; 09-17-2013 at 08:45 PM.
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09-18-2013, 01:54 AM #49dd if=/dev/null of=/dev/sda
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Well, this thread is bound to get interesting. From getting hacked to this. Seems that their business model wasn't so viable.
I wonder what happened if a disaster happened, would OVH be able to recover from it? From what I read they only have enough money to cover their new server purchases/loans. That's a vicious circle.
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09-18-2013, 02:08 AM #50Hosting seer
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Well, well, well...
First they limit the circle of customers a day after new Kimsufi starts, then delays begin (oh my! completely unforeseenable!), and now OVH isn't happy that people that pay 5-10 times as much as Kimsufi 2013 for servers that are much more inferior try to switch to new servers en mass.
Was that so hard to expect? Loyal customers aren't those that will pay fortune for old hardware, losing support options etc etc etc. Loyalty should work both ways. Looks like OVH started (I hope) to understand that.
Let's see what follows. In any case, all the plans and promises to open the offer to all the world won't happen. Epic fail #2 in Kimsufy 2013 history (JMNSHO). Angering really loyal customers that stayed with OVH for years wasn't a good idea...
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