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  1. #1
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    What Happened to Industry, Why Everyone Need Everything Soo Cheap ?

    Hello everyone,

    I have been thinking alot about this from past 6 months & today i thought to discuss this among other wht members too.

    Every second inquiry we see comes with a price match request, almost every customer need super cheap servers, hosting industry never use to be like this...i am not sure how some providers are selling servers soo cheap...do you guys think that this is something which is giving too bad impact on hosting industry and things may get worst with time. PLEASE SHARE YOUR VALUABLE VIEWS
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  2. #2
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  3. #3
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    Generation Y . . . you owe them, it's not their fault they don't have enough money, you're evil because you run a profitable business, everything should be free or insert whiny rant about unfairness here.

    They'll drive your business into the ground complaining about how crappy the service is with their $20/mo E3 server . . . the hordes are coming!

  4. #4
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    So i am not alone who is thinking about this...
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  5. #5
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    Quote Originally Posted by Prolime Servers View Post
    So i am not alone who is thinking about this...
    Oh no. i can remember several years ago when I was signing hundreds of people up to a Core2Quad with 8GB RAM and a 1TB Drive with a few TB of bandwidth for $100/mo because that was seen as a totally amazing deal at the time. Now people expect that spec, with 100Mbps unmetered for $35/mo.

    I've been out of this game for 2 years and coming back in to it, it's taking some work to get my head around it.

    But the thing is - you're daft if you rely on WHT to find your customers. The business customer is still prepared to pay a good price for a good service - but even they are consolidating. The truth is, the future is not in dedicated servers. It's in cloud.

  6. #6
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    I have to agree with this, but to stay competitive you have to keep up with the competition, especially the big boys who offer dedicated servers for like $20 per month. Customers do seem to want more and more while maintaining even lower budget than few years ago.
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  7. #7
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    agreed, but to keep up with the competition we are decreasing cost of servers & decreasing the level of services too, my main concern is how can we cope up with both the things together ie decrease cost + provide quality services and upto some extent i found this totally impossible mainly because hiring experienced techs, buying quality hardware, paying for premium bandwidth, power cost etc can never be recovered if we end up selling servers at 30$,40$ or even at 70$ and then customer start complaining about bad services, crappy hardware, downtime etc...too confusing & unclear situation for a mid size provider like us.
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  8. #8
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    We also get quite some requests from parties trying to squeeze every penny out of an offer. Mostly when a provider is 1 USD cheaper they would probably go for that other one.
    The strange thing is that they also tend to shout at you like you are doing something wrong because you can't match the price. We've seen customers come and go who only look at the price, but only start to realize that's not the most important thing once things like 'support' and 'uptime' come to mind.

    In my opinion, you should just stick with the most valuable point of your company which you are good at and not care too much about clients who only want the cheapest deal.
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  9. #9
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    A lot of people don't need dedicated servers anymore. A lot of enterprises and most start ups are using services from Microsoft, Amazon and Google now.

  10. #10
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    Quote Originally Posted by slyjackal View Post
    A lot of people don't need dedicated servers anymore. A lot of enterprises and most start ups are using services from Microsoft, Amazon and Google now.
    That may be true but on a different note, have you ever tried customer support from Amazon or Microsoft on their "cloud" services?
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  11. #11
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    Quote Originally Posted by BBGN Brian View Post
    That may be true but on a different note, have you ever tried customer support from Amazon or Microsoft on their "cloud" services?
    No. I am sure they are not on par with some of the hosts here. However, they are big, have all the frills,cheap and reliable.

  12. #12
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    Quote Originally Posted by slyjackal View Post
    No. I am sure they are not on par with some of the hosts here. However, they are big, have all the frills,cheap and reliable.
    I'm not trying to derail the original post but ... you had me up until cheap and reliable.
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  13. #13
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    Quote Originally Posted by BBGN Brian View Post
    That may be true but on a different note, have you ever tried customer support from Amazon or Microsoft on their "cloud" services?
    Bingo!!!

  14. #14
    Quote Originally Posted by BBGN Brian View Post
    That may be true but on a different note, have you ever tried customer support from Amazon or Microsoft on their "cloud" services?
    It works both ways.

    I've had numerous services from WHT hosts, who have had just as appalling customer support. All the way through shared/vps/dedicated/cloud hosting. Right now, i only trust my data with MS/Amazon (S3)/Google.

    I personally use the cheaper dedicated hosts right now, because i can buy 3 servers from the cheaper hosts, for the price of 1 from a good host. Whilst still maintaining better availability/bandwidth capacity and server resources as my clients sites can be split across multiple servers easy. It probably helps as being a pretty competent admin, the only time i will contact support is for network issues/hardware issues.

  15. #15
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    Quote Originally Posted by slyjackal View Post
    A lot of people don't need dedicated servers anymore. A lot of enterprises and most start ups are using services from Microsoft, Amazon and Google now.
    That's not true, enterprise customer would opt for dedicated over cloud because of performance. Enterprise clients usually require none shared resources.

  16. #16
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    Quote Originally Posted by HocusPocus View Post
    It works both ways.

    I've had numerous services from WHT hosts, who have had just as appalling customer support. All the way through shared/vps/dedicated/cloud hosting. Right now, i only trust my data with MS/Amazon (S3)/Google.

    I personally use the cheaper dedicated hosts right now, because i can buy 3 servers from the cheaper hosts, for the price of 1 from a good host. Whilst still maintaining better availability/bandwidth capacity and server resources as my clients sites can be split across multiple servers easy. It probably helps as being a pretty competent admin, the only time i will contact support is for network issues/hardware issues.
    What do you think the cheaper hosts are selling you? it sure isn't enterprise grade hardware which will lead to failures down the road. That can definitely end up costing you in the long run, many people fail to see this until they get burnt.

  17. #17
    Quote Originally Posted by Terrence-J View Post
    What do you think the cheaper hosts are selling you? it sure isn't enterprise grade hardware which will lead to failures down the road. That can definitely end up costing you in the long run, many people fail to see this until they get burnt.
    I've used servers for approx the last 15 years. The only time i've had hardware issues which was not harddrive related, was on a batch of IBM motherboards for server grade hardware.

    With that aside, I can still take 2 servers from 2 separate cheap suppliers failing at exactly the same time and still have my client sites running. There is a significantly higher % chance that a more expensive server will fail (or its network), before i have 3 cheap servers from different suppliers all die at the same time.

    So not only do i get more reliability, i also get a significant ability to burst bandwidth and CPU usage than if i had chosen the more expensive host.

    The only thing i lose on, is the small amount of time in purchasing/setting up a new server, but this is a one time event and normally takes less than 20mins.

    I don't know if im just lucky but in my 20 years of computing, i've never seen a consumer motherboard/cpu fail which wasn't DOA to start with. I have absolutely no issue with using such hardware when CPU horsepower is not a requirement.

  18. #18
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    Quote Originally Posted by HocusPocus View Post
    I've used servers for approx the last 15 years. The only time i've had hardware issues which was not harddrive related, was on a batch of IBM motherboards for server grade hardware.

    With that aside, I can still take 2 servers from 2 separate cheap suppliers failing at exactly the same time and still have my client sites running. There is a significantly higher % chance that a more expensive server will fail (or its network), before i have 3 cheap servers from different suppliers all die at the same time.

    So not only do i get more reliability, i also get a significant ability to burst bandwidth and CPU usage than if i had chosen the more expensive host.

    The only thing i lose on, is the small amount of time in purchasing/setting up a new server, but this is a one time event and normally takes less than 20mins.

    I don't know if im just lucky but in my 20 years of computing, i've never seen a consumer motherboard/cpu fail which wasn't DOA to start with. I have absolutely no issue with using such hardware when CPU horsepower is not a requirement.
    I mostly agree here. For any kind of business/enterprise application, I feel that it should be moving in the direction of application level redundancy. If your application can't tolerate host failures in a clustered setup without downtime, it's the wrong application to be using. I realize that's an unrealistic expectation for everything at the current time, but things definitely seem to be moving that way. And once you're at a point where you know that a one or even two host failure will not impact your service, why would you pay more to buy enterprise grade components if you can just order a new commodity server in hours and sometimes even minutes?

  19. #19
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    In my personal opinion, I agree that people seem to expect ridiculously high specifications for a very low price and because they have seen it in one place they expect all other providers to be able to do the same but I fear they are missing out on two key points:

    1. Value - The reason companies DON'T have ridiculously low prices is not because they want to take more money from you. They would not be in business or long if that were the case. They will charge more because they offer more. This could be in terms of superior hardware, (modern servers with modern CPUs) or it could be because of the support that they offer and extra care that you get. Yes it may seem attractive at the time to get a huge dedicated server for £5/month but after 3 days when it goes 'bang' and the support staff are nowhere to be seen, you business will be going down hill very rapidly.

    2. Hidden Charges - I don't want to bad mouth Amazon here, or any other companies for that matter but it seems to me that they lure people in with these low prices but when you find out the advertised price doesn't include any bandwidth, or any control panel, or any backup, or any support etc. it soon because better value to go for a reputable provider that includes all of these things and more for free. This way you know there will be no nasty surprise bills one month ans you feel that you have the right to call up your provider and ask them to give you a hand with confidence.

    Naturally these are just my views and I am sure some will agree, some will disagree.
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  20. #20
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    I know this will sound short sighted but, if a customer haggle's me on price, they can go somewhere else. Why? Because if they nag on price, they'll nag on things that really don't matter, and I probably can't do anything about.

    If a client can't afford $5 a month, or $66 a year, you don't want them. Bottom feeding is not a good business model.

    My 2 cents : )
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  21. #21
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    Quote Originally Posted by owengreaves View Post
    I know this will sound short sighted but, if a customer haggle's me on price, they can go somewhere else. Why? Because if they nag on price, they'll nag on things that really don't matter, and I probably can't do anything about.

    If a client can't afford $5 a month, or $66 a year, you don't want them. Bottom feeding is not a good business model.

    My 2 cents : )
    This is very true!!

  22. #22
    Like all the other sectors, everyone is racing to 0 margins. Just take a look at

    Fast Food
    Specialty Food
    Ebay Stores
    Online Stores
    Retail Stores
    Specialty Contractors

    The new mojo is do more make less. The problem is people rushing in for the quick dollar.

    Once they are forced to comply with insurance, employment, and taxes. Most businesses on a flawed model will disappear. It is not just webhosting, I see it everywhere. I just cut out the middle man and went with Geico cause it is a lot cheaper.

  23. #23
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    Topics like these I enjoy reading...although the enjoyment does have the attachment of disappointed feelings. All of us share the same thoughts, almost nothing to counter-argue, and I see how things are falling apart day by day.

    I like to reference the music industry a lot in my posts, and it's going through the exact same thing.

    Both industries...the divide between mega-business and common sense. Everything for nothing, while waking on those that helped to create and build the infrastructure. It's to the point, people in both industries give up and throw in the towel.

    Once you have the thoughts of "It made sense and it was well respected", your pretty much a dinosaur.

  24. #24
    The biggest issue is the market changing from quality to godaddy like services and oveseas pressure. In order to be successful in this new market you need to be able to provide something different than everyone else. It's easy to start up a hosting company and do a me too offer and hop into PhoenixNap or burst or some other location that everyone in the planet goes to.

    However, providing something different and presenting a different story like scalability, performance, and location can even the playing field. You really need to identify who is your market. Is it the budget market looking for the next cheapest unsustainable deal e.g. the groupon method or is it about service/performance where you may not have the same quantity of customers but you make it up in quality and relationships.
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  25. #25
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    Quote Originally Posted by Terrence-J View Post
    That's not true, enterprise customer would opt for dedicated over cloud because of performance. Enterprise clients usually require none shared resources.
    You do realise there's not just 'Public' cloud offerings... right..

    Just because you choose cloud, doesn't mean you're sharing with other people. You establish your own setup. Enterprise customers are establishing their own cloud infrastructure because they are more heavily reliant on their IT infrastructure, uptime, quality of connection, redundancy and security is of paramount importance. You can control every element of this in your own cloud setup.

    Cloud isn't just setting up some servers and a storage box and linking them together with OnApp... y'know. You also need to look at Wordpress for example. Their hosted platform delivers some of the major news and outlet websites on the web... that's putting an element of your setup in the cloud.

    I think the biggest problem here is that most hosts you see advertising to WHT don't necessarily have any experience of or knowledge of how to deal with an enterprise client. They will forever be pushing the slim margins and throwing around the budget box. There's two ways to look at your business:

    1) You can see more of your brand new server hardware at $35/mo
    2) You can sell less of your brand new server hardware at $200/mo
    (prices for example purposes only)

    But if you opt for two, you have to be able to deliver a product that is greater than one and you are targeting a different audience. But you're making better margins, have a greater ROI and establishing yourself to a different market. Thus making your business more sustainable and attractive to inward investment.

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