Cloud at Cost - Did I make a mistake?
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@Dashrender said:
Even if it's just for a year, you're still money ahead.
Though I do agree, I'm not sure how they plan to survive?
What's the concern? It's a very potentially viable model. Charge up front the full cost of a lifetime service. Put that money in the bank, earn interest. The cost of delivering services over time drops towards zero. The servers don't get bigger over time, they become relatively trivial.
Now if they never bring on new customers, ever, sure the model doesn't work. But then again, it doesn't work in that case anyway. So that is not an issue.
What concern do you have with the business model? I don't see any. Seems like a good one to me. It is simply betting on good financial planning and with the time / value of money that IT people so often don't consider and bet against, costing themselves a fortune.
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@JaredBusch said:
@Dashrender
Buy some hardware and divide up the costs. I think this is a decent model. Only time will tell though.I agree. It makes sense. And it is different than the competitors, which gives them a unique market. Just look at how many people jumped on buying "lifetime" options with the full cost up front just to test out the service!
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As the OP mentions, how do you account for hardware upgrades and the continual bandwidth, power, etc costs?
If I buy my one windows server for $280 (before any discounts) and run that for 8 years, are they still ahead?
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@Aaron-Studer said:
I moved my domain aaronstuder.com to it, and it is working great, however the more I think about it, I have the gut feeling I made a mistake.
No company sells a product for a lifetime, without income coming in. The business model just doesn't work.
This is the third thread I've seen on this and I've yet to hear any reason for why people don't think it is a viable business model. I see money coming in, I see profits, I see long term model.... what I don't see is a reason that people are concerned.
What financial reason do you have for concern? Do you worry about how Ford is going to keep making money after you buy your car? Do you worry about how Dell will keep making money after you buy your server? In every other aspect of life we buy, rather than lease. In this one case you bought instead of leasing and think that the company will collapse? Why?
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@Aaron-Studer said:
There going to need to upgrade servers/switches etc. How can they do they with no recurring income?
What do you mean no recurring income? You certainly are not their only customer.
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@Aaron-Studer said:
They have to pay for the bandwidth you use, how can they do that when your not paying for it?
But you ARE paying for it. You've already paid for it. What am I missing here?
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@Dashrender said:
If I buy my one windows server for $280 (before any discounts) and run that for 8 years, are they still ahead?
Yup. It's that simple.
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@Dashrender said:
As the OP mentions, how do you account for hardware upgrades and the continual bandwidth, power, etc costs?
Why do they need upgrades? Only for new, paying customers. They only need to upgrade when money is coming in. When money isn't coming in, they don't need to upgrade. The business model is pretty straightforward, in reality.
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Once you purchase one does it become a transferable asset? Can I sell it to another person?
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@scottalanmiller said:
@Dashrender said:
As the OP mentions, how do you account for hardware upgrades and the continual bandwidth, power, etc costs?
Why do they need upgrades? Only for new, paying customers. They only need to upgrade when money is coming in. When money isn't coming in, they don't need to upgrade. The business model is pretty straightforward, in reality.
That would be true if there were no cost to support those customers. They still need to support hardware on those servers. When hardware starts to fail years down the road on the older hardware for lifetime customers, who pays for that?
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@MattSpeller said:
Once you purchase one does it become a transferable asset? Can I sell it to another person?
You could in some ways. You could give access to someone to your account. If you put each server on a different account you could transfer the account.
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@IRJ said:
That would be true if there were no cost to support those customers. They still need to support hardware on those servers. When hardware starts to fail years down the road on the older hardware for lifetime customers, who pays for that?
You do. You already paid for it. There's no magic here. The cost of a server, over its lifetime, has been rolled into an up front cost just like anything. That's why it costs so much more up front than paying month to month.
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@MattSpeller said:
Once you purchase one does it become a transferable asset? Can I sell it to another person?
I suppose in a few cases you would want to transfer it,.. but otherwise I don't see any need. You want the data and such - here you go, 'hardware' stays with me.
Hosted Websites are no different. It's your content on their hardware. it is always their hardware.
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What, can they stick like 2000 linux boxes on a single piece of hardware?
Same goes for the Windows side, I guess the density that they can provide much be much higher than I realized.
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@Dashrender said:
What, can they stick like 2000 linux boxes on a single piece of hardware?
Certainly. And that number just increases with time. Every generation you get much higher density than the generation before. -
@Dashrender said:
Same goes for the Windows side, I guess the density that they can provide much be much higher than I realized.
Yup. NTG has actually looked at when it would make sense to go to hardware that does close to 1,000 PBXs on a single 2U chassis. Virtualization takes you much farther than people realize.
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@Dashrender said:
What, can they stick like 2000 linux boxes on a single piece of hardware?
Same goes for the Windows side, I guess the density that they can provide much be much higher than I realized.
If they are selling their developer 1 option predominantly (which I'm not saying they are) they could have that kind of density.
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@coliver said:
@Dashrender said:
What, can they stick like 2000 linux boxes on a single piece of hardware?
Same goes for the Windows side, I guess the density that they can provide much be much higher than I realized.
If they are selling their developer 1 option predominantly (which I'm not saying they are) they could have that kind of density.
Those you could get 500 on a Dell R720xd (one generation old) which is a pretty low end, SMB server, with zero shared memory. Share memory and 1,000 on old hardware is doable!!
On an Oracle 2U box you might get 4,000 or more. On a big enterprise server, look out!
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I'm guessing this is banking on the fact that 90% or so (guessing) of users will use next to nothing on resources and very few will be pushing it to the max. The average website I'm guessing ones the density is up is pennies to run.
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@thecreativeone91 said:
I'm guessing this is banking on the fact that 90% or so (guessing) of users will use next to nothing on resources and very few will be pushing it to the max. The average website I'm guessing ones the density is up is pennies to run.
That's partially true, but not actually required for the concept to work. The overcommit level just makes it that much easier to work.
