That is an interesting perspective, but it runs directly counter to my experience. I've experimented with many different business models; building hardware an

That is an interesting perspective, but it runs directly counter to my experience. I've experimented with many different business models; building hardware and selling it (and then renting co-location) charging a setup fee that covered the parts costs (and then charging a just above cost fee for running the server) and traditional renting. Renting hardware, for me, has been vastly more profitable than any other option. I can build a 32GiB ram server with an 8 core opteron, 4 'enterprise sata' disks, etc... for well under fifteen hundred bucks. I could probably sell it for two grand, if I spent a lot of effort on sales. Alternately, I can rent the thing for $300/month. Heck I can rent a three year old server with similar specs for $300/month. This is without really trying; I thought I was going to have to part out those old servers, but people keep emailing me asking for high-ram dedicated servers. I'm honest about the age of the hardware, and yet I still have more demand for old servers than I have old servers. (I'm working on moving my xen customers on to new servers, so I will have more old servers shortly.) Those old servers cost maybe $60/month for me to host; the new ones? $30/month. As far as I can tell, you can charge vastly higher prices if you rent your product rather than sell it. From my perspective, renting is more profitable than selling even if I'm paying credit card rates on the capital. I self-finance by offering people a discount if they pay 3, 6, or 12 months ahead; 5% for 3 months, 10% for 6 and 20% for 12 months. It works quite well, new signups on a server will pay for the hardware the first month. 20% is kind of costly capital, but it still makes more sense for me to borrow and rent than to sell.