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This is really neat. One question: How are these folks able to keep such low prices? For example, I run several servers on rackspace. Their least expensive opt

by memset 13y ago

This is really neat. One question: How are these folks able to keep such low prices? For example, I run several servers on rackspace. Their least expensive option (512MB RAM, 1 core, 20GB disk) is $16.00 per month. DigitalOcean's is $5.00 per month. On the face of it, they are identical offerings but triple the price. Rackspace does offer other features (load balancing, cloudfiles, and other useful things which integrate nicely with their servers.) Is that the value proposition of AWS/Rackspace over these other companies, which only give you vanilla servers?

nikcub 13y ago
Rackspace's gross margin is 72.95%[0] and they are (or were) considered 'fat' (look at the margin trend in that chart to see how they have improved) Some estimate AWS's margins are up around 80% [1] Competition, low cost hardware, building their own stack, open source etc. mean better pricing for us users [0] http://ycharts.com/companies/RAX/gross_profit_margin http://ycharts.com/companies/RAX/gross_profit_margin [1] http://blog.profitbricks.com/the-fake-cloud-price-war/ http://blog.profitbricks.com/the-fake-cloud-price-war/
- mgaphysics 13y ago
  I tried to Love AWS, but right now I just like their effort. There is something organically that feels right about the way DO has positioned themselves, they can always scale pricing based on additional features added. Yes, there margin is thin, but the the fact that the service is easy to use means less user support issues when adding them at 500 per day.
snewman 13y ago
I keep hearing great things about DigitalOcean, but the critical price parameter for me is flash storage, and they don't seem to be beating AWS here. The larger DigitalOcean plans are $1 / GB / month for flash. An EC2 hi1.4xlarge instance has 2TB of flash. At on-demand pricing, $3.10/hr x 24 hours x 30 days == $2232/month, which is slightly more expensive. But reserved instances bring that down very quickly. A "Light Utilization" instance only costs $3884 upfront for a three-year term. Even if you amortize that over just 12 months, it works out to $1152/month, almost 2x as cost-effective as DigitalOcean. (Of course, with DigitalOcean you're getting a lot more CPU and RAM per GB of SSD, but only compared to the h1.4xlarge which is deliberately flash-heavy.) This is not to run down DigitalOcean, but if you take reserved instances into account then they don't necessarily beat EC2 pricing. Or am I missing something?
- rismay 13y ago
  For me, they are really good on the low end. I love the fact that they offer a $5 per month instance size. Plus, since I joined during the beta period I get unlimited bandwidth for free. This beats the $15 per month AWS instance sizes or the lowest Google option of like $30 bucks. Also, it's like 2x faster than AWS. Finally, for hacking you can easily use a $5 server to replace a service like Cloudant as your backend during testing. I've had cases where I would have been charged hundreds of dollars for API calls which a $5 DigitalOcean server handled marvelously. Or you can use it host a high performance blog: http://jasonormand.com/2012/07/20/introducing-lempress-super-easy-wordpress-server-setup/ http://jasonormand.com/2012/07/20/introducing-lempress-super...
  - Kudos 13y ago
    I thought the unlimited bandwidth thing was only until they start measuring it?
    - ampsonic 13y ago
      Correct
    - jeffasinger 13y ago
      I think customers that signed up a long time ago get unlimited bandwidth forever so long as they don't do certain things (Tor, Bittorents, run a CDN)
- toomuchtodo 13y ago
  Why would I take reserved instances into account when I don't have to reserve them with Digital Ocean? They're still kicking AWS' ass on pricing. Sure, big boys are still going to go with AWS (i.e. the CIA), but for small/mid-sized shops? Digital Ocean ahoy!
regularfry 13y ago
My guess is that they're a) using cheap SSD's, and b) charging at or below cost now so that when a price drop hits in a year or so's time they'll be instantly, hugely profitable.

by memset 13y ago

nikcub 13y ago

Rackspace's gross margin is 72.95%[0] and they are (or were) considered 'fat' (look at the margin trend in that chart to see how they have improved) Some estimate AWS's margins are up around 80% [1] Competition, low cost hardware, building their own stack, open source etc. mean better pricing for us users [0] http://ycharts.com/companies/RAX/gross_profit_margin http://ycharts.com/companies/RAX/gross_profit_margin [1] http://blog.profitbricks.com/the-fake-cloud-price-war/ http://blog.profitbricks.com/the-fake-cloud-price-war/

mgaphysics 13y ago
I tried to Love AWS, but right now I just like their effort. There is something organically that feels right about the way DO has positioned themselves, they can always scale pricing based on additional features added. Yes, there margin is thin, but the the fact that the service is easy to use means less user support issues when adding them at 500 per day.

snewman 13y ago

I keep hearing great things about DigitalOcean, but the critical price parameter for me is flash storage, and they don't seem to be beating AWS here. The larger DigitalOcean plans are $1 / GB / month for flash. An EC2 hi1.4xlarge instance has 2TB of flash. At on-demand pricing, $3.10/hr x 24 hours x 30 days == $2232/month, which is slightly more expensive. But reserved instances bring that down very quickly. A "Light Utilization" instance only costs $3884 upfront for a three-year term. Even if you amortize that over just 12 months, it works out to $1152/month, almost 2x as cost-effective as DigitalOcean. (Of course, with DigitalOcean you're getting a lot more CPU and RAM per GB of SSD, but only compared to the h1.4xlarge which is deliberately flash-heavy.) This is not to run down DigitalOcean, but if you take reserved instances into account then they don't necessarily beat EC2 pricing. Or am I missing something?

rismay 13y ago
For me, they are really good on the low end. I love the fact that they offer a $5 per month instance size. Plus, since I joined during the beta period I get unlimited bandwidth for free. This beats the $15 per month AWS instance sizes or the lowest Google option of like $30 bucks. Also, it's like 2x faster than AWS. Finally, for hacking you can easily use a $5 server to replace a service like Cloudant as your backend during testing. I've had cases where I would have been charged hundreds of dollars for API calls which a $5 DigitalOcean server handled marvelously. Or you can use it host a high performance blog: http://jasonormand.com/2012/07/20/introducing-lempress-super-easy-wordpress-server-setup/ http://jasonormand.com/2012/07/20/introducing-lempress-super...
- Kudos 13y ago
  I thought the unlimited bandwidth thing was only until they start measuring it?
  - ampsonic 13y ago
    Correct
  - jeffasinger 13y ago
    I think customers that signed up a long time ago get unlimited bandwidth forever so long as they don't do certain things (Tor, Bittorents, run a CDN)
toomuchtodo 13y ago
Why would I take reserved instances into account when I don't have to reserve them with Digital Ocean? They're still kicking AWS' ass on pricing. Sure, big boys are still going to go with AWS (i.e. the CIA), but for small/mid-sized shops? Digital Ocean ahoy!

regularfry 13y ago

My guess is that they're a) using cheap SSD's, and b) charging at or below cost now so that when a price drop hits in a year or so's time they'll be instantly, hugely profitable.