4 ms·

Why all OVH dedicated servers are "sold out"

57 points by mike_esspe 13y ago

clienthunter 13y ago
I'm an OVH customer, and I find this unbelievably bad practice. This rant is a piece of polemic that only serves to legitimise their screw up. Not selling cheap dedi's makes them entirely redundant.
- deleted 13y ago
  [deleted]
- vidarh 13y ago
  What rant? Unless you're seeing something different to me, it's a Q&A form text that calmly explains the problem they have encountered with their current business model, and how they are going about trying to figure out a model that will work for the long term. You are right, if the situation remains, it does make them redundant. On the other hand, if the turnover is too high to allow them to recover the cost of the new servers, they'll go bankrupt, so it is a problem they need to deal with one way or the other. The approach they've chosen is unusual, that is all.
  - aroch 13y ago
    The text is almost verbatim from a post Oles made a month or so ago. It read someone what like rant, but mostly because Oles apparently can't write in French or English with proper grammar
    - clienthunter 13y ago
      Still, hardly my problem to figure that out and make allowances for it. It's his job to have it copyedited/run past someone in the company who is capable of empathy with customers.
      - aroch 13y ago
        I don't know, if you've been dealing with OVH for any length of time you should realize this is par for the course. OVH (in particular Oles) have always been brusque and unsympathetic to their customers whenever they've changed policies (usually with no consultation of their customers). OVH couldn't give two shits about your problems
  - clienthunter 13y ago
    What annoys me I suppose is that the issue was entirely predictable. I now know there are customers who got in before the shutdown who now have a server with double my spec at half the price. Of course current customers were going to move if they could! Why this surprised anyone is beyond me. The shutdown locks loyal customers in to a worse deal, and this rant/article/whatever doesn't even come close to apologising for/mitigating that - it is exclusively concerned with the ramifications for OVH. I'm the customer, OVH is the variable that bends to my will, not the other way around. I'm eyeing up online.net now anyway, as I didn't know of them before. Now I do, and I have an insight into how the OVH mind works, I'm unlikely to ever use them again.
- maaarghk 13y ago
  Also an OVH customer and whilst I think the "shutdown" is annoying because I do want to buy another server from them (concurrently, not as a replacement), I don't agree that this is a rant at all nevermind a polemic, seems quite reasonable.
  - clienthunter 13y ago
    Perhaps 'rhetoric' is a better word. I'm a predictably pissed off customer, the last thing I need from OVH is a lesson in business strategy. All I want from them is a fair plan for what they plan to do for me now they've gone and got my back up. I don't think that's unreasonable given that I'm one of many who has chosen to keep them in business, and the hand that giveth is the hand that taketh away.
yannickmahe 13y ago
CEO announced on twitter they would have new offers in 10-14 days. https://twitter.com/olesovhcom/status/390557634790973440 https://twitter.com/olesovhcom/status/390557634790973440
alexandros 13y ago
Surely if users are flocking to the 'latest and greatest' you deal with that by gradually reducing the prices of the old servers such that you get natural price discrimination?
- vidarh 13y ago
  That's one possible solution, but then that needs to be accounted for in their price model to ensure they can pay off the cost of each server over its life, and that seems to be a substantial part of the problem they've run into: The turnover on each new generation is higher than their models accounted for, and so reduces their lifetime expected revenue per server too much. Doing what you suggest is certainly possible, but would likely mean they'd need to charge more early on.
networked 13y ago
>The main competitor of OVH is actually OVH itself. The customer stays with OVH but orders a new server instead of keeping the old one. Interesting problem, and surely not the worst one to have. What would have been a more graceful way to deal with it, though, if any?
- clienthunter 13y ago
  I wouldn't call it interesting, the situation was massively predictable - I would call it profound incompetence.
davidjgraph 13y ago
How about simply reduce the rental cost of the older servers to below that of the newer servers? I don't see this mentioned anywhere, isn't it pretty obvious?
- justincormack 13y ago
  Yes that was my thought, have a price function that falls over time you have held the server, perhaps starting a little higher than the current one. Its a kind of amortised up front fee in some ways. Alternatively, start a PAAS business to use the servers people dont want to buy, although I guess the VPS business does this to some extent.
  - tinco 13y ago
    This is not what they want because they are trying to price their new hardware competitively by milking their older customers. If they would reduce the profit of their cash cows they can not invest in reducing the prices of the hardware that attracts new customers.
- tinco 13y ago
  No it's not pretty obvious. Reducing the rental cost of sold servers means directly reducing revenue, that sounds like madness to me. The saner alternative would be to _increase_ the cost of the newer servers, but as they point out that could result in them being less competitive. The real solution would be to devise some way where happy customers just retain their current servers, and new customers can get the latest hardware for the lowest price. For some reason the old customers do enjoy upgrading their machines though, so this lands them in a tough spot. They can't have the best of both worlds, both the lowest prices and the freedom contracts. So they're going to take their time finding out what their strategy on this is going to be.
  - thaumasiotes 13y ago
    Yes, it's obvious enough that the author specifically calls it out: > So yes if it's a turnover issue, we could offer the old server at the same price as the new one as an incentive. It might or might not be correct, but it's an extremely obvious idea.
dcc1 13y ago
I cancelled all my OVH servers, on the high end they are a ripoff and their internal network went to crap recently, it was faster to move files to another country than between 2 HG XXXL servers, go figure I am currently testing the waters on offering 24 and 36 drive storage monsters https://news.ycombinator.com/item?id=6576796 https://news.ycombinator.com/item?id=6576796 any feedback is appreciated
- cmer 13y ago
  I agree with you. Their internal network is crap. And recently, their external network has been horrible as well. We have 40 servers with them and we're getting out of there. Been getting downtime almost weekly for the last couple of months. Their prices are impossible to beat in America however. Even heavily discounted, SoftLayer is more than twice the price.
  - tluyben2 13y ago
    I used to not like them years ago when I had a lot of servers, moved away, went back and we are very happy now. We are not experiencing the downtime / slowness you are referencing. And the competition quite expensive compared. I mean; I don't have to get the cheapest stuff possible, but Softlayer etc is really not economical for our business even if OVH would have some downtime.
nly 13y ago
Despite other criticisms, you can pry my $60/year dedi out of my cold dead hands (2 GiB/500GB/dual core Atom)
- aroch 13y ago
  Using OVH's horrible volume network, backed by their crap support with their servers built from a lot of QC-rejected procs on 5400RPM drives.
  - anoncowherd 13y ago
    It seems you've got some bad experiences with OVH. Could you go into more detail on this stuff? Do you think Hetzner is better than OVH, by the way?
    - xeroxmalf 13y ago
      Previous OVH customer and now current Hetzner customer here. I've been impressed with Hetzner's internal tools (Robot) and their support has been quick (had a faulty server, had it replaced inside of an hour).
      - anoncowherd 13y ago
        Good to know, thanks!
    - aroch 13y ago
      OVH's network is one of the most overly sold of any large multinational host (At one point they had ~40Gbps fiber between their DCs but, of HG servers alone, had sold over 2Tbps of bandwidth). Their volume network has horrible contention and they don't even try to make it worthwhile -- 'best effort bandwidth' is basically what residential bandwidth is. At one point I had ~5K of servers with them and in any given week one of them would require some work. My org had paid for the best SLA (<2 hour) and we'd often have to wait a day to hear back what the problem is and another day, at least, to get things replaced. OVH's general business plan is to expand customer base quickly, then take the time to actually build out the network to fit their pre-growth size. Hetzner is a little better on supportbut they have some annoying policies (See the DDoS thread from yesterday), I do like their automation though. I'm now mostly in Leaseweb and a couple CN-datacenters with my own peering mix
Napapijri 13y ago
OVH is the worst out there.
bio4m 13y ago
The biggest problem was they were introducing new servers with similar or better specs than servers existing customers had. And instead of dropping existing customers prices, they kept them static. So a lot of people found themselves looking at a bill 600% higher for the same server just because they were an existing customer. Who in their right mind would pay 6x times more for the same service ? They could stop the customer churn by simply changing the price to match the new offerings. At the time I switched to a new server type I even asked their customer team if the new pricing would be offered to existing customers and the answer was a flat no.
lowry 13y ago
it would be much better for their sales if they did not force clients to manually renew every 3 months.
- Karunamon 13y ago
  It was every individual month for me. This combined with a dodgy spam filter led to me losing my server there. And now I can't reorder because of this silliness. Oh well. I recently found out that I can get business-class internet at my home, so I'll be moving all that stuff inside my own network soon enough.
  - maaarghk 13y ago
    Monthly for me, but managed to keep on top of it. Happy to know that they are re-thinking payments, because it was getting really annoying.
- _delirium 13y ago
  That's one of the things mentioned in the post, which seems like a reasonable place to start. If their goal is that older customers should ideally stay on the old servers, that's more likely if it's basically autopilot. If someone has to manually decide to renew, they're much more likely to notice that they can upgrade to a newer offering, instead.
benmorris 13y ago
It appears to me they have underpriced their servers to the point they can't offset the ratio of existing customers upgrading servers. Seems like they should implement longer term contracts if they want to keep offering these rock bottom prices people keep snatching up. I'll admit looking at their pricing I can see why they sell so many.
sriramiyer 13y ago
I too, like many of you find their policies a little strange. Where the entire business world practices reducing prices of older products and replacing them with superior products at old or even slightly higher price points one must wonder the reasoning behind their, "newer must be cheaper than older" strategy where they do not pass on the benefit of the older hardware to the customers. If an existing customer reads that page, and this thread there's just one thing that they will immediately deduce. Existing customers are being used as a subsidizing agent to capture new audience. Which, again is quite strange. In a game theoretic way, this drives the point to existing customers that it is beneficial to not be loyal to the service (i.e. cancel/re-order). If they reduced cost on older hardware while introducing newer one, they could also list those up for sale. Surely people on a budget or people who don't need a Xeon will simply settle for an older Atom at a cheaper price. This also allows OVH to retain and milk the box till its ROI is hopefully achieved.
jjoe 13y ago
"bringing in new customers and new projects which will allow us to increase our business figures" Guys, you need to realize this isn't about getting the balance sheet in the black. There is no legitimate or interesting problem to solve here. They've been deep in the red. Their ultimate goal is to increase revenue figures at all cost and perhaps look "good" for an OK exit. Maybe there isn't more users or market share to grab in their niche. Hence the "thrashing." Their target server count is a million. They've been building DCs left and right with this figure in mind without there being solid sustained demand. I think they've spread themselves too thin. OVH is working hard to acquire as many users as it can for the sole purpose of pleasing investors. And when that becomes any business' only focus...

57 points by mike_esspe 13y ago

I'm an OVH customer, and I find this unbelievably bad practice. This rant is a piece of polemic that only serves to legitimise their screw up. Not selling cheap dedi's makes them entirely redundant.

deleted 13y ago
[deleted]
vidarh 13y ago
What rant? Unless you're seeing something different to me, it's a Q&A form text that calmly explains the problem they have encountered with their current business model, and how they are going about trying to figure out a model that will work for the long term. You are right, if the situation remains, it does make them redundant. On the other hand, if the turnover is too high to allow them to recover the cost of the new servers, they'll go bankrupt, so it is a problem they need to deal with one way or the other. The approach they've chosen is unusual, that is all.
- aroch 13y ago
  The text is almost verbatim from a post Oles made a month or so ago. It read someone what like rant, but mostly because Oles apparently can't write in French or English with proper grammar
  - clienthunter 13y ago
    Still, hardly my problem to figure that out and make allowances for it. It's his job to have it copyedited/run past someone in the company who is capable of empathy with customers.
    - aroch 13y ago
      I don't know, if you've been dealing with OVH for any length of time you should realize this is par for the course. OVH (in particular Oles) have always been brusque and unsympathetic to their customers whenever they've changed policies (usually with no consultation of their customers). OVH couldn't give two shits about your problems
- clienthunter 13y ago
  What annoys me I suppose is that the issue was entirely predictable. I now know there are customers who got in before the shutdown who now have a server with double my spec at half the price. Of course current customers were going to move if they could! Why this surprised anyone is beyond me. The shutdown locks loyal customers in to a worse deal, and this rant/article/whatever doesn't even come close to apologising for/mitigating that - it is exclusively concerned with the ramifications for OVH. I'm the customer, OVH is the variable that bends to my will, not the other way around. I'm eyeing up online.net now anyway, as I didn't know of them before. Now I do, and I have an insight into how the OVH mind works, I'm unlikely to ever use them again.
maaarghk 13y ago
Also an OVH customer and whilst I think the "shutdown" is annoying because I do want to buy another server from them (concurrently, not as a replacement), I don't agree that this is a rant at all nevermind a polemic, seems quite reasonable.
- clienthunter 13y ago
  Perhaps 'rhetoric' is a better word. I'm a predictably pissed off customer, the last thing I need from OVH is a lesson in business strategy. All I want from them is a fair plan for what they plan to do for me now they've gone and got my back up. I don't think that's unreasonable given that I'm one of many who has chosen to keep them in business, and the hand that giveth is the hand that taketh away.

yannickmahe 13y ago

CEO announced on twitter they would have new offers in 10-14 days. https://twitter.com/olesovhcom/status/390557634790973440 https://twitter.com/olesovhcom/status/390557634790973440

alexandros 13y ago

Surely if users are flocking to the 'latest and greatest' you deal with that by gradually reducing the prices of the old servers such that you get natural price discrimination?

vidarh 13y ago
That's one possible solution, but then that needs to be accounted for in their price model to ensure they can pay off the cost of each server over its life, and that seems to be a substantial part of the problem they've run into: The turnover on each new generation is higher than their models accounted for, and so reduces their lifetime expected revenue per server too much. Doing what you suggest is certainly possible, but would likely mean they'd need to charge more early on.

networked 13y ago

>The main competitor of OVH is actually OVH itself. The customer stays with OVH but orders a new server instead of keeping the old one. Interesting problem, and surely not the worst one to have. What would have been a more graceful way to deal with it, though, if any?

clienthunter 13y ago
I wouldn't call it interesting, the situation was massively predictable - I would call it profound incompetence.

davidjgraph 13y ago

How about simply reduce the rental cost of the older servers to below that of the newer servers? I don't see this mentioned anywhere, isn't it pretty obvious?

justincormack 13y ago
Yes that was my thought, have a price function that falls over time you have held the server, perhaps starting a little higher than the current one. Its a kind of amortised up front fee in some ways. Alternatively, start a PAAS business to use the servers people dont want to buy, although I guess the VPS business does this to some extent.
- tinco 13y ago
  This is not what they want because they are trying to price their new hardware competitively by milking their older customers. If they would reduce the profit of their cash cows they can not invest in reducing the prices of the hardware that attracts new customers.
tinco 13y ago
No it's not pretty obvious. Reducing the rental cost of sold servers means directly reducing revenue, that sounds like madness to me. The saner alternative would be to _increase_ the cost of the newer servers, but as they point out that could result in them being less competitive. The real solution would be to devise some way where happy customers just retain their current servers, and new customers can get the latest hardware for the lowest price. For some reason the old customers do enjoy upgrading their machines though, so this lands them in a tough spot. They can't have the best of both worlds, both the lowest prices and the freedom contracts. So they're going to take their time finding out what their strategy on this is going to be.
- thaumasiotes 13y ago
  Yes, it's obvious enough that the author specifically calls it out: > So yes if it's a turnover issue, we could offer the old server at the same price as the new one as an incentive. It might or might not be correct, but it's an extremely obvious idea.

dcc1 13y ago

I cancelled all my OVH servers, on the high end they are a ripoff and their internal network went to crap recently, it was faster to move files to another country than between 2 HG XXXL servers, go figure I am currently testing the waters on offering 24 and 36 drive storage monsters https://news.ycombinator.com/item?id=6576796 https://news.ycombinator.com/item?id=6576796 any feedback is appreciated

cmer 13y ago
I agree with you. Their internal network is crap. And recently, their external network has been horrible as well. We have 40 servers with them and we're getting out of there. Been getting downtime almost weekly for the last couple of months. Their prices are impossible to beat in America however. Even heavily discounted, SoftLayer is more than twice the price.
- tluyben2 13y ago
  I used to not like them years ago when I had a lot of servers, moved away, went back and we are very happy now. We are not experiencing the downtime / slowness you are referencing. And the competition quite expensive compared. I mean; I don't have to get the cheapest stuff possible, but Softlayer etc is really not economical for our business even if OVH would have some downtime.

nly 13y ago

Despite other criticisms, you can pry my $60/year dedi out of my cold dead hands (2 GiB/500GB/dual core Atom)

aroch 13y ago
Using OVH's horrible volume network, backed by their crap support with their servers built from a lot of QC-rejected procs on 5400RPM drives.
- anoncowherd 13y ago
  It seems you've got some bad experiences with OVH. Could you go into more detail on this stuff? Do you think Hetzner is better than OVH, by the way?
  - xeroxmalf 13y ago
    Previous OVH customer and now current Hetzner customer here. I've been impressed with Hetzner's internal tools (Robot) and their support has been quick (had a faulty server, had it replaced inside of an hour).
    - anoncowherd 13y ago
      Good to know, thanks!
  - aroch 13y ago
    OVH's network is one of the most overly sold of any large multinational host (At one point they had ~40Gbps fiber between their DCs but, of HG servers alone, had sold over 2Tbps of bandwidth). Their volume network has horrible contention and they don't even try to make it worthwhile -- 'best effort bandwidth' is basically what residential bandwidth is. At one point I had ~5K of servers with them and in any given week one of them would require some work. My org had paid for the best SLA (<2 hour) and we'd often have to wait a day to hear back what the problem is and another day, at least, to get things replaced. OVH's general business plan is to expand customer base quickly, then take the time to actually build out the network to fit their pre-growth size. Hetzner is a little better on supportbut they have some annoying policies (See the DDoS thread from yesterday), I do like their automation though. I'm now mostly in Leaseweb and a couple CN-datacenters with my own peering mix

Napapijri 13y ago

OVH is the worst out there.

bio4m 13y ago

The biggest problem was they were introducing new servers with similar or better specs than servers existing customers had. And instead of dropping existing customers prices, they kept them static. So a lot of people found themselves looking at a bill 600% higher for the same server just because they were an existing customer. Who in their right mind would pay 6x times more for the same service ? They could stop the customer churn by simply changing the price to match the new offerings. At the time I switched to a new server type I even asked their customer team if the new pricing would be offered to existing customers and the answer was a flat no.

lowry 13y ago

it would be much better for their sales if they did not force clients to manually renew every 3 months.

Karunamon 13y ago
It was every individual month for me. This combined with a dodgy spam filter led to me losing my server there. And now I can't reorder because of this silliness. Oh well. I recently found out that I can get business-class internet at my home, so I'll be moving all that stuff inside my own network soon enough.
- maaarghk 13y ago
  Monthly for me, but managed to keep on top of it. Happy to know that they are re-thinking payments, because it was getting really annoying.
_delirium 13y ago
That's one of the things mentioned in the post, which seems like a reasonable place to start. If their goal is that older customers should ideally stay on the old servers, that's more likely if it's basically autopilot. If someone has to manually decide to renew, they're much more likely to notice that they can upgrade to a newer offering, instead.

benmorris 13y ago

It appears to me they have underpriced their servers to the point they can't offset the ratio of existing customers upgrading servers. Seems like they should implement longer term contracts if they want to keep offering these rock bottom prices people keep snatching up. I'll admit looking at their pricing I can see why they sell so many.

sriramiyer 13y ago

I too, like many of you find their policies a little strange. Where the entire business world practices reducing prices of older products and replacing them with superior products at old or even slightly higher price points one must wonder the reasoning behind their, "newer must be cheaper than older" strategy where they do not pass on the benefit of the older hardware to the customers. If an existing customer reads that page, and this thread there's just one thing that they will immediately deduce. Existing customers are being used as a subsidizing agent to capture new audience. Which, again is quite strange. In a game theoretic way, this drives the point to existing customers that it is beneficial to not be loyal to the service (i.e. cancel/re-order). If they reduced cost on older hardware while introducing newer one, they could also list those up for sale. Surely people on a budget or people who don't need a Xeon will simply settle for an older Atom at a cheaper price. This also allows OVH to retain and milk the box till its ROI is hopefully achieved.

jjoe 13y ago

"bringing in new customers and new projects which will allow us to increase our business figures" Guys, you need to realize this isn't about getting the balance sheet in the black. There is no legitimate or interesting problem to solve here. They've been deep in the red. Their ultimate goal is to increase revenue figures at all cost and perhaps look "good" for an OK exit. Maybe there isn't more users or market share to grab in their niche. Hence the "thrashing." Their target server count is a million. They've been building DCs left and right with this figure in mind without there being solid sustained demand. I think they've spread themselves too thin. OVH is working hard to acquire as many users as it can for the sole purpose of pleasing investors. And when that becomes any business' only focus...