OVH intends to ruin the hosting industry.

Discussion in 'Industry News' started by drmike, Jan 7, 2016.

  1. drmike

    drmike 100% Tier-1 Gogent

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  2. Shoaib_A

    Shoaib_A New Member

    It would be impossible to provide guaranteed 500 Mbps unmetered in Australia or Asia for as low as 79$ like OVH do in France & Canada currently  but yes their aim, like always, would be to offer things cheaper than others ensuring high uptime & almost everything automated attracting those who can manage their servers themselves & usually go for cheapest available option. There is no doubt that bandwidth is very expensive in Asia & Australia but those who currently offer decent servers there overprice things a bit as well so it would be interesting to see what direction things take when OVH enters those markets.

    So personally I feel it is a good thing as those looking for servers in Australia or Asia also deserve to have cheaper options available & of course we might see others improving as well due to increase in competition.
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  3. rds100

    rds100 Verified Provider

    Why is this email signed by Octave? I thought he is no longer in charge?
  4. Shoaib_A

    Shoaib_A New Member

    He is still the CTO & if I'm not wrong OVH is pretty much a Klaba family business.
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  5. OSTKCabal

    OSTKCabal Verified Provider

    I don't see how OVH intends to reliably finance 12 new data centers, much less provide sustainable service in the Asian markets. I'm sure they'll have to either raise their prices for the Asia-Pacific region servers, reduce the included/"guaranteed" bandwidth, or both.
  6. drmike

    drmike 100% Tier-1 Gogent

    I can't see anyone saying 12 new data centers and being honest about it.   These DCs have to be built out in other folks space.

    As for their locations, the Portland one is going to wreck providers on the West Coast.  Good luck selling cheap like OVH competition.

    Asia?  I can't see OVH doing much there.  But quite possible that they might go into play to pay location where cutting a payoff gets you far.  For now, they are going to try that West Coast lure to Asia, which is meh, unless you are selling VPN.
  7. OSTKCabal

    OSTKCabal Verified Provider

    I'm just wondering who, especially in those locations, could meet their price range without them owning the facility. It'd be very, very difficult, especially if they intend to deploy their Kimsufi and SoYouStart brands in those locations as well. Beyond that, them building out in existing data center space may raise an issue of space itself. They're an extremely high-volume provider and will be deploying in very popular locations.
  8. DomainBop

    DomainBop Dormant VPSB Pathogen

    Already financed  by the $327 million ($196 million revolving credit facility + $131 million bond issue) they raised in December 2014 for US/Asia expansion.   Plus an additional $163 million self-funded from company funds.  Total of $490 million investment in international expansion.

    typo, should be 50000 (they previously announced they built over 50000 new servers last year).
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  9. drmike

    drmike 100% Tier-1 Gogent

    Ashburn / DC has probably more DC's than the Silicon Valley.  It's a heavy location with DCs.. and while everyone pretends floor space is all filled, I doubt it there.   There have been a number of big DC builds in past few years.

    Portland is a bit of a slacker.   I vaguely recall Oregon being generous about dolling public cash for DC projects.  Will be more interested in seeing which facility has them in it.

    I cannot see the Kimsufi and SoYou lines hitting these new locations or any they aren't completely owning.  
  10. drmike

    drmike 100% Tier-1 Gogent

    This may be.  Heck of a war chest.  Definitely can get milege out of that money. 

    Credit + bonds have IOUs and paybacks... so it's meh, a bit expensive and risky.  The $163 million and how it is applied could be the story behind most of this.  Expect a chunk of that to be securitized against the IOUs.

    Enough money either way to pull such...
  11. Dylan

    Dylan New Member

    Totally a Klaba family business, even. They're the only owners and he's the chairman of the board. The CEO is accountable to Octave. It's just that now he gets to spend more time on the stuff he wants to focus on (tech) and less on the stuff he doesn't (business).
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  12. HN-Matt

    HN-Matt Verified Provider

    I lol'd
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  13. MikeA

    MikeA Verified Provider


    SpaceX - Bringing affordable space travel/launches to private companies.
    OVH - Bringing affordable server hosting to underdeveloped/overpriced regions.

    Bad for business in the region that compete, good for small consumers and startups who need it.

    I use OVH for my game servers and OpenVZ, I'm not saying this because they're definitely not the only datacenter I use, but this is a step forward assuming their prices in Singapore/Sydney are similar to their other locations (which I doubt, surely they will be a bit higher).

    Either way, it doesn't mean every business that operates in their areas isn't going to simply go out of business.
    Last edited by a moderator: Jan 8, 2016
  14. HN-Matt

    HN-Matt Verified Provider

    Hopefully SpaceX will be able to convince the Van Allen radiation belts to use OpenVZ before the launch of Mars One!
  15. HalfEatenPie

    HalfEatenPie The Irrational One Retired Staff

    While Asia is a more expensive market, especially in terms of bandwidth and power, I can see a way where OVH can potentially flourish here.  

    Lets take OVH for what it is.  It's like Walmart.  They buy everything in bulk and make a profit through volumes.  Asia isn't that much different, although they might have to increase the pricing a little bit (like adding an extra dollar or something).  However if their supplier is a local business, they would be getting cheap cheap hardware. 

    One of the biggest issues facing Asia, besides for climate change, is the energy crisis.  Energy is incredibly scarce that many countries are having supply issues and are starting to cut back a little bit.  It also gets coupled in with "being green" and "saving energy/protecting the environment", but I know multiple countries right now are at an energy deficit that datacenters may have to increase their rent.  So that's the most expensive part.  

    The 4 best connected points in Asia are: Singapore, Hong Kong, Korea, and Japan.  Other less developed countries have much less bandwidth and if you're looking at a country like Vietnam, are only connected to either Hong Kong or Singapore.  If you want to network internationally, most of the time you'll want to peer with Singapore or Hong Kong (for SEA countries).  Hong Kong has the best gateway/traffic into mainland China for obvious reasons.  Singapore is like the network hub of all of Asia.  India's also decent but India is just better connected within their own country rather than internationally (unless you want the more Western part of Asia, but when people usually say Asia they usually look at SEA or Northern Asia, like Japan, Korea, and China).  

    Singapore specifically though is pretty weird.  The country is practically fractured network wise.  Either you're part of the big/primary internet exchange, which if I recall correctly is StarHub (a local ISP plus datacenter provider), or you have to be part of the smaller IXes that lacks some good peering.  That's why sometimes even if you're living in Singapore, there are sometimes periods when your routing to another Singapore server is absolutely out of whack.  Internationally, 

    There are also more submarine cables being laid down right now, connecting Asia to the US and Australia.  If I recall correctly, KT is co-owning another new submarine cable currently being laid out connecting Korea and Japan to Seattle.  

    Talking about Submarine cables, because Asia is practically a conglomerate of island nations each with political tensions which frequently prevents direct country peering (e.g. South Korea can't lay down fiber in North Korea, Vietnam and their border countries, etc.), almost all countries are connected via the submarine cables.  Now if there is an issue and lets say someone accidentally damages a submarine cable (like what happened in 2015 in Vietnam, Vietnam has two major points where the submarine cables connect and one of those locations had a high capacity/volume cable that was cut) suddenly all the country's network is channeled through a single cable.  For a period of about two weeks (until the weather subsided and the cable could be repaired), that country had some shitty internet.  

    However shitty the internet situation is in Asia in comparison to Europe or the US, and however limited in resources Asia is, I can still see OVH flourishing if they're willing to invest in their own infrastructure here.  Just like how OVH chose BHS as their North America location (due to access to cheap power and they made their own network and systems there), if they are willing to invest into the area and buy everything in bulk, I can see them succeeding pretty big here.  

    Now for the Asian server industry as a whole, I can't say I know exactly what will happen since I'm an engineer, not an economist, but this is what I'm thinking.  If OVH does bring in Kimsufi and Soyoustart along with it (remember, when OVH first moved into BHS, they only had OVH brand hardware in there, but later started including Kimsufi and Soyoustart) then the budget server market in Asia will be made available to other people internationally.  Currently, the budget servers are only available to people who are domestic/live locally/understand the language (for example, I can find a Korean dedicated server for 30 dollars a month, but if an English speaking individual wanted one they'd be paying 80 dollars or more).  OVH coming into a market decreases the cost of bandwidth (since it usually creates excess bandwidth).  Power will probably be the major deciding factor though.  

    I'm not an expert.  Therefore there's probably a fair amount of issues and errors in this post.  However, this is what I think and is my opinion of what will happen.  Especially since this will be a direct impact to me.  
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  16. HN-Matt

    HN-Matt Verified Provider

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  17. HalfEatenPie

    HalfEatenPie The Irrational One Retired Staff

  18. OSTKCabal

    OSTKCabal Verified Provider

    While I see your point, the ideology still exists that it is often a more expensive place for hosts to locate themselves in. My largest concern with OVH is not necessarily the data center itself or even power; moreso the massive amount of bandwidth required. If their current setup is anything to speak of, they'll likely offer their 160Gbps DDoS Protection free with every service, and it'll be interesting to see if that's modified at all for the Asian market - be that a (likely temporarily) smaller amount of protection or a small price hike for Asian-deployed servers. Needless to say, bandwidth in the Asian market is generally more expensive when compared to equivalent bandwidth commits elsewhere in the world.

    I'm personally not a fan of OVH at all. They exist almost solely on fairly constant debt, and have been operating in that way for years now.

    It is undeniable that, even at their scale, their pricing schemes are definitely on the very low end and generally not sustainable from a traditional ROI standpoint, especially when you factor in the massive DDoS Protection and various other features that they offer such as free backup space, the one-time-only IP space payment, and the amount of bandwidth that they guarantee per server. Oftentimes, the server's price won't even cover the bandwidth price when that server gets attacked, which is an extremely common occurrence in the VPS and Game Server markets - two that OVH actively markets to.

    On the flipside, I'm all for increased coverage of service and the investments that they'll be making in local and even national infrastructure. Them bringing a great-value service to the Asian market, as I'm confident they will even if they implement an increased price, will be a good move.
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  19. PowerUpHosting-Udit

    PowerUpHosting-Udit Verified Provider

    Bandwidth will remain the biggest challenge in Asian countries and Australia, regardless of them coming, they won't be able to offer the same pricing, if they do then they will take a massive loss and I doubt the investors would love the fact that they are losing the money. I am expecting the prices to be 2-3x higher than what they are offering at present with very limited amount of bandwidth available per server. 

    Overall, it would be interesting to see how they price out all their servers as this could really be a game changer in the future and could affect a lot of companies, but regardless, they still remain IaaS with no managed services.