What is better: Renting or owning your hardware?
- Thread starter Wambo
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Wambo
New Member
Owning hardware seems that it would require more time and energy that may not exist at the starting point, and building nodes with new server grade hardware can add up quick. Filling up a quarter rack with new hardware would be very big starting expense, even if it's better in the long run. (I think, but I don't know)
If you do the math, you will normally save much more money if you buy or lease the hardware. After a certain point per month, you start losing money. That point generally is around $150-200/mo give or take depending on the server hardware. You can build nice E3 servers with 32GB RAM and RAID 10 for around $1000 and colo for under $100/mo. Math time!
As a new business your primary concern is going to be with monthly expenditure. I would forgo the quarter rack entirely and just pay for 1U-2U colocation which quite a few places will offer for $75-$100/month. Just make sure it's a month to month contract so you can upgrade to a rack when needed.
I keep seeing budget dedicated servers that are far cheaper than anything I could do with owned equipment. I own a fairly nice server (well a bit obsolete now) that is sitting in my kitchen, because I could never find colo space that was competitive with just renting an OVH or Hetzner server. E.g. an E3-1245v2 with 32gb ecc ram and 2x 3tb disks and 30TB BW is currently 48.7 euro (ex. VAT) or around $56/month at Hetzner. I don't see how to get anywhere near that with comparable owned equipment counting depreciation. It gets different if you need specific configurations or locations of course.
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The discussion is around hardware raid-10 rentals with four or more hard drives or ssds for VPS nodes. But yes for what you listed your ROI would probably be in the ~30 month range.
The E3-1270 V3 at Hetnzer is $67 on the base price with another $100 for setup. Then you need the flexi pack for IPMI (IPMI also has a $200 setup fee). The flexi pack + IPMI brings the monthly total up to $102.58. So your first months invoice would be ~$402 and after $102.58.
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Depends how long you want to be around.
We only JUST started buying our equipment about 3 months ago to bring up our own services on them...
you got to start somewhere, i'd rent before you own.
It's like running before you can walk..
We only JUST started buying our equipment about 3 months ago to bring up our own services on them...
you got to start somewhere, i'd rent before you own.
It's like running before you can walk..
There's nothing wrong with renting hardware to begin with, but eventually it may be good (if you have the funds to support it) in owning your own hardware. It depends on the locations you want to serve and what sort of funding you have available. Do you make enough money to buy your own hardware, and make a profit on it before it reaches your end of life cycle? Some companies like to replace hardware every few years, but if you don't make a return on your costs during that lifecycle, is it worth owning your own hardware?
I'd say it depends entirely on the situation and requirements of the company in question.
I'd say it depends entirely on the situation and requirements of the company in question.
drmike
100% Tier-1 Gogent
I liked this reply
Anyone that has been in the market / prior relative experience though should be looking to buy up front. Even if you go older hardware, I say fine.
dd speed tests and CPU benchmarks, blah, I do and have bought recently from folks offering services on 54xx's. Cost of such a node? It can be pretty darn cheap.
If someone is new to industry and/or has little to no experience with hardware configs and maintaining things, then renting or LTO is recommended.
Here's the problem. You'll only save a small amount if you're colocating a few servers. It really only starts to make sense, financially, once you've grown past a certain point. Let's do some quick calculations:
Let's say you can purchase some server for $1,000 and colocate it for $100 a month. Alternatively, you can rent it for $150 a month.
So, let's find x (where x is the amount of months to break even):
150x = $1,000 + 100x
x = 20. That's 20 months for the renting to be more expensive than the colocation. Of course, the $100 a month doesn't include remote hands and the $1,000 doesn't include spares. So, realistically, you're looking at an even longer period of time.
Serious savings come in at (depending on your location) a quarter cabinet to a half cabinet. That's 10U to 20U (8 or 9 - 18 or 19 servers at 1U a pop + 1 or 2 switches).
Say you expect to grow to 10 servers in a single location in 12 months [and buy them all up-front), let's evaluate a few options over 24 months (throwing out additional growth after 12):
Straight Rent: 24 * $150 * 10 = $36,000.
Colocate 1/4 cab + 2 switches for: 8 * 1,000 + 2 * 500 = $9,000 + 24 * 300 $16,200
What if we could mix these two? Since you won't be renting 10 servers at once, maybe rent until you hit 3 - 5 and then start to colocate.
Let's say you add a server a month:
Rent: $150 + $300 + $450 + $600 + $750 = $2,250
Buy Hardware: 8 * 1,000 + 2 * 500 = $9,000
Colocate: 19 * 300 = $5,700
Total: $16,950
That's only an extra $750... Plus, you have spares since you're only using 4 or 5 servers and purchased 8. Well, I think we see a winner.
Let's say you can purchase some server for $1,000 and colocate it for $100 a month. Alternatively, you can rent it for $150 a month.
So, let's find x (where x is the amount of months to break even):
150x = $1,000 + 100x
x = 20. That's 20 months for the renting to be more expensive than the colocation. Of course, the $100 a month doesn't include remote hands and the $1,000 doesn't include spares. So, realistically, you're looking at an even longer period of time.
Serious savings come in at (depending on your location) a quarter cabinet to a half cabinet. That's 10U to 20U (8 or 9 - 18 or 19 servers at 1U a pop + 1 or 2 switches).
Say you expect to grow to 10 servers in a single location in 12 months [and buy them all up-front), let's evaluate a few options over 24 months (throwing out additional growth after 12):
Straight Rent: 24 * $150 * 10 = $36,000.
Colocate 1/4 cab + 2 switches for: 8 * 1,000 + 2 * 500 = $9,000 + 24 * 300 $16,200
What if we could mix these two? Since you won't be renting 10 servers at once, maybe rent until you hit 3 - 5 and then start to colocate.
Let's say you add a server a month:
Rent: $150 + $300 + $450 + $600 + $750 = $2,250
Buy Hardware: 8 * 1,000 + 2 * 500 = $9,000
Colocate: 19 * 300 = $5,700
Total: $16,950
That's only an extra $750... Plus, you have spares since you're only using 4 or 5 servers and purchased 8. Well, I think we see a winner.
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drmike
100% Tier-1 Gogent
Depends though StevenF
Talking about single server to few server commits? Then getting prices that are crazy for colo and such. Much downside to such "no commits" like usually the folks have no control over the space they are in - shared with others... Switching in rack is whatever it is... VLANs and other switching stuff cannot do....
Fact is, anyone that is a "host" and is less than a few units + own switch isn't a real host in my eyes.
No self funded startup really is hitting these sort of buy in numbers. Great to future forecast, but.... Startups often out of necessity buy prior gen gear to get started.
E3 love?
E3 + 32GB + 4 1TB drives + BW + IPS ---- rental ----> $200~++ a month
Similar E3 bought: $700~ used/refurb + drives @ $70 x 4 = $280 = $1k~
12 months of the rental = $2400
12 months of the purchase = $1000 + $1200 for colo = $2200
These two are nearly identical.
At 24 months:
24 month of the rental = $4800
24 months of the purchase = $1000 for purchased gear + $2400 for colo = $3400
And is this a fair comparison? Per se. Because no guarantee of what the usage on gear you get in rental is going to previously be. You can rent the very latest to try and reduce prior wear, but you'll pay for that at top of pricing bracket.
Now all that is buying newish E3 gear, maybe v2 vs. v3... Little stuff that in big picture isn't very different.
Or you could go prior generation stuff and spend < $2000 for a nice quad board setup with more cores and more RAM - 3X... Throw another $70 x [drives needed on top 16 @ 4 per] = $1120
= $3200 total or $800 per node.
Numbers really matter more when buying brand newer stuff and comparing to rental.
Rental is a ripoff unless you are renting from outfits like the guys in Buffalo who don't mind selling at near cost (low to no profit margin) to gain market share.
RTO that few offer is a better option and that's where you can bring your own drives in versus getting gouged by facility for theirs. RTO gives them during pay period liability for hardware. To me, that's the hybrid n00bs should be looking at if entering the market place. n00bs with some prior experience should be looking for entire racks and stacks of servers out there for extremely low cost per unit that is prior gen stuff.
Talking about single server to few server commits? Then getting prices that are crazy for colo and such. Much downside to such "no commits" like usually the folks have no control over the space they are in - shared with others... Switching in rack is whatever it is... VLANs and other switching stuff cannot do....
Fact is, anyone that is a "host" and is less than a few units + own switch isn't a real host in my eyes.
No self funded startup really is hitting these sort of buy in numbers. Great to future forecast, but.... Startups often out of necessity buy prior gen gear to get started.
E3 love?
E3 + 32GB + 4 1TB drives + BW + IPS ---- rental ----> $200~++ a month
Similar E3 bought: $700~ used/refurb + drives @ $70 x 4 = $280 = $1k~
12 months of the rental = $2400
12 months of the purchase = $1000 + $1200 for colo = $2200
These two are nearly identical.
At 24 months:
24 month of the rental = $4800
24 months of the purchase = $1000 for purchased gear + $2400 for colo = $3400
And is this a fair comparison? Per se. Because no guarantee of what the usage on gear you get in rental is going to previously be. You can rent the very latest to try and reduce prior wear, but you'll pay for that at top of pricing bracket.
Now all that is buying newish E3 gear, maybe v2 vs. v3... Little stuff that in big picture isn't very different.
Or you could go prior generation stuff and spend < $2000 for a nice quad board setup with more cores and more RAM - 3X... Throw another $70 x [drives needed on top 16 @ 4 per] = $1120
= $3200 total or $800 per node.
Numbers really matter more when buying brand newer stuff and comparing to rental.
Rental is a ripoff unless you are renting from outfits like the guys in Buffalo who don't mind selling at near cost (low to no profit margin) to gain market share.
RTO that few offer is a better option and that's where you can bring your own drives in versus getting gouged by facility for theirs. RTO gives them during pay period liability for hardware. To me, that's the hybrid n00bs should be looking at if entering the market place. n00bs with some prior experience should be looking for entire racks and stacks of servers out there for extremely low cost per unit that is prior gen stuff.
For a startup it's probably best to buy used hardware. RTO may also be a good alternative, but make sure you can source replacement hardware. Many places doing RTO is just trying to get rid of old stock servers and may not have any spare hardware around. In either case always stay N+1 on your servers so you have a spare should one of the others crap out.
FRH started on a new supermicro I originally bought for hosting my own websites when I decided to just do web hosting to let others pay for the hosting, when I moved into VPS's I bought a dell 1950 and 2950 and ran them on that, once it was setup I turned the SM server into another VPS node, while having a 2nd 1950 as a backup to it all.
Once I was cash positive I began expanding with new hardware, but got shafted when the datacenter had an outage and lost a good chunk of customers since it wiped several systems and fried 2 raid cards, something I was not prepared for at the time expecting to lost a single system and I lost 3 at once. Luckily 2 were recoverable once the hardware arrived, the 3rd was a total loss and had to re-create VM's.
Lesson learned about OpenVZ, make damn sure if you're not doing customer backups to at least backup the OpenVZ config files. You lose those and you have to terminate and create the VM's to rebuild a VM, rather than just restore the config files and say rebuild to OpenVZ.
FRH started on a new supermicro I originally bought for hosting my own websites when I decided to just do web hosting to let others pay for the hosting, when I moved into VPS's I bought a dell 1950 and 2950 and ran them on that, once it was setup I turned the SM server into another VPS node, while having a 2nd 1950 as a backup to it all.
Once I was cash positive I began expanding with new hardware, but got shafted when the datacenter had an outage and lost a good chunk of customers since it wiped several systems and fried 2 raid cards, something I was not prepared for at the time expecting to lost a single system and I lost 3 at once. Luckily 2 were recoverable once the hardware arrived, the 3rd was a total loss and had to re-create VM's.
Lesson learned about OpenVZ, make damn sure if you're not doing customer backups to at least backup the OpenVZ config files. You lose those and you have to terminate and create the VM's to rebuild a VM, rather than just restore the config files and say rebuild to OpenVZ.
I love @drmike 's calculation. But I, myself, prefer renting the hardware.
That's why there's a lot of insurance company nowadays. (should we add 'insurance' cost)
- Please don't forget to add the depreciation, as @willie said (10 - 15% a year now)
- Risk of having a hardware failure, or the risk will be higher if you opt-in buying a refurb/2nd
- Risk of having a 'wrong' decision in choosing a DC.(if you are on a "right DC" it would cost you a lot then).
- other Risks...(such as: dealing with man power resources or people, transport, etc: ....you name it)
That's why there's a lot of insurance company nowadays. (should we add 'insurance' cost
)
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drmike
100% Tier-1 Gogent
The potential for losses are great, regardless of the own/rent/lease arrangement.
One bad power incident and you have fried gear. Electric doesn't care who owns it
Picking the wrong DC is a big issue and one we see a lot. Indeed that can be a really costly fubar. Most people don't consider that potential fail point.
Now I will say, with used gear (especially the servers, routers, switches, related) you can buy used gear that still is warrantied and covered. Leasing companies are fine with financing that sort of gear also. If you go the Ebay surplus route or much older gear, you can just buy more/spares and keep them at the DC as live spares online.
One bad power incident and you have fried gear. Electric doesn't care who owns it
Picking the wrong DC is a big issue and one we see a lot. Indeed that can be a really costly fubar. Most people don't consider that potential fail point.
Now I will say, with used gear (especially the servers, routers, switches, related) you can buy used gear that still is warrantied and covered. Leasing companies are fine with financing that sort of gear also. If you go the Ebay surplus route or much older gear, you can just buy more/spares and keep them at the DC as live spares online.
Check out the Supermicro microclouds - you can get 12-24 E3 nodes in 3U of space! This would make colo a much cheaper option if you were to start out with just one cabinet, or less.
Ah, I love those things. We have four of em. Been thinking about an M100e -- have any experience with them?