Your predictions for the future of the VPS hosting industry?

Discussion in 'Operating a Hosting Business' started by MannDude, Sep 4, 2015.

  1. MannDude

    MannDude Just a dude vpsBoard Founder Moderator

    Mar 8, 2013
    Taking into consideration the upcoming depletion of IPv4 addresses, the increase in things like computing power, storage capabilities and network throughput, and things like political changes that may effect how virtual goods are perceived as well as the increase in popularity of virtual currencies like BitCoin... What are your predictions for the VPS hosting (or web hosting in general) industry in the coming 5-10 years? Think we'll see any game changers? Restrictions or regulations that prevent some hosts from operating?
  2. drmike

    drmike 100% Tier-1 Gogent

    May 13, 2013
    The industry is overdue for a mass LEGAL crackdown.   There is way too much advertising fraud, way too many companies that fail to deliver what they advertise. Legal implications could rapidly change how folks operate as well as how many people want to be in this industry as a provider.

    Cloud is a clear run up hype boom.  More folks will go imitating such in hopes of maintaining their customer levels.  Give this a 3 year fashion cycle.  Hard to say since the industry is prone to some future rapid changes.

    You are going to see mass consolidation.  Long overdue and has been happening, not to noisy companies you'd notice.  Lots of silent deaths for several years. IP costs MAY drive this from angles of some folks selling out for IP money (definitely seeing this already) and from business hardship induced by $1/mo+ IPs.  Margins on cheap side are far too slim to eat costs like that.

    I think marketplaces / federations are going to be the next fringe interest.  OnApp has their federation for VPS companies which seems lacking in traction.  That is customer has one panel piece, can buy things all over from any provider in the network.   Single point of purchase and control.  Think DigitalOcean but backside provided by MANY companies.

    The marketplace / federation is an API play / remix.   Expect to see more of industry, like most focusing on re-appropriated data mashed up to make something bigger.

    Future systems are going to be what guys long have avoided due to complexity.  Scalable outside of the chasis, across multiple servers physically, across multiple racks, across a DC, across town, across the State, across the country.  Redundant systems with true failover, true N+1 redundancy on all layers.  More hardware, more software, more infrastructure.  

    ^ -- this applies to all forms of hosting, shared, VPS, cloud, apps, etc.

    I still believe in the host-it-yourself (HIY) movement and that re-emerging due to censorship, fear of the cloud, reoccurring costs for hosting, inability to single pane manage remote assets, etc.  (someone really needs to make a panel for end customers.... point me at such if it kind of exists).  You see the HIY movement in NAS solutions like Synology.  Maturing that inevitably will expand into remote systems and blur the lines.  If single pane can manage both in one spot on-LAN, someone stands to make a killing on sales.   HIY makes sense since fixed costs and costs that can be mega low.  Embedded boards @ < $35, drive sled solution for 2-4 drives @ $25, new drives at 2TB @ $50.   Viable $100/2TB powerhouse.  Since the hardware today is basically mass produced commodity, the future is all in value added by software.

    I see software as being a huge piece of where things head.  Lack of such and competitors at market from software side is why hosting has lagged for a long time.
    MannDude likes this.
  3. wlanboy

    wlanboy Content Contributer

    May 16, 2013
    Power costs and low bandwidth will kill all non-idealistic approaches to host-it-yourself movements. Perfect for yourself but not usable to offer something for thousand of users.

    The cloud itself is not a hype because it is currently not available yet. It will be a mix of current technologies that are tied together with some software/automation glue. I see an evolution to what I think is "the cloud".

    VPS (containers on a server) -> VMWare (virtualized on more than one machine) -> AWS (virtualized services) -> Azure (virtualized infrastructure) -> Azure Stack (Azure as a service on own hardware) -> real cloud (*).

    *: My view on "automation"

    I want a website and a wiki. I type in a domain name and my monthly budget and a link to a content database.
    Service is returning link to running wiki with credentials after data import. Assigning ips, dns, loadbalancer, settings, credentials, resources as needed.
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  4. drmike

    drmike 100% Tier-1 Gogent

    May 13, 2013
    Power costs are rather moot.  We aren't talking about running big iron or needing such beef.  Sure if you want to share huge files / video / high resolution photos, the bandwidth out to the net is going to matter.

    Much of what the net is, and content many produce is rather tiny, especially when distilled down to content and stripped of all the BS top dressing and site bulk overhead.  Look at how radically popular things like Twitter remain.  140 character payload, can ship that around on dial up.  So bandwidth for normal folks is minimal, very minimal.  What they are after is access to their stuff, and why the cloud services got so popular.

    Power wise, a simple ARM quad core box with real storage connected like mmc memory built onto board is more than sufficient computer plus storage.  Devices like Synology run on far less equipped gear (many models).

    Look at modeling for a 213J model:

    So, for the normal working days, we have1 day power = 6h*19w + 18h*3.65w =  114wh + 65.7wh = 179.7wh / dayBut in the week end I spend more time with my PC, so it will be more something like1 day power = 16h*19w + 8h*3.65w =   333 wh /dayIn a year this will build up to:1 year power = 333wh * 104d + 180wh *261d = 35kwh + 47kwh = 82kwh

    82Kwh a year? Pfft tiny. 6.83KwH a month... seems too low.

    Let's say 20 watts sustained x 720 hours a month = 15KwH a month.  

    15 KwH x cost per KW = ?

    @ 10 cents $1.50 a month
    @ 20 cents $3 a month

    People certainly can and will afford that $1-4 of power a month...  Especially where the device does other useful things.  Like feeds their idiot box content (TV).

    Bandwidth many people already have, unless they are living on the mobile only internet.
    Last edited by a moderator: Sep 5, 2015
  5. MannDude

    MannDude Just a dude vpsBoard Founder Moderator

    Mar 8, 2013
    Personally I think we're going to see a lot more deadpools and company mergers over the next 5 years, and realistically, a harder point of entry into the industry is something that I think would be better, though unsure if we'll see that.
  6. HN-Matt

    HN-Matt New Member Verified Provider

    Dec 19, 2013

    Surely everyone trusts 'the cloud' by now! I haven't read the book in which it was coined, but the term 'Siren Servers' remains an interesting concept.
    Last edited by a moderator: Sep 9, 2015
    graeme likes this.
  7. VpsAG

    VpsAG New Member

    Aug 20, 2015
    I believe that for the next years, the VPS industry will upgrade to a few gigantic players, too big too fall, and I am unsure of any small players being able to compete (which is a bad thing). I really hope we can skip a monopoly of a few big players keeping out the rest.
  8. VisionGroup

    VisionGroup New Member

    Oct 9, 2015
    Its a value add, I run a IT / ISP based business in New Zealand. Yes ive run vps's only businesses but i think providing vps's now are more value add and another 'hook' to upsell higher value services to a customer..
  9. TO.oL

    TO.oL New Member

    Nov 3, 2015
    Cloud will replace the entire VPS industry. Only few big quality providers will survive. Smaller providers will have hard time keeping their business afloat.
  10. sterile

    sterile New Member

    Nov 10, 2015
    I am unsure of the future, but I will be here to watch it out:D
  11. CenTex Hosting

    CenTex Hosting Member Verified Provider

    Dec 22, 2015
    I agree.

    I think the cloud industry will push out a lot of the VPS providers as it becomes more main stream. 

    I also feel that there is going to come more regulation on who can be a web host company and cut out all the resellers that are in the market out.

    There will always be a need for the true VPS and dedicated servers. 

    where it all ends up no one knows. 
  12. HN-Matt

    HN-Matt New Member Verified Provider

    Dec 19, 2013
  13. Nyr

    Nyr New Member

    May 16, 2013
    We'll surely see a LOT of consolidation. 
  14. OneStepHosting

    OneStepHosting New Member Verified Provider

    Oct 5, 2015
    If we don't get killed first by the biggest providers (e.g. Amazon, Msft,etc)   and by we I mean smaller cloud hosting providers ;)
  15. Nerdie

    Nerdie New Member Verified Provider

    Dec 4, 2015
    I second this. :)
  16. PowerUpHosting-Udit

    PowerUpHosting-Udit New Member Verified Provider

    Nov 6, 2015
    I think it will all come to few major points:

    - Customer Service
    - If you can come up with your own software as a value-added service
    - How strong your performance is going to be
    - How soon can you adapt the market changes
    - Not but the least, Pricing! 

    For example, DO is selling 8GB of RAM for $80, while the price point is good, you can find a lot cheaper Dedicated Servers with higher bandwidth for the same cost. So, the cloud hype only works for people who aren't aware of the industry, the ones who do, usually go for these typical small VPS/Dedicated Server hosting company as they tend to get a better performance and overall service.
  17. HalfEatenPie

    HalfEatenPie The Irrational One Retired Staff

    Mar 25, 2013
    This doesn't apply to DO, but for High availability setups like iwStack or Leaseweb Cloud or such.

    The entire term behind cloud (for me anyways) is the redundancy.  A single cheap dedicated server with a single hard drive means there's a single point of failure.  Either the hard drive dies, there is a hardware problem, etc.  You're down a creek without a paddle. 

    For absolute critical infrastructure, I use real cloud providers, one of which (my favorite) is Leaseweb.  The fact that they have my VM in several SAN clusters and if the physical server goes down then they automatically reboot me on a working node.  This system brings in high availability and depends entirely on how you value high availability.  tldr: I don't have to deal with the hardware.  I just deploy my application and I'm done.  If there are hardware problems down the line, the system already takes care of it. 

    If I'm running a service that i'm fine with losing and re-configuring (e.g. my dev environment or lets say a hobby project like a game server), I won't place that much value on high availability.  However, if it's something very important to me as in something that's critical, I would (in a heartbeat) put it on a proper setup with high availability.  

    For the cheaper/budget market, I agree that would be acceptable.  However, for individuals who don't mind paying more to have the reliability of a real cloud setup and minimize risk (Risk management here) is the way to go, even if it's a little bit more expensive.  

    Also, I don't see hardware as an issue at all.  Usually everyone has the same hardware.  "The latest Xeon core server!" to "Dual L5420s for everyone!".  Everyone likes a cheap VPS or a dedicated server sure, and the bare minimum specs are fine enough to run your application.  However, the important thing that separates the budget/hobby brands vs more "Premium" brands, is the bandwidth blend. Route/BGP optimization (such as Incero's Route bot or Internap's MIRO), and overall connection to the greater web.  A server on the internet isn't a one-size-fits-all situation either.  People have to actually see what peers are available, what networks are available, where the strongest part of each network is.  

    Take Vultr Japan location for example (since that's a case study area I am very familiar with).  Choopa, parent company of Vultr, offers KVM VPSes out of their Japan location.  Now I enjoy and use Vultr and I see their brand going a long way.  However, their Japan bandwidth blend is very limited.  Originally when they opened up, it was single-homed and any network off the Japan island would be re-routed through the United States.  This meant additional latency from lets say a viewer from China, as instead of going directly from Japan to China, your data packets are sent from Japan to Seattle, to Los Angeles, to Hong Kong, to inside China. Now Vultr has improved their network blend since then and I applaud them for that.  

    You also have to look at the offered peering at the Datacenter.  See what network blends are available.  Certain datacenters are better with domestic traffic, but aren't as well tuned for international traffic.  One focuses on volume, other focuses on quality.  One example on this could be Leaseweb.  Leaseweb has the "Premium Blend" vs the "Volume Blend".  Now I've never really experienced their "Premium Blend" (as my dedicated server with them is in a location without a premium blend), but basically they have the Premium blend support more expensive uplinks.  Certain bandwidth companies will give you an uplink for $XX.XX/Mbit, others would simply do it for $0.XX/Mbit (e.g. Cogent vs Level 3). That necessarily doesn't mean Level 3 is better because it's more expensive.  That also doesn't mean Cogent is crap because it's cheaper.  Again, it all depends on what your design parameter for your service is.  Cogent is great with volume and that's why services like Netflix (which are very bandwidth intensive) use a ton of Cogent.  However, as long as the network speed was fine the latency doesn't really matter, and therefore you sacrifice latency for volume.  

    Now certain services are sensitive to latency.  The most common example is Game Servers, however there are more services such as finance systems and scientific research which are also sensitive to latency.  However for the sake of simplicity and since everyone here is familiar with Game Servers, I'll go with that example.  Game Servers are sensitive to latency because of the way the game server engine processes actions and events occurring within it.  I mean there's of course interpolation and other "lag-mitigating" mathematical formulas and systems available, however those aren't solutions to the issue.  The solution is to have more peers.  This is where networks with better peering or higher quality bandwidth (as in less overselling and more available "on demand") are necessary.  A lag in the latency could (in the game server sense) be the difference between life or death.  Ever had that experience where you "headshot" someone but then you died first?  More than likely, the other person's headshot/killing shot reached the server before your "killing blow" reached it, and the server accepted the later one since that information came in first.  Apply this to financial systems and now you see how important this is.  Therefore, most solution to this would be to have more peers.  But of course making sure they have the bandwidth available to sustain it. 

    For those well informed, this is like "How to Find a Server 101".  Understanding this simple concept is the start between a simple reseller who sells VPSes from their server/rack, to a proper specialist who understands the end client's needs.  It's 2016.  I see LowEndBox working to try and educate their userbase, but most of them are simple tutorials on how to setup a web server with the next "hot" software.  People see that, and then they see SolusVM, and then suddenly a "new 13 year old web host CEO President Founder" comes in to the market and acts cocky as hell and think they own the place.  The same questions constantly come up over and over again by different/new people who have yet to find the search button.  

    The future of the VPS Hosting Industry is good if providers and clients alike are able to understand this concept and are able to easily communicate their needs.  This means the VPS Hosting Industry has continued to mature and now understands the importance of specialist, and is easily able to spot and remove a Johnny Nguyen scenario.  Random 16 year old kid with his parent's credit card don't understand that the actions they take to "set up their own company" (and then later sell out or fail) is one of the reasons why some people see the VPS Industry as a joke or as the free-for-all wild west.  They can easily miss the professionals who actually know what they're talking about like @Francisco or @mitgib and kind of group them in with the younguns (mostly due to the nature of the internet and how almost anyone can be anything on it).  The kids may know what function creates what result, but they don't understand the fundamental logic behind it.  

    Anyways that's my two cents.  This thing started out as a bitching post/response post and then kinda became an essay.  So... GG.  Also my views are a bit pessimistic and is kinda really very different from the original intended response from the thread.  However, I think it's worth a look from a theoretical and ideal perspective. 

    tldr: I'm an old man that likes to write. 
    Last edited by a moderator: Apr 30, 2017
  18. DomainBop

    DomainBop Dormant VPSB Pathogen

    Oct 11, 2013
    Theoretically that's how it's supposed to work.  :) A few months ago many Leaseweb Cloud customers in NL and DE had extended downtime when Leaseweb's SAN cluster system failed (and this wasn't the first time their storage system 2013 users suffered through a week of hell).  I had 28 straight hours of downtime on one server in September but many users were down for even longer (they did give users who were affected 3 free months of service as compensation but...).  

    tl;dr Real cloud providers may have higher availability than a LEB kiddie host but 100% uptime (both hardware and network) isn't going to happen with any cloud provider (chart of cloud providers uptime:  )

    In 1997 a couple of Dutch college students named Con and Laurens who didn't know a thing about hosting (but who both had ATP pilots licenses) started an online business directory and shortly after launching the directory they started offering web design services to the businesses listed in their directory, and then they rented a server to host the client websites they designed.. Fast forward 19 years and they've learned a bit about the hosting industry and their company OCOM is one of the largest hosts in the world and owns several datacenters and counts both DomainBop and HalfEatenPie among its clients.

    tl;dr stop picking on random 16 year old CEOs because there is an outside chance they'll grow up to be a professional who actually knows what they're talking about (and then again, maybe not  because some of them are already beyond hope) :p

    "VPS" providers sell virtualized services.  "Cloud" providers sell virtualized services.  :)  

    The only virtualition providers who will be pushed out are those who remain stuck in the past and don't adopt to changing market conditions.  (points finger at all of the current SolusVM host in a box providers who have already fallen behind because they failed to adopt to changes in the virtualization market and are still offering yesterday's feature set ).
    Last edited by a moderator: Jan 13, 2016
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  19. HN-Matt

    HN-Matt New Member Verified Provider

    Dec 19, 2013
    accidentally read that as 'interpellation' at first

    I suppose at least a few were waiting for v2, which was announced how long ago now? Some screenshots of a 'LAMP Test Suite' in June of last year and then nothing.

    Come to think of it, OnApp's acquisition of SVM, however many months ago that was, seems to have produced no change in the software whatsoever so far.

    EDIT: Damn, it was in September of 2014! So more or less nothing has changed in ~15 months, and that's only if you don't count the time prior to the acquisition where nothing had changed. SolusVM was the first VPS software I learned how to use. I was never comfortable with it being limited to CentOS for the master and host nodes.
    Last edited by a moderator: Jan 13, 2016
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  20. HalfEatenPie

    HalfEatenPie The Irrational One Retired Staff

    Mar 25, 2013
    Aiit ya got me on those points.  Damn you @DomainBop!  Noone like a smartass! :p

    Yep. Been a while. CentOS was never my preferred OS. 
    Last edited by a moderator: Apr 30, 2017