I am always skeptical about providers that offer dedicated servers near 60$. Regular server requires 2 Amps of 110V power. 1 Amp (backed up, stabilized, air conditioned) cost near ~15$ so you need near 30-40$ ONLY to power up a server. Add super cheap, oversold internet 10-15$ add MEGA cheap colo price 10-15$, plus server cost lets say at least 15-20$/month and you have 65-90 price range.

As you see it is extremely difficult to create effective business model with 50$ per server price. Both sides should have advantage of doing business only in that case it will last long.

am I wrong ?

I agree. For that price, it makes you wonder how they would stay in business.

Unless they are new and are just trying to build their customer base, it doesn't seem sustainable in the long term.

Well, you could be very profitable selling atom servers at $50, but not quad core servers.

That is the question. Some companies offer Pentium4 era Xeons, Dual-cores and quad cores for ~60$. Atom it is another story - they are super cheap, with low power consumption and require less than 1U of space but performance is sucks with IO bound architecture.

Even for new companies I will not consider it as a smart way to build customer base. 50% of clients will be kiddy hosts or spam/scam clowns. Low price attracts scam as magnet.

And from another side - to make losses in long-term projection to achieve today's marketing goals is not a smart way too IMHO.

We have a number of older P4's in the $50 range (and cheaper). When you own the hardware it's very easy to sell in this pricerange.

Look at it this way - 42u cabinet will run you about $600/month. Lets say we put 35 1u servers in there at $50 a pop, that's $1750/month - $600 = $1150 revenue. This doesnt count the bandwidth or admin fees, but it's very easy to make a profit on the older machines.

As Steve said, a Quad Core in the $50 range would be a tough sell, but it depends if things are being bundled with it - server management, extra bandwidth etc etc.

Configuration on $50 servers may varies from web host to web host, however, it's a fair deal for those users who wants to upgrade their hosting services from VPS to Dedicated server. I know highly configured VPS plans are capable, but these kind of classic dedicated servers are better option where users can get more exclusive resources.

35 servers it is 60-70 amps at least. What price do you have for the power ?

For US 70 amps at 110 Volts it is 7.7 KWh, so one month of RAW power at the lowest price available in US will cost at least 400$ per month and it is without COOLING(!), backup, stabilization, maintenance and etc.

It still makes no seance for me.

PS: We are talking about commercial / industrial power i guess...
http://www.eia.doe.gov/cneaf/electri...able5_6_a.html

With the place that we used we were provided a 3 20amp circuits as part of the price of the rack that we were renting. Granted we had multiple racks at the facility (7 racks) so we were getting discount rates left and right.

Again, this is strictly talking about hardware and space. The other factors such as maintenance, backups etc do not play a part of the pricing that I listed above.

Depending on the place that you are colocating with (especially larger facilities) you can get really good colocation rates, and even better if you're doing a cage type setup.

At the end of the day however, you CAN resell at $50/month and still make money. It requires owning your own equipment and having decent leases in place with your provider.

If you want to dump the entire RACK type setup and go with bakers racks with mini towers you can substantially decrease costs of hardware, but you'll usually pay a higher price per sq ft of usage. And lets not forget about BLADE servers - those pack and mean punch into a small space.

Can it be done? Definitely - we did it.

Wow! Rack with 60 amps and internet for $600 - really nice deal! What DC offers it ?

It was a local DC in Orange County California. It was a business office park with the entire first floor for dedicated servers. Generally the servers that were housed at the facility were belonging to people who rented office space within their building, however since we got in on the ground floor of their startup, we were able to take a number of cabinets and got extremely good deals.

I've also worked with the One Wilshire building in L.A. which were doing racks (with power and bandwdith - granted minimal 5MB 95th percentile calculated) for under $900.

Again, shopping locally for deals you can often find great incentives. I now live in Omaha Nebraska and there's two main facilities that I have hardware in - Scotts Technology and CoSentry, BOTH offer some really nice intensives to host with them! The place I worked with in Orange County was called Techspace.

Our average server consumes 70 watts. Multiply that times 2.25 to get a rough real power cost and you come to 157.5 watts. Multiply that times 720 hours in a month and you get 113400 watt hours or 113.4 killowatt hours.

113.4 Killowatt Hours times 5.5 cents per kwh is $6.24 in power per average server including air conditioning and extras.

The average server uses about 1 Mbit of bandwidth so there's another $1 per month.

Since we own our own buildings or are able to trade space for space in buildings we don't own the space costs are as low as $1 per server per month.

I can build a quad core server for under $200 and sell them all day long for $50 and make a resonable living doing so.

You never can tell what a companies actual costs really are. Best to do the research instead of assuming that a company can't stay in business because you couldn't do it as cheap.

Thanks for doing those extra calculations DataShack!

Sure, only time could judge who will stay....

What configuration you have for 70 wats? Intel says that quadcoeres has 70-90W only for termal power. Dell says that R410 require 200W at least.

Ah... ok now i see were DC making money. we have expensive power but not expensive internet. For your scenario it is cheap power, but expensive internet. And for low end boxes definitely better to have cheap power than internet. So it comes from DC politics what they wont to host.