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Thread: Turnover on dedicated servers

  1. #1
    oles@ovh.net
    Guest

    Turnover on dedicated servers

    Dear Customer,

    The server deals that we offer are based on certain principles which make renting
    a server from us very appealing:
    - no installation fees
    - no commitment
    - monthly payment
    - regular release of new features

    Up to 100, 000 servers in our DCs, we haven't had any particular problems with
    these principles. To manage growth, it was sometimes necessary to add a limit
    of 2 new servers per month. Sometimes we had added installation fees for a few
    months, but overall, the model functions very well.

    Between 100,000 and 150,000 servers, we felt that these principles began to
    create problems in terms of turnover.

    What is turnover? Turnover is when our existing customers that rent servers decide to
    take new ones from us to replace the old. This if not a problem if the old server has
    been rented for 2-3 years, or if we can re-rent the old server as a Kimsufi for another
    2-3 years. But with 150,000 servers, the number of customers renting a new server
    again after 3 to 6 months has become the majority. And the old servers are becoming
    comercially obsolete too quickly.

    Today we have 170, 000 servers and since the range was updated at the beginning of
    August, the turnover has sped up even more to become too high. The majority of deliveries
    are basically just turnover. We are no longer delivering enough servers to keep up with new
    projects or new customers. The delivery time for everyone has become too long and we can
    say that the mechanics isn't working any more.

    As for the 170K servers already leased out, there's no problem to report and no change to
    expect. Everything is running perfectly well and we're not changing anything. The problem
    only concerns new orders for new servers.

    How do we fix this turnover issue?
    ---------------------------
    We think we can find a better way of working which will enable us to deliver servers in 1hr,
    while managing 200,000 or even 300,000 servers. But such a way of working requires
    serious consideration.

    We have started to make adjustments on certain elements such as IP Failover, but clearly
    it is necessary to go more in-depth. We have multiple avenues to follow, but if we start making
    changes every day, a piece here and a piece there, nobody will understand anything any more.

    And so even if we have more than 10,000 servers ready to be delivered (all ranges and DCs mixed up),
    we have thus decided to "sell out" all dedicated server offers in France and the European subsidiaries,
    as well as in Canada and the USA. Orders already placed will be delivered, but we are not accepting
    any more new orders.

    This "sold out" action will enable us to take time to analyze the sales of the last few months
    in greater depth, and understand the behavior of each customer contributing to the turnover.

    We will then put the servers back on sale in limited quantities (batches of 100 servers) and new
    principles to then re-analyze what has happened, and so on and so forth until finding the principles
    which will allow us to:
    - deliver the servers to you quickly
    - offer very competitive offers
    - increase customer loyalty to their servers

    At the same time, we're speeding up the rewriting of the API in v6 in terms of domain names,
    emails, web hosting and dedicated servers. The same goes for Manager V6 which will replace V3
    and V5 before the end of the year. Our order system will be reviewed before the end of the year
    for all the services that we offer you. We will be able to offer bank card auto-renewal in Europe
    and Canada. In short, we are making the most of this " sold out" period to focus internal resources
    not on growth, but rather on consolidation of our backoffice and on careful consideration of the
    mechanics of our offers.

    In the meantime, if you have new projects which oblige you to rent new servers, please don't
    hesitate to contact us so that you can place an order manually. We have the server stock but we
    don't want to deliver it and continue this high turnover cycle.

    We're counting on your feedback to help us to refine the mechanics, which must be convenient
    for you and allow us to do our job without having to change the rules of play every 6 months
    because we have 200K or 300K servers in our DCs. This is basically a good time to discuss
    and exchange, and then to come up with the idea that nobody has yet come up with…

    Best wishes,
    Octave
    Last edited by NatdaS; 17-09-2013 at 14:19.

  2. #2

    Re: The turnover on dedicated servers

    You can offer existing customers to upgrade in batches to reduce everyone ordering new servers all at the same time, before releasing the new packages into the wild.

    Also current users of KS 2012 servers who have the same specification of KS 2013 servers should just get there price reduced so that will make less orders being processed and is being recycled so no need to build another server just to get the lower price.
    Two Kimsufi 2G 2013 servers

    Exchange 2010 Email Hosted by OVH

    Happy OVH Customer since Feb 2011

  3. #3

    Re: The turnover on dedicated servers

    I'm not surprised at this, the constant ability to get a much better deal makes no surprise people are churning to new servers, especially on the lowest ranges.

    Frankly you should make the older servers in-line with the new costs as wii90 says.

  4. #4
    HG XXXL + MegaRAID Myatu's Avatar
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    Re: Le turnover sur les serveurs dedies

    Quote Originally Posted by rickyday View Post
    We rely on your feedback to help us refine
    mechanics that should suit you and which will enable us
    to do our job without having to change the rules
    game every 6 months
    Okay, then for starters: stop changing things on a whim. At this point it no longer looks as if you are changing things to get "the latest and greatest" in technology or to control orders, but that you are indecisive and can't stick to a plan. And that's bad for your business, and for people who rely on your business. But that's been mentioned before, so I'm not sure how our feedback actually helps.
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  5. #5

    Re: The turnover on dedicated servers

    So how long will the servers stay sold out for?

  6. #6
    EG Max
    Join Date
    May 2010
    Location
    Kent UK
    Posts
    477
    Blog Entries
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    Re: Turnover on dedicated servers

    Dear Octave

    Yes - there are major problems, mainly caused by the new offers you made.

    Consider these things:

    1. The offer price difference between the existing products and the new products was too great.
    If it had been less, then the time spent moving changing a server would not have made changing worthwhile.

    2. Looking at your post, it looks like you intend to keep a server for a life of about 6 years.
    The 3 Euro server was always going to cause an issue, as it's price cannot really be dropped after it "first life" of 2 to 3 years.
    The pricing point was completely wrong.

    3. Changes to Terms and conditions. If you change the terms of the old machines, the new ones will seem more appealing.

    So the proper fix is to correct the pricing, so that there is not such a great difference between the 2012 (and earlier) offers and the 2013 offers.
    This will allow you to drop the price in 2 or three years time, when a 2013 KS2G is barely useful for anything.

    Think about your pricing compared to the competition.
    20 Euros does not buy much in a Deddie, 2GB Ram and a low-end processor.
    Now compare the KS8G to this.

    Your say that you want to reduce turnover.
    There is another problem for those of us who have pre 2013 KS servers.
    We Rented these with good prices, and email support.
    Now the email support has been removed, but we pay the same price.
    A new server has come along which offers so much more hardware, and the same level of support, for much less money.
    It seems what you want us to do is change servers - or increase turnover.

    So, in reality you have only one option - Correct the pricing on the 2013 range of servers.
    How this is done is going to be hard, as the existing 2013 servers (and unfilled orders) will have to be done at the price stated.
    From re-release the 2013's need to be at a proper price level.

    To determine the proper level you have two main things to consider:

    1. What is the life expectancy of a 2013 KS2G.
    I suspect it will be un-saleable in about 3 years.
    So, it needs to be priced to recover it's costs in that time-frame.
    Note: The fee you can charge in 2 years maybe less than it would at the start, so this needs to be higher at the front.

    2. How much do you want to grow the total number of servers by?
    Growing too fast will cause other business issues.
    Pricing needs to be built to control this.

    Another way to look at this would be as a graph.
    The rent which you get from a server would currently be stepped (a drop each time it is recycled).
    Whereas the "value" of the server reduces steadily over time (better offers make this one worth less).
    In the austere times, people are trying to ensure they are paying as close to the "value" as possible.
    The longer they keep a server, the more they are paying over the odds.

    Example:

    Look at my oldest server:
    Kimsufi C-05G (2009)
    (ordered as) 1.2 Celeron (actually got 3.0 Pentium)
    2GB Ram
    500GB HDD
    (included email support)
    ...according to the latest pricing this is worth 3 euros.
    I am still paying 27.23 for this.

    This shows that your pricing is up-side-down.
    You are rewarding people who change every 5 minutes, and NOT rewarding people like me, who keep servers for a long time.
    Until you reverse this, you will get from your customers what you ask for: High Turn Over.

    Side Note:
    The Kimi listed above probably had a former life as a "Pro Server".
    When it was returned, after 2 or 3 years, it was recycled into a Kimi.
    Now it has had a life of more than 4 years with me.
    If any server should have got down to 3 Euros, then it is this one.

    Conclusion:

    You asked for "the idea no one has had yet".

    I think you probably already know the answer.
    One of the things you offer already needs to change:
    No setup fee / No commitment / Monthly payment / Very regular innovation.
    It is probably one of the first two which needs to change most.
    (There is an alternative - see below)

    I do have an idea as to how you could solve this properly.
    You should have a meeting with your top executives, and a range of your clients.
    The client group should contain all types from resellers with hundreds of machines, to people with one or two servers.
    (Of course, I think you should include me..!)
    This group could help you find a way to balance Technology verses Price, and how this should change over time.

    I am sure there are a few (forum) members here who would love an "expenses paid" trip to RBX to meet with you.
    Living just the other side of the Tunnel, I would gladly come.

    The Alternative.

    I am not sure the alternative is even viable, but I am sure you are already considering it:
    Continue with the current offers, almost on a drip-feed (100 per release), to limit the new sales.
    Try to continue to do business with ever increasing servers, and ever dwindling fees.
    I must say I fear this route will lead to the failure of a business (OVH) upon which I rely.

    I hope you at least read this, as I have put in some effort, I hope you will, as many of the posts here go completely ignored.

    If you do read this, please let us know your thoughts, here on the forum where they should be, rather than in twitter-speak, in a land we do not visit.

    Kind Regards,

    ~Trap

  7. #7

    Thumbs up Re: The turnover on dedicated servers

    Quote Originally Posted by wii89 View Post
    Also current users of KS 2012 servers who have the same specification of KS 2013 servers should just get there price reduced so that will make less orders being processed and is being recycled so no need to build another server just to get the lower price.
    100% this. The only reason I went for an upgrade was because it was cheaper than what I was already paying and I got new/better hardware as a bonus
    Last edited by Corobo; 17-09-2013 at 15:29.
    ICNerd - The love of tech (unless it's broken)

  8. #8

    Re: Turnover on dedicated servers

    Quote Originally Posted by Trapper View Post
    Example:

    Look at my oldest server:
    Kimsufi C-05G (2009)
    (ordered as) 1.2 Celeron (actually got 3.0 Pentium)
    2GB Ram
    500GB HDD
    (included email support)
    ...according to the latest pricing this is worth 3 euros.
    I am still paying 27.23 for this.

    This shows that your pricing is up-side-down.
    You are rewarding people who change every 5 minutes, and NOT rewarding people like me, who keep servers for a long time.
    Until you reverse this, you will get from your customers what you ask for: High Turn Over.

    Side Note:
    The Kimi listed above probably had a former life as a "Pro Server".
    When it was returned, after 2 or 3 years, it was recycled into a Kimi.
    Now it has had a life of more than 4 years with me.
    If any server should have got down to 3 Euros, then it is this one.

    Conclusion:

    You asked for "the idea no one has had yet".

    I think you probably already know the answer.
    One of the things you offer already needs to change:
    No setup fee / No commitment / Monthly payment / Very regular innovation.
    It is probably one of the first two which needs to change most.
    (There is an alternative - see below)

    I do have an idea as to how you could solve this properly.
    You should have a meeting with your top executives, and a range of your clients.
    The client group should contain all types from resellers with hundreds of machines, to people with one or two servers.
    (Of course, I think you should include me..!)
    This group could help you find a way to balance Technology verses Price, and how this should change over time.

    I am sure there are a few (forum) members here who would love an "expenses paid" trip to RBX to meet with you.
    Living just the other side of the Tunnel, I would gladly come.

    The Alternative.

    I am not sure the alternative is even viable, but I am sure you are already considering it:
    Continue with the current offers, almost on a drip-feed (100 per release), to limit the new sales.
    Try to continue to do business with ever increasing servers, and ever dwindling fees.
    I must say I fear this route will lead to the failure of a business (OVH) upon which I rely.

    I hope you at least read this, as I have put in some effort, I hope you will, as many of the posts here go completely ignored.

    If you do read this, please let us know your thoughts, here on the forum where they should be, rather than in twitter-speak, in a land we do not visit.

    Kind Regards,

    ~Trap
    They could possibly drop the price but probably not as low as the 2013 kimi due to the much higher power consumption of the P4 compared to the Atom.

  9. #9

    Re: Turnover on dedicated servers

    +1 to above ideas from Trap. Why not reduce the server price over time slowly?

    Willing to go to your HQ to help you thrash out these issues

    -macole111
    OVH customer since 2011
    5 servers - 3 OVH, 1 local and 1 elsewhere

    Managed servers and support services http://www.yellowcu.be

  10. #10

    Re: The turnover on dedicated servers

    Quote Originally Posted by Corobo View Post
    100% this. The only reason I went for an upgrade was because it was cheaper than what I was already paying and I got new/better hardware as a bonus
    How long did you have your previous server for?
    .

    * OVH Purchaser
    * I want no setup fee
    * I want 1Gbps UNMETERED dedicated servers
    * 24/7 Support
    * RapidSeeds ::
    www.rapidspeeds.com

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