We have spent the last few months getting ready to startup VPS and learned a bunch. There are a few things that are ringing in my head as we push forward into this marketplace. Are we making the best choice for what the customers will want? I mean it's pretty obvious why some would want to buy VPS; for the value of course compared to true dedicated server offerings. It's just a perfect next step from shared without having to incur all the expense of a dedicated.
Well.. the big players are Microsoft Virtual Server, Virtuozzo, VMware and freeVPS. I know, there are at least 6 or so more you might like and please feel free to comment on them.
In all it's easy to see the high level differences, advantages and disadvantages. VMware being more a true virtual server setup, but weighing heavy on resource consumption. Virtuozzo tending more towards a lighter virtual server and allowing a lower dollar/higher density plan type offerings. FreeVPS being good but maybe harder to support. Microsoft limiting the amount of instances to 4, I believe. We also had to consider APIs to the solutions. How do you automate management? We are still learning about the full automation and I will add more later to what we know. All good solutions; all have their ups and downs. I think it's just what fits your needs better.
If market trends continue, more and more low dollar, less secure "garage style" hosts will be entering the market. Also, the big players will offer more and freer hosting for this same market segment. Competition for this space will be tough for higher volume VPS instance per server offerings.
I would see most small business clients heading towards a smaller / true VPS model with a fair amount of resources available. This will benefit them the most.
The customers expectations are that a VPS will solve problems where really it will not.
Yes there is a market for VPS but 1 out of 10 customers will actually have the right use for it where the other 9 of them will leave feeling disappointed that they bought it. Then 1 of those 9 will post how your VPS sucks.
My suggestion is to not enter the VPS market it is domed to be treated as another commodity like shared hosting.
If you are looking to the future read Isabel's blog, I agree with most of her observations.
Would you be willing to let me know what solution you used? Also, how you allocated the instances?
I think your comments are valid and worries me as well. Low cost dedicates are abundant, putting a big question up about price and profitability.
Do you think most small business clients know what a VPS is? I'm guessing Gary's disappointing experience was caused in part by end users' lack of awareness as to how much resources their applications require.
Within the web hosting industry, we tend to market VPSes as "dedicated server-like" hosting environments, only cheaper. There's not a lot of emphasis on value propositions that have made virtualization popular within the enterprise IT arena: easier scalability, for instance, faster disaster recovery, and the ability to host the same set of applications on less hardware.
Unfortunately, these benefits raise some tough questions. Do we want customers to lease fewer servers? If we moved a VPS from machine A to machine B, or resized its CPU/RAM allocation on demand, how can we account for this activity in our billing and inventory systems?
On the other hand, if we set such possibilities aside and treat VPSes as nothing more than mini-dedicated-servers, we won't be able to differentiate it from shared hosting, and as Gary says, customers will see it as just another commodity.
PS - Thanks for mentioning my blog, Gary! :)
Sorry for not getting back to you sooner. Our re-branding efforts have me a little busy.
"Would you be willing to let me know what solution you used?"
We used Virtuozzo as a solution on high-end Linux servers.
Also, how you allocated the instances?
We started with doing a 30 VPS's per server with fair price model to the market and then tried a 10 VPS's per server model at a higher price.
Isabel,
I noticed you didn't blog as much this week. I always look forward to your posts.
"Do you think most small business clients know what a VPS is? "
When we started in the market there were only 5-10 of us providing them. At that time it seemed anyone that was banned for loading a server was looking for a VPS. These customers would not tell us why they picked a VPS so after moving there CPU or Memory intensive sites over they complain about slowness. When urged to upgrade they would become angry.
I think that the end user of most sites don't know what there CPU or Memory usage is. This is in fault to most hosts and control panel makers who do not share or make those details available to clients.
If customers did know those details it would be easy to build a wizard to point the right people to buy a VPS or a dedicated server.
We have been using Virtuozzo since 2004, providing virtual servers to end-users. We started providing the service with a single Dell PE6450, and now, we lost track of our machines ;) I can answer some of your questions in detail below, with my opinion after some time in the VPS industry, see here;
>>> Are we making the best choice for what the customers will want?
VPS needs to be marketed for what it is, it's not shared hosting, and most importantly, it is not high powered shared hosting for 'abusive' users, the guys that will be running 187 apache processes and 100% MySQL usage. Problem with VPS is that you get guys that cannot afford a dedicated server, but want to run 37 Mambos and 32 Joomlas on a reseller account because it's within the disk and bandwidth limits. They don't understand that these horrible scripts consume CPU time, regardless on what hardware you place them. So, when they're booted from shared hosting for monopolizing the hardware, they pick a VPS. You need to market the product so that it does not appeal to this group of guys. If it's marketed as a 'root-control' solution, where they can change their settings, play with all the buttons, change the logos, recompile PHP to their liking etc, then you'll do very well. Marketing is as a dedicated server with 'dedicated-like' power, will not be good for your pocket. An example;
* Dell PE6850 / 2 x Xeon MP 3.16 / 16G RAM / 5 x 146G [5] on LSI 320-2E
This box will run easily 100 VPS's, very easily. We're talking full machines with cPanel or Plesk installed, no problem.
Take the same box and put 20 heavy Joomla users on there, and a couple of Mambos to go with it, and your $38,000 server is 100% utilized. Abusers need to be upsold to dedicated servers quickly as there is no way you can integrate them into 'general production' Virtuozzo servers.
Now you will ask why Virtuozzo cannot curb CPU usage, this is not the problem. No other Virtualization technology can run 100 VE's on a single machine perfectly, with zero overhead. It's common sense, abuse/high load needs to be segregated to 'abuse-only' nodes, or simply upsold to dedicated machines.
>>> Microsoft Virtual Server, Virtuozzo, VMware and freeVPS.
Forget about MSVS, it's extremely slow, try it and see for yourself Useless. You will run, what, 5-6 guys on there, to collect $100 a pop? So $500-600 revenue on a $7000 machine? VZ will give you $6000 on a box per month without headaches.
VMware? Same story, plus it's extremely slow. Forget about >20 VPS's on a box.
FreeVPS? This is a dead project.
Xen, this is good, however again, forget about >15-20 VPS's on a box.
>>>> How do you automate management? We are still learning about the full automation and I will add more later to what we know.
This is done via HSPcomplete. We are running HSPc to control our Virtuozzo hardware, and I can't say enough positive mention about this combination of software. It's a complete and fully automatic solution for your business. Set it up, and your clients will order service, and be subsequently provisioned fully automatically, you do nothing. Really, nothing. No other system exists that can rival HSPc, the other business solutions i.e. Modernbill etc, are imitations. Everything that has to do with your clients' VPS's, is fully controllable via HSPc, from billing, resource tracking & billing for overages, and of course upselling within the control panel. For example, you'll get a client playing around at 3:30 AM one morning who decides that he wants to buy some more IP's, or upgrade his RAM, he just clicks a couple of buttons, voila, you got paid, he got his upgrades, fully automatic. You can't beat it.
>>> I think it's just what fits your needs better.
HSPc, in the proper hands, will ensure that you will be completely profitable with your VPS solution within 120 days. I'm talking about hardware costs, licensing costs, personnel costs, advertising costs, full stop - 120 days you will have your money back - Get HSPc + Virtuozzo. Sure there are other solutions but there's only one Mercedes S500, the rest are imitations.
>>> continue, more and more low dollar, less secure "garage style" hosts will be entering the market.
They sure will, and they will be going out of business just as quick. DC's provide cheap leased servers and cheap leased licenses, but the 'little guy' has to work _very_ hard to survive to compete against the big boys. Many fail, don't be concerned with this. Nobody will compete with you, and with a name & reputation that you have, you'll sell like hotcakes. I recommend Dell PE6850's/PE6950's, they are able to run high density (100-120 VE) and rock solid. You'll need the capacity as you'll sell fast.
>>>> most small business clients heading towards a smaller / true VPS model with a fair amount of resources available. This will benefit them the most.
No, this is wrong. This will not happen because nobody wants to pay 99.50 $ for a VPS. They can get a cheap junk-o server from LT for 50-60 $. You need to be in the 35-45 $ market, and this is only possible to do, with Virtuozzo. You will not only generate a tremendous amount of profit immediately and for years to come, but you will enhance your company's brand image. Other new, unreliable solutions which are still new & unstable, will hurt your name. Virtuozzo offers us a full business solution;
1. Customer buys VPS, HSPc sets up VPS automatically
2. Virtuozzo server will run X amount of VPS's without issues
3. Backup, migration, management, resource tracking tools are second to none in Virtuozzo
4. Even if you lose a complete 500GB~ hardware node with Virtuozzo, if you have other equipment standing by, you will be online again within 2-3 hours max. No other solution can offer a 15 minute bare metal VZ-ready server, and VPS restoration as fast as your GBnics can write to your disks. And all of this is reliable as well, no games. We have experience with total data loss due to RAID failure, when I say 2-3 hours, I mean exactly that.
Overall I cannot say enough positive mention about this software and of course the company behind it. Remember, you can build the best software, but if your support & R&D guys are jerks, it's worthless. SW's guys are incredible, and will bend over backwards to help you in anything you need.
This is serious money, don't make a mistake and end up pulling your hair out in 2 years time.
Rgds.
F.
Any hosting company or datacenter that plans to support clients of the future needs to be looking at virtualization today. You are correct; there are many virtualization solutions on the market. You need to look at the way they are implemented. I have personally worked with most of them and for my company and my clients; I have made a clear choice to support SWsoft Virtuozzo software hands down. Virtuozzo seamlessly integrates with HSPc, and the Plesk control panel install in the Virtuozzo VPS without and modifications. Feature of Virtuozzo that put it above the other technologies are:
1.) Virtualization of the OS – The OS’s are templated and cached to the virtuozzo hardware node, this allows for smaller footprint ( about 55 – 75 Meg ) on the VPS and faster VPS buildup ( about 15 seconds for Linux)
2.) The best resource allocation – from CPU units, memory allocation, HD space, as well as all other OS resources, allowing dynamic adjustments to the entire VPS without need to reboot the VPS.
3.) Application templates – The point of Virtualization is to minimize admin workload and maximize server usage. Application templates allow us to install complete software solutions as well as upgrades across our systems with a few clicks of a mouse (VZMC, VZPP, and VZCP) or command line script.
4.) Backup, Restore and Rebuild – As Virtuozzo, like we already stated, is based on OS and application templates, the actual size of a VPS is much smaller then one would expect. This allows Virtuozzo users to easily backup, restore and even rebuild systems much faster.
5.) Migration – Virtuozzo is able to migrate a live VPS from one hardware node to another, coping files and memory captures, to create a 0 downtime migration that clients and customers working on the system will not notice. The only requirement is that the VPS’s OS and application templates be the same as used to create the original VPS. This is an easy task as well.
ROI – Virtuozzo is the Commercial side of virtualization. The return on your investment is very quick. I have personally helped clients, on the low end, setup single processor boxes with as little as 4G of ram and place over 25 VPS’s with live commercial websites running in each. These VPS’s bringing in anywhere from $75 – $100 a month. These systems still use less then 80% of the actual hardware resources. This type of income covers initial cost of server, Virtuozzo licensing and quickly covers the cost of setting up a backup/ redundant server.
Another thing to point out on any virtualization is the learning curve for the administrators as well as the end users. Any admin with even the most basic Linux knowledge can install any of the compatible base OS’s, Virtuozzo, and OS /Application templates in about an hour or less depending on the local internet connection. For those individuals, after the initial install, they can use any of the control panels (VZMC, VZCP, and VZPP) to administrate and monitor all their VPS’s.
The reason you see many companies able to use Virtuozzo for low end hosting or VPS needs is not because it is low end, but is because of the ROI / Resource Utilization / Learning curve for both admin and users. Claiming it is a light VPS solution is missing the entire point and grossly underestimating the best solution on the market. It is also why the top hosting companies and datacenters world wide are using it. That should tell you something.
VPS cannot solve issues with abusers, They need to be on a dedicated. In our guidance to the desing engineers, this will need to be built into any analysis of a particular customer right off the bat.
Virtuozzo seems to be the answer in general for the larger quanity sites per server. Thanks Fotis for one of the best all out analysis on your knowledge in this arena.
Our plans are to role out Virtuozzo on a smaller scale plan with limnited resources. We are looking at a larger IBM or DELL blade setup with a good size SAN behind it. (Dont have the details yet.)
We are looking through the API offered by Virtuozzo to find models for management.
Thank you again for all the information everyone has posted at this point.
After the comments from reading Fotis, I feel enlightened :P
I haven't really looked a lot into what is available. I've used VMWare ESX in the enterprise and it worked really well for that task. Maybe one of the others could have done a better job I don't know. But for hosting I wouldn't have thought it would be a good choice.
I want to get into the vps hosting business and it was interesting reading the support page for leeware.com - He has pretty well summed up what VPS is ;)
After we had problems about shared hosting (like email/hour limits), we decided to go with a VPS. Because we had a limited budget. We thought that VPS is better in resources, performance, etc.
But we were wrong! Shared hosting is much better in resources in performance. Why? Because these accounts are run on huge computers, in order to be able to host hundreds of accounts. So, these servers has many gigabytes of memory and and high-performance cpu's.
When we passed to VPS, we observed that the speed of our website decreased dramatically.
So why one may choose VPS? There can be only 1 reason: If you want to manage your own server and have not much money.
VPS is definitely not for performance.
This is the customer experience...