Web Host Go Daddy Quietly Kills Off Cloud Servers Business


Just five months after officially launching a cloud server product at the beginning of May, web hosting giant Go Daddy has quietly abandoned the model, choosing instead to focus on the more traditional product the company has seen success with.

Go Daddy officially launched its pay-as-you-go cloud servers product in May of this year.

As of yesterday, at least, the link to the cloud hosting products page on the Go Daddy website was redirecting to the company’s homepage, while last week the cloud servers provisioning tool was still live.

In a post made Tuesday on GigaOM, Derek Harris says an anonymous ex-employee of Go Daddy shared an internal memo, in which Go Daddy said the cloud server business wasn’t seeing traction among the small and medium-sized business customers on which the company is focused.

“After reviewing all of our hosting products, we decided to double-down on our shared hosting and site builder products and invest to win in these spaces,” Harris quotes from the letter. “As part of this focus, we will discontinue Cloud Servers as a stand-alone product.”

Go Daddy wasn’t available to discuss the issue on the phone, but CIO Augustine Goldman confirmed the move in an email comment.

“We are focused on SMBs and SMBs don’t use our Cloud Servers product the way we are offering it now. So, in the weeks ahead, it won’t be a stand-alone product in and of itself. However, we plan to continue developing cloud technology into our other hosted products,” he wrote. “We will continue to support existing Cloud Server customers in a variety of ways.”

Go Daddy is the first large hosting company to formally back out of the cloud server market, after joining the land rush that has seen the majority of web hosting providers rushing to develop some kind of pay-as-you-go cloud server product, following in the footsteps of market-leader Amazon and its incredibly popular EC2 product.

While I haven’t spoken to Go Daddy about it officially, it seems unlikely the company will stop supporting existing cloud server deployments in the near future. The company will probably wait for existing cloud server customers to migrate to other services before it ultimately ends the product’s life.

For the hosting industry at large, the impact of Go Daddy’s decision to back out of the cloud server business could be interesting. The company’s lack of traction, and lack of success with that particular product could be taken as a sign that traditional shared hosting providers aren’t equipped to compete in a cloud server market, where customers have different demands.

It could also mean that, as Go Daddy suggests, the sorts of SMB clients currently using shared hosting services don’t necessarily have a need for the scaling or pricing granularity that cloud servers offer.

Then again, it could say something specifically about the sophistication of Go Daddy’s customers , a true “mass market” audience, given the company’s success in marketing to the average Internet user and the first-time website operator.

Talk back: Is Go Daddy’s decision to back out of the cloud servers business a sign of failure, or a smart move away from a bad business model for the company? Does it suggest that shared hosting firms can’t compete in the cloud business, or reassure you that there’s still a big market for shared hosting. Let us know in the comments.

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  1. Tyler

    Hey everyone. I read this right when they discontinued the cloud servers. I am only commenting now after I have experienced what GoDaddy did for me :D So.. I tried out the cloud servers ONCE. I paid for hourly services, which are charged at the end of a billing period. So I paid $1 to start my godaddy cloud post paid account on my credit card, then paid less than $1 to have a server up for 1 hour. I didn't like it and discontinued my use of cloud servers. Godaddy then announced they were discontinuing the project via email to me. I was like meh. I ignored the email's entire message. A week later I read it again while bored on a bus browsing through my smart phone. It had extra information... It turned out they were offering me about 6 months of FREE unlimited cloud hosting. That meant, I could deploy servers with the hardware specs I wanted, use as much bandwidth as I wanted, etc and not pay. I called in before the planned "unbilled free period" and asked for a RAM increase as well, I went from 11GB RAM limit to 21GB RAM limit. This means since October 17th, 2012, til now and until April 15th, I can deploy as much cloud instances on any OS free of charge up to 21GB RAM. You can deploy servers as small as 1GB RAM each. Servers with 1-8GB RAM were given four virtual core processing with more dedicated CPU per 1GB RAM, 16GB RAM servers were given 6 virtual cores, and almost full dedicated cpu per core. Each server instance came with non throttled 2Gbps up/down. If I used my 21GB RAM limit to deploy 21 separate 1GB servers, I would have 21 servers with 2Gbps connections on each. Whats is even better is that the servers are on a NAT Firewall, so you have support for load balancing. With these 21 servers load balancing, I have non billed bandwidth, non throttled, 42Gbps to use for whatever I please. The only downside I have with NAT Firewall is that it doesn't natively support cPanel. The other upside, you get easy VPN support. I've been using it to stream American Netflix here in Canada :P I gave all my friends a VPN account to do that also :P. The VPN runs outside your server instances and is controlled in your cloud control panel. GoDaddy's dedicated servers are their current most powerful servers in hardware and network speed. They offer up to quad cores, and 100Mbps up/down (10Mbps by default unless you create a ticket on your own asking for 100Mbps after paying). The plan with the most Bandwidth in their plan before you had to pay for bandwidth overage was 20TB (Also, to pay for extra bandwidth in a plan equivalent to the original plan amount of bandwidth costs in fact more money than to buy a new server of the same kind). Just funny that I got all this power from GoDaddy Here is a copy of the message I received from GoDaddy :) Dear , Go Daddy appreciates your business with us – we know you have many choices when choosing a business partner online. We continually strive to deliver you the best products and the best support in the industry. After careful review, we have decided that the best way to bring cloud hosting to our customers is by integrating it with our Web Hosting and Virtual Private Server products. As such, we will be discontinuing Cloud Servers as a stand-alone product. We know you have invested your time building your business on top of our Cloud Servers product, and we want to work with you to take the next step. We will be giving our Cloud Server customers until April 15, 2013 to migrate their data and processes to a new platform. Our customer care representatives will be reaching out to you over the next week to help you make this transition. We have several alternative products to meet your hosting needs, including: • VPS (Virtual Private Servers) offer flexible capacity with guaranteed RAM and storage availability. • Dedicated Server plans that give you your own lightning-fast processor, up to core i7, with up to 20TB of bandwidth. • Go Daddy Web hosting is an option for those who need reliable hosting in a clustered, multi-server environment. We respect the fact that you may want to transition to other solutions outside of Go Daddy. If this is the case, we have staff available to assist you in your transition to another solution. If you would like to talk to a customer care representative immediately, you can do so anytime by calling 480-463-8823. As an appreciation for your loyalty we will not be charging you for the usage of your Cloud Server product after October 19, 2012. Regardless of the date services are migrated, customers who have prepaid for their services will receive a pro-rated credit utilizing October 19 as the end date for billing purposes. We look forward to working with you and continuing to help you grow your business. Thank you for being a Go Daddy customer, GoDaddy.com

  2. Marco

    I think that a convenient use of cloud hosting requires a very deep knowledge of the activity we want to base on it (probably more than a knowledge of technology involved in cloud computing). Maybe only a full control over the use of resources we are exposing can save us by the bad surprise of an unexpected consumption of our credit, or even worse a service breakdown. So a question could be: how many SMB customers have such a deep control on their own online business, so that using an hosting provided on request and hourly charged can be affordable. It's possible that Godaddy finds his main market in a range of people that have a little or no idea of how much their online services will be used and so they find a flat service for a flat fee less risky, if not more convenient. A very interesting precedent anyway, definitely to pay attention.

  3. I think that customer need some education first before he goes in for cloud servers. Go Daddy took a right step. In shared hosting/VPS the client know the exact amount he needs to pay every month, while in cloud it varies.

  4. I don't think that individuals or small business owners can understand exactly what cloud hosting is and in addition they may could not understand how many resources they need / consume. So, what I may assumme is that there may be a lot more complains than they thought about extra charges. Also, the only one that can "count" the resources used is godaddy. How can anyone now if the resources where actually used or if there were indeed overcharges?

  5. Cloud hosting brings with it a certain level of experience for the type of customer that is attracted to this offering. The cloud is not yet a commodity, so the image that is portrayed by the cloud operator is still very important when deciding on a cloud provider. Go Daddy doesn't scream enterprise, or even reliable in many respects. So, people looking for cloud services often look at the major "serious" players. Sure, they can get an SSL cert. from Go Daddy, but that is seen as a commodity. You don't feel you have to trust or lean on support when things go awry with an SSL certificate. With cloud hosting, the reputation of the provider is paramount in many cases, especially when issues pop up. My guess is Go Daddy's image is not in alignment with the expectations of cloud consumers.

    • Post author

      Rob, Very good point. Something I think is worth considering is that Go Daddy's greatest strengths probably lie in winning the business of first-time hosting buyers, much more so than competing directly with other service providers for a specific customer. I'm not saying Go Daddy never wins a serious comparison shopper, but it probably signs up a lot fewer of those than it does people who aren't necessarily experts on hosting, and are reassured by the brand awareness Go Daddy has. Cloud servers definitely don't seem to be in line with that particular strength. Interestingly, Amazon is sort of the default cloud server provider the way Go Daddy is the default shared hosting company. Go Daddy is competing against Amazon for cloud servers business just like everyone else, but it's actually going to lose that brand awareness battle.

  6. I think one heavy driver is also the need of bigger effort and investments (infra, processes & people) to get lower profit margins, compared to traditional web hosting and all expertise already achieved in their market by GoDaddy mates...

  7. I feel that it is a good move since Godaddy appeals more to SMEs and individuals. To most of such customers, cloud or no cloud makes no difference to them. Godaddy may well opt to relaunch under an Enterprise planning which should be more understood by the customers.

  8. bertrand

    Hi Liam, your gigaom link is lacking a colon after the http and before the / back to your article, it's interesting to see that these cloud server have not reached the right audience for Goddady. I do understand that in usual shared webhosting markets, customers are not tech-savvy but Godaddy is also one of the leaders in SSL certificate, a quite technical product, and I was guessing these technical customers may have used Godaddy's cloud. Obviously, this has not happened. best Bertrand

    • Post author

      Bertrand, Thanks for the heads up about the link. It's fixed. That's an interesting point about SSL certs. I think it raises a couple of relevant questions. Was technical complexity the barrier to adopting cloud for Go Daddy customers, or did they maybe just not want to acquire those kinds of resources in that way? And is part of Go Daddy's success in the SSL business due to the fact that the company has found a way to successfully sell them to not-so-technical users.

      • Liam, Just my opinion: GoDaddy knows how to make a technical product simple. What they don't know, what I don't know, and perhaps what nobody knows, is how to create a market for the Cloud servers among non techies. Our Company has also looked at deploying cloud servers. We're at work now building our own cloud infrastructure, but we've recently decided to not offer cloud servers, but rather to add cloud infrastructure to make our web hosting work better and to offer more robust and redundant solutions. It appears GoDaddy is going in that direction as well.