FindMyHost

As I surf through several cheap dedicated server host web sites, I see budget server after budget server. Competition is stiff and furious for the low-end Dedicated Server customer. I can only imagine the insane churn rates, low profit margins, and overall headaches caused by the low-end customer. What’s scary for the cheap dedicated server providers is; there’s already a better product on the playing field at more affordable prices.

Furthermore, this new player is easier to manage, easier to provision, uses less power, and will be commonplace by the end of 2009.

Even more damaging to your future is that this provider offers more computing power in one tiny sliver than your ancient low-cost dedicated server.

What will you do once the customers start to leave you for the new player? Lower your prices even more on ancient hardware? Probably.

Will it work? No chance

MEET YOUR NEW COMPETITOR: VIRTUALIZED DEDICATED.

Once a customer gets used to the automation, 20 second reboots, easy migrations, back-up / restoration tools a Virtual Server offers, they will not go back.

What’s even more cool is, a VE (Virtual Environment) on a high-powered Dedicated Server vastly out-performs these ancient pieces of hardware you are pawning off on people for $40/mo for the same price. This is not the VPS of two years ago. Processing power has gone up considerably and has now enabled cost efficient ‘slicing’ of a single computer in to many usable computers. More efficient manufacturing methods have also led to competitive pricing on server hardware

The processing power increases now make sense for the end customer to consider VPS as a viable solution. It’s affordable and reliable now for mass market use.

In addition, the power consumption on your old beast servers are considerably higher than a newer more powerful machine capable of being virtualized. This saves you the Hosting company money.

As a dedicated server provider, you already have a data center, network, and the infrastructure in place to keep selling dedicateds. You just need to tweak your sales model to cater to virtualization hardware and software for end Resellers.

HELP DEVELOP THE NEW EMERGING MARKET : VIRTUALIZED DEDICATED.

Most companies who offer dedicated servers do not offer the necessary tools to help the end-user virtualize that server.

Let’s be honest, dedicated servers will soon be a thing of the past (one server = one server). Virtualization just makes too much sense. But here’s the catch, you still need a dedicated server to slice up in to those little VPS’s right (one server = xx servers)?

Most offer you a base OS and Control Panel. The setup is designed to be one server = one server.

Wouldn’t it be better if you catered to Web Hosting Resellers who sell and manage VPS? I’m not talking about competing with your resellers, but giving them the tools they need to be cutting edge. Give them the software and tools necessary for them to offer quality VPS products to end-users.

Resellers buy a big box and resell ‘slices’ to their customers. I’m not talking about limited VPS, but VPS with more processing power and RAM as your existing old school hardware.

I think it would be fantastic to roll out the tools to make it easier for your dedicated customers to virtualize the dedicateds you already sell them.

VIRTUALIZE YOUR DEDICATED SERVERS WITHOUT COMPETING AGAINST YOUR RESELLERS

DO NOT MAKE THIS MISTAKE: COMPETE WITH YOUR DEDICATED CUSTOMERS BY SELLING VPS CONTAINERS.

As VPS products become more efficient, robust, and automated, I expect these low end providers will want to jump in and sell low end VPS packages. I would advise against this, competing against your current customer base is never a good idea.

The benefit for you Mr. Cheap Dedicated Server company? Higher profit, less churn, and more loyal Reseller customers. How do I accomplish this you ask?

You can still offer low end servers, but you give the Resellers valuable add-ons. RAM and Hard Drive are necessary evils with virtualization. Suddenly that $89/mo server is now at $199/mo.

You must be the Sam’s Club or Costco for the Reseller. You let them worry about high churn rates and low pricing. You simply provide affordable tools to virtualize a dedicated based on your already existing low-cost gameplan. Let the reseller do what he does best and sell the VPS’s.

The benefits should be obvious. A virtualized dedicated has a much higher cost and bigger margin than a low end dedicated server. This helps your bottom line.

What add on tools are these VPS resellers looking for? Xen, Virtuozzo, Citrex, VMWare plus backup services, managed tech support, a wide array of control panels, etc…

If you can “GoDaddy” virtualized dedicateds with lots of options, I think you will have a winner. Market to resellers and help support them with the tools they need to beat the competition. Maintain your low price point, but give your product line the boost it needs to succeed and survive the evolving market.

You better virtualize soon Mr. Cheap Dedicated Server provider or you will be the next dial up.