OVH forced sales-halt due to "failed" pricing strategy

jimaek

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

http://forum.ovh.co.uk/showpost.php?p=54520&postcount=1

Spirit

Thank you for letting us know but @rds100 already posted it.
http://lowendtalk.com/discussion/comment/323790/#Comment_323790 - Please discuss there.