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Some thoughts about hardware crisis
So, two massive bombs in web hosting industry dropped: OVH and Hetzner price increase. The news was brought to me by early morning e-mail just after I had a nice morning wood. It immediately went down. And I started to think about all this madness.
It reminds me a lot of electricity price crisis: there was announcement from few major providers and this led to ripple effect across whole industry.
So wtf is happening? Brief thoughts from my erratic mind:
- Everything starts from greed. Followed with corruption and finished with apathy. The main trigger of hardware crisis is obviously working supply and demand economy model. It is natural occurrence in healthy market with a chance for equilibrium.
But what happened here: AI bubble drove demand for supply so insanely high, that equilibrium was disturbed and now we have shortage. Is it natural? No. It is induced by 3 business entities world-wide. On top of that, NVIDIA drives this madness even more by creating ouroboros effect in stock market. And suppliers also playing their part as flow of cash is in multi billions.
- Now, the providers. What we know about real situation with major providers regarding their real intentions of price increase?
What we do not know:
- Supply of surplus hardware that they have. They could have hardware surplus for 2+ years from this moment. We would never know that. And those who knows it - NDA'd to the death.
- Contracts with hardware suppliers. This part, the same as it was with electricity - we do not know real situation and contracts signed.
- Do they tell us (customers) the truth? They are not obligated by any means to tell us truth. Not by moral, ethics (those does not exist in business after all) and not by the law.
What we do know:
- Everyone will increase the price as ripple effect is on-going. There is plenty of excuse to do that - even if reasons are fabricated. Because everyone does that. The same was with electricity.
- They will keep recurring prices up, while in future removing / changing one-time type setup fees.
- We will pay the price, no matter what. The apathy in action right here.
Well, that's it. Probably this wall of text could be expanded by fckin LLM, but nah, fck that. It is somewhat soothing to went out like this.
What do YOU think about this, average Joe? Do you have something in mind?
Comments
Hi,
even i might not be a totally average Joe as i am working as a small fry provider, but at least about the price driving / hardware stuff:
So this can be summarized as greed in my humble opinion... at least i dont understand how prices for gas / electric on stock market can be back to normal or even lower and this lower is not given to the customers...
The hardware of hetzner or OVH is mostly not server hardware. Unbranded hardware in desktops and even worst. And of course some premium dell / hp brand hardware.
As to the unbranded one, i assume that they will buy it in batches on demand. So if their stock is going low, they will order a new batch,
As to the branded one, they will most probably do the same, but with (far) lower numbers.
The unit amount per ordered batch will be somewhere in the 3 digits i guess.
So depending on their stock situation, they might be forced to buy now for the current prices stock. Maybe they will adjust the number of units as the old (discounted) (batch) price is anyway gone.
This means that even the supply would be tomorrow back to normal pricing, the now bought batch would have been bought for this XXL pricings and this way hetzner must somehow compensate this by increasing the pricing.
As for now, hetzner tries to compensate this with a high raise of setup, but moderate raise for the monthly fees.
This way hetzner can just remove / lower the setup as soon as the prices are back to normal without changing the monthly fee too much.
Otherwise people would simply cancel their existing servers with higher monthly and get the same server again with lower monthly and do a migration.
So thats actually quiet smart of hetzner to do it this way.
But in general, yes, new price round and i assume that the monthly prices will not go back where they were.
In all that the income of normal joe is of course not keeping up with this price jumps... well i guess thats the way it goes. Normal joe could only fight it if he is going into hard digital detox and if joe has many friends doing that aswell.
Maybe remembering that we have a nature out there would be a good start and that for some mystical reason our parents and ancestors survived without the internet, AI and all this fancy stuff.
But, lets be honest... we talk here about normal joe... he and she will not do that. Its not convenient...
Its better to keep complaining. Imagine you dont have something to complain.... imagine you would actually really DO something to improve the situation ( for yourself! ) by doing something inconvenient ... nah... better complaining... less work... it makes us feel like not we are the problem with our way of consuming, but the others... this bad bad other people who actually want to rip us off while we just want to consume... more and more and more... of course without paying more... thats inconvenient.... so lets just continue like it is and complain. Most easy to blame others for (miss)using the situation we prefer to maintain ourselves..... because this is convenient
;-)
This seems like a lot of speculation. I know that OVH have for a very long time (maybe since the beginning) designed their own enclosures that's basically just a rack to support their custom motherboards and drives as densely and as space-efficiently as possible. It's certainly not just random old unbranded desktops.
I think Hetzner is more of a mixed bag - I believe they do use standard PC tower cases, but I know they're big enough that they have bespoke motherboards made.
However, the point I take issue with is that they're increasing prices for existing customers as well because future hardware is expensive. That just seems wrong. Charge the new customers more based on the same expected time to recoup investment as previous hardware purchases. If fewer new customers come on board, then so be it - they still have all the existing customers.
That said, 3% isn't a terrible rise. My (server auction) dedi has been the same price since I got it just over 3 years ago, so it doesn't feel too excessive to me. The rises on the current machines does though, especially those that have only just had a price rise.
Hi,
well the monthly cost of services does usually not only includes the datacenter/routing/... cost.
A portion of it is also some kind of "insurance" in the greater sense that if your hardware got damaged they will replace it.
If your server dies now, they have to replace it. Usually that would cost them X. Now with the new pricing it might cost X + Y. So this Y there someone needs to pay.
So there are some IF's in this story.
IF we talk about old auction server, rising those prices make not much sense in my humble opinion. They will anyway not buy this hardware newly. So why rising prices there?
IF we talk about new / regular server, rising those prices WOULD make some sense because hetzner also need to cover a hardware defective szenario where they have to replace hardware ( but can obviously not charge again a setup ).
As to hardware: With OVH i have no idea. With hetzner, i was there in falkenfels years ago. All desktops.
Why the rise if hardware already paid off? To increase price existing, old hardware on basis of current hardware crisis is greed in action right before your eyes.
Wild guess: Replacement hardware
I am still betting on massive write off by 2029, over generational breakthrough.
Ironically, I use AI to fill in the blanks
This is 100% human typed.
Premises:
0. Prisoner dilemma applies.
1. AI companies revenue will not grow 5x YoY for the next 2-3 years.
2. Hyperscaler (and its smaller competitors) is spending 500-600B on 2026 alone (or twice, thrice the actual demand). Probably will increase moaaaaaar.
3. Nvidia is going to release GPU with even bigger memory and bandwidth (using HBM4 and HBM4E).
4. Multi-GPU setup is used to function.
5. Nvidia gross profit is set at 85%
Further speculations
Gross Income (loss) = (825B)
But, there's still 1950B worth of assets, right? Assuming H200 (141GB) is $30K, Vera-rubin (576GB) at $60k. That would have depreciate the price of H200 by 75% on memory alone, not including better bandwidth, etc.
If it's all H200, -825B + (0.25*1950B)= -337.5B.
That's if Nvidia somehow delayed the next chip to early 2029. What happened if it's early 2028 or even late 2027? LOL LMAO
Pricing is based more on market pricing (supply and demand) than business costs.
I am seriously thinking of cancelling everything that gets a price increase. I am aware that I am irrelevant in my decision, but this is not simply my way of fighting back, but also my way of coping with this mess. Whomever wants to participate in the greedy shitshow, it is their choice, not mine.
Like @layer7 said earlier "our parents and ancestors survived without the internet". I might be able to survive this one too even though it is just survival, not evolution of society. And yet, I did not cause this mess of our civilisation, nor did the "average Joe" with his low-end salary.
Your ancestors survived without toilets, indoor plumbing, electricity, penicillin and modern medicine, as well.
After all, average Joe will pay the bill in the end for the table. He will pay for cake he didn’t taste. He will pay for whiskey he didn’t sip. He will pay for tramps that he didn’t plow.
Turn the table, Joe. Do something!
Resource will flow naturally to wherever it can produce more value. Everything is ultimately determined by the market.
As someone working in HDD industry, I knew WDC and STX are both fully sold out until at least end of 2027. DRAM/NAND industries are likely even worse. There's no such thing as manufacturer hoarding hardware - it's a simple supply-demand rebalance. So we expect hardware prices to keep at this level for the foreseeable future.
One thing we know for sure - getting into the hosting industry is probably the dumbest idea in 2026. Well - it has been a terrible industry since 2020ish, but we still see new providers born and deadpooled every year.
Hetzner do have custom mobo's, there is a video on Youtube from a walk through there.
But they are not using standard racks, it's some kind of custom enclosure that is cooled with one PC fan. Old one's are indeed towers.
Even if some hardware is already paid off, you still need to replace it, expand capacity, and buy new equipment.
If a server was budgeted at X in 2025 and by early 2026 it costs X + Y, where Y is now 20%+ of X, that delta doesn’t magically disappear.
You don’t price based on what yesterday’s hardware cost - unless.... yap... you still live Fairy Land and did not wake up.
You price based on what tomorrow’s replacement cost will be - the actual word around you.
When the market is steady, like 2021 to mid-2025, operators can absorb 10–15% operational increases. That’s business noise. Scale, efficiency, and margin smoothing usually cover that.
But what we’ve seen recently isn’t 10% or 15%. It’s more like 20%, 25%, sometimes 30% or even more on some SKU. ( I promised my self not to debate RAM and NVME here, so don't get me started
)
That’s not noise anymore. That is a real issue.
Also try to understand this: raising prices is rarely a first choice. It’s usually the last option or lever an operator wants to pull.
Mostly because one of the factors, but can be others as well:
Either way, it’s not a casual decision, nor a happy one.
If you are 100% confident it is greed, then, there is nothing anyone here can say to convince you otherwise.
Either the entire global market suddenly decided to become greedy at the same time…
or we’re dealing with something a bit more complicated that effects the whole industry.
It’s easier to call it greed - and yes, much more convenient.
It's a bit harder to admin shit hit the fan, this is going to happen, whatever we like it or not.
True
But when barely some of them made it to 35, they were already considered the “elder” of the tribe.
Let’s not forget that part of the story.
From what I see, it seems networking supplies will be next.
Me and my big fat mouth…
Nothing is immune. Some things will spike harder, some softer but when the tide moves, it moves everywhere.
Memory Chips are in everything.
From your fridge’s glorious 2-digit LCD display (yes, even that masterpiece of engineering) to the latest Arista switch or whatever premium brand someone swears by this week.
When new parts get expensive, guess what is next on the menu?
Yep. The used market. ( welcome to be billionaires of e-bay )
First the newer SKUs get squeezed.
Then the “still perfectly fine and works” previous 1 or 2 gen's.
Then even the “I thought this was e-waste” tier starts creeping up.
Have you looked at DDR3 lately?
It didn’t go 3x overnight… but it’s definitely not what it was six months ago.
Funny how “obsolete and old” suddenly becomes “strategic asset” when supply tightens.
Welcome to hardware economics 101 in 2026
....... yet I still presume it will flat out in a few weeks, and other types of hw will not get the same treatment as NAND and RAM.
I have seen DDR5 slightly dropping ( I will underline slightly here ) in the EU.
If you wished to upgrade your VGA card this year? better grab a console fast from ex-buy.
Well, life expectancy has been decreasing recently never mind all those toilets, indoor plumbing, electricity, penicillin and whatever, at this rate dying young will one day be as popular as it used to be in the ancient past.
Our ancient ancestors might not have been very successful at surviving without Internet and modern medicine but we are not that good either.
The industry price increases doesn't qualify as being a "crisis".
does anyone know the tldr? i guess it's nothingburger for norm ppl not using OVH/hetzner? i am so confused on why the price hike after checking out the arm vps for hetzner and they still charge 0.50 euros for a ipv4. i don't plan on using them anytime soon
I thought 2026 was going to be the year of the cheap 5Gbps switch.
15/y is the new 7/y
It's so over
It's so $7/yrver
Hardware doesn't exist at any level. Its not even just the current apocalyptic 100% increase every other week, even as a provider if you are willing to absorb some of this without hiking pricing to the stratosphere , memory and drives aren't available in any sufficient quantity, anywhere.
Best estimates are this thing hits a new normal floor price in the next 8-9 months, vendors that had some quantity of critical components are sold to the highest bidders during this time, new fabs come online and or production increases on all memory to stabilize somewhere before 2030.
Can confirm, we are seeing this as well. Juniper line cards that were ubiquitous suddenly dried up overnight.
I remember reading a comment from OVH on here about how they buy servers barebones with no ram so it has to be supplied internally. They only have so much stock available
I dunno. I guess I'll be renewing my sub 10/y servers for now.
I have another couple of 99/y Dedis almost idle.. might even renew that as it's great value for the money.
Cheapest (almost decent hardware) these days is CC at 115/y but specs are kinda meh.
If the bubble continues till 2030, consider prices of subscriptions to rise if you have any given that they will also have to pay for infrastructure/ even software enshittening even further with higher prices.
It seems that these 4 years are gonna be the dark ages (where less productivity not more) would happen within the computer industry yet I feel like that its gonna be underrated after 4 years as more people shift to other things.
For what its worth, I am in my high school so the 4 year thing could perfectly match with my degree end and till that time most of my projects could still happen on vps servers or some free services that I know and so I don't think that I would be personally impacted very much so by the prices.
So I guess I am gonna take a 4 year break from the price based things and focus on college/ before college the exam that I have to give in to get into decent college. Wish me luck xD
So I guess I can be lucky in that sense that I can move back for 4 years and be able to focus on other things till then but for the hosting providers whose job its right now. I pray for them and for the bubble to burst fast but I am not sure if others might have such unique position/sort of privilege in some sense that I might have. Especially the people in their 20's or 30's imo.
To be quite frank, I can't think of any idea which isn't impacted by AI. Even hardware prices are rising/in long term say 4 years with WD being already out for so many years iirc till 2028 if things remain this way the chances of even backblaze or others rising prices could be a genuine possibility.
I thought netcup could survive but they literally shut down one of their deals because of what they say ramapocolypse. The network fibre thing being expensive feels the next prediction but I Don't think that we should try to get ahead of the curve as that to me feels like being the creator of inducing the shockwave in the first thing
It's all quite sad to see all of this happen in real time though. Maybe ignorance is bliss especially when its related to AI because the chances of the news being bad are quite quite more significant than being good (almost none)
Imho, the hardware is becoming way too expensive due to the LLM, but the bright side is LLM also brings more people to the hosting industry as (potential) customers. 2026 is definitely a hardship for most of us here, but everything will be just fine.
I'm good. A **90 this year will become **80 in 2 year, **70 super in 3 years, **70/60 TI in 4 years. So, no reason to purchase high-end SKU... when low-end current gen SKU have lower depreciating schedule and made me feel less bad if I had to purchase new (low-end) card.
Together with that information, I instructed LLM to pull in together information about previous, current, and next gen GPU hardware.. And made that bet.
When everything went up, will an average joe have enough money to pay AI subscription? Probably no, and this stunts AI revenue growth.
So, have you purchased DDR3 sticks before it spiked? It will be much harder looking for functioning DDR2 board and sticks 🤫
it won't. It took more than a decade before gigabit switch become cheap staple
Many people don't have enough experience dealing with b2b. You can't just go to their location/warehouse, grab what you want and pay with cash/cheque on the spot. It took back-and-forth communication and more if you need them to stockpiled it for you, let's say for 1 to 6 months (which will be reflected on the quote). And it's actually worse when they mixed their online store & offline fulfilments.
These days, it's hard to find vendor who will honor verbal/written agreement even when they had confirmed your PO and didn't say "Oops, the price has went up 20-30%, do you still want to purchase it?" the next day.
Haha, even cat 6 cabling and connectors went up. What a joke
Now that is a very wise decision,
Good Luck, not just to you, but to everyone here who’s in the same situation.