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Hi Marcm, I thanked the comment because I value all feedback.
Customers who have taken the time to discuss options with us realize why the price hike was last minute (our datacenter selling to Zayo 45 days before ~1/4 of our space is up for renewal, for which we had multi year renewal assurances from the original owners), thus we have to consolidate quickly. In turn we need to know right away which clients need to be migrated to our other cages, hence the immediate price increase and the offer to extend any prepaid period for free while clients move out. Naturally I wasn't going to dump blame on some external factor in our announcement. Things happen, we're making sure we can continue to provide excellent service to profitable clients. We've been in business for six years and were already in the process of a 5 year extension on our space, but our datacenter provider was dragging their feet on the renewal (we now know this was because of the acquisition).
I'm not sure why anyone thinks that someone just wanted to do a price hike with no reason, as that would be quite bizarre. Quite simply we're facing higher renewal pricing with the new datacenter owners that is not sustainable for the loss leader products, so we have to condense our footprint into the 3/4s of the space that already has a longer lease remaining on it, and with these loss leader customers gone we can be sure that we can swallow whatever price hike is coming our way for the rest of the datacenter space. In my limited experience when DCs are acquired the pricing goes up, people don't spend millions acquiring a datacenter business, and then not jack up the rates.
Again, genuinely appreciate all feedback. Above all, any customer having issues just get in touch directly, we can consolidate/upgrade machines with more power and at the same price as multiple lower space machines. Nobody is being forced to pay the renewal price, we can provide free extensions on prepaid periods to help people migrate. Ultimately we hope that the time and money invested in our infrastructure, staff, network, etc is reason enough for most people to stay.
Regards,
Gordon
http://www.webhostingtalk.com/showpost.php?p=9040589&postcount=57
Hi Iniz, lets see how that pans out over the next 12 months. I wasn't born yesterday, I've never seen a DC not increase prices after an acquisition by a corporate overlord. Zayo has, what, ~$703million in debt? Their next logical step is going public. When a company goes public their fiduciary duty is to return value to the share holders not the customers.
Believe what you like, but if you think zayo, who burns millions in cash per quarter is not going to raise prices at CoreXchange then check your kool-aid, it's tainted.
http://www.zayo.com/images/uploads/resources/Earnings_Releases/FY2014Q2/FY2014Q2_10-Q.pdf
Loss from continuing operations, for the quarter (three month period) ending dec 2013: ($36,315,000)
I don't build my business model around what VPs of Sales state on forums after they just acquired something. Of course they don't want to scare anyone off while they're getting a wrangle on things.
.02
If he wanted to raise prices on existing customers, he should have done it gradually over time and with plenty of advance notice. It's always good to give your customers time to plan and adjust for big changes like that.
Gordon is probably right, pricing will go up significantly. Look at colo4/tierpoint as an indicator.
Why? There is nobody in business that can say a right decision made today will not be reflected on by others as a bad decision tomorrow. If there is such a person I want to buy his hindsight.
When the DC is rising prices, there is not much you can do. As many people here know, Incero and Gordon are not perfect but I can't see what else could have been done.
Pricing is not that important when you offer quality, responsiveness and you can keep your word. When that doesn't happen pricing is the only thing that can differentiate you from other people which can't do the above either.
That is the sad truth
As a 3rd party who read comments on WHT and here posted by others, I have given you feedback as well. And I wasn't trying to be hostile by any means. Also, as a 3rd party observer I have no problem with the price increase. My only point was that maybe announcing this would have been better for some customers, you have also done everything you could to assist those customers that needed help. In conclusion I got nothing else to add.
I think that 2014 will be a year in which interesting things will happen in the hosting business. Starting over a year ago I kept saying that prices need to go up in order for the quality of services to improve, and of course I had allot of arguments with people over this. Customers want always the cheapest prices and best quality, however as you well know these two things kind of go against each other. In reality you have to maintain a happy balance between the two.
At the end of the day it's a business, not a hobby, so unless it's profitable, it's not worth doing. In my experience customers, if they can afford it (have the money available) will pay more for better quality products / services. Simple example from the car business: Hyundai is raising prices every hear, however the quality of their vehicles also increases every year, and this year they will be one of the very few auto makers who ship a four door sedan with a 200+ HP turbo charged engine on the base model Sonata. And it will cost more, and yes, it will sell.
Best of luck, and my apologies if any of my comments upset you Gordon.
I have been saying that also for some time (minus the fact that low price=bad service), but the price increase will not be an easy road and some hosts which only expanded based on low pricing will have a very hard year. This year, also ARIN will get to the last /8 and all these crazy deals to expand IP usage will vanish over night. In short, who makes a profitable 2014 is a great host, who makes it by is a viable host and who doesnt make it was in the wrong business anyway, there will be no loss to the serious customer in the end.
These are wise words. We in the APNIC area have been struggling with much more expensive IP addresses for some time now. I know that personally in my line of work we have been buying from our upstream provider and can get another /24 only from them. After that, we are stuck.
While we have a few plans like moving all hosted Remote Desktop machines to go behind a gateway, the only real solution is to start forcing people onto IPv6. Unfortunately the rollout of IPv6 from ISPs is very limited here in Australia. It will get better once Telstra rolls out IPv6 for their residential customers.
I see 2014 as getting IPv6 in place and solidly working across ALL your services, not just new ones like some providers here are doing (GVH I am looking at you). There will also be a crunch as certain datacentre providers who seem unwilling to move to IPv6 - CC is a prime example.
Those providers who can conserve their IPv4 resources while offering decent IPv6 addressing will be the best placed in 2015 to grow their businesses again.
There is a difference between places.
See, APNIC will need much more IPv4 in a few years than does US and even EU. The growth of internet there is big while EU and especially US are mature markets.
In EU there is a lot of IP trading right now in anticipation of shortage, but I think there is enough to last till IPv6 takes hold (with some increased prices, of course, but nowhere to what people expect while US (ARIN) zone is having a lot of unused capacity much of the current allocation is bogus, providers hoarding them in anticipation of similar events as in APNIC and even RIPE zones.
Read my lips, people in ARIN hoarding IPs, IT AIN'T GONNA HAPPEN!
US is far from an attractive place for world hosting now (at least compared with how it used to be), infrastructure problems that make providers in same area to have higher ping between them than across the continent in Europe, surveillance laws and soon servers seizing and DCs closures, as well as the general stagnation of the market will mean that people will look elsewhere and, while probably not losing overall the current demand, it will certainly not increase much in the future, at least not enough so the current drive towards implementing IPv6 not to catch with it. Add to this that probably half of the last year's allocations are bogus, not really needed, you will see that there is still a sizeable pool of available IPs out there, even is no longer in ARIN's hands. So, IF (note the emphasize) ARIN will not lift a finger to look into the rampant abuse of last year's allocations and recall 1/3-1/4 bogus ones, there is still a serious pool of offer out there and the demand will not be as high as the hoarders hope for now;
EU is still expanding as internet usage and will probably continue to do so at a pace bigger than US and most international customers will seek EU first and US later due to better infrastructure, lower censorship and surveillance, cheaper and faster connections for everyone. THis will mean that RIPE area will need more IPs than ARIN area and prices will always be lower in ARIN than in EU, of course, even if we ignore the fact RIPE run out much earlier than ARIN.
IF the prices will go too high (highly unlikely even in APNIC area), re-allocations and some organizations giving up their /8s or selling them will make the pressure ease. Also, as the prices will go up, the drive to implement IPv6 will increase too.
That, coupled with many other reasons, will mean that:
@Monsta_AU
We're moving our CC Dallas and CC LA locations to QuadraNet soon and IPv6 will be available to all Dallas, LA, and Chicago clients afterwards. Buffalo will remain v4 only as ColoCrossing's network does not support v6.
The faster that happens, the better!
I mentioned GVH as I am a customer, and I am having issues with the fact that IPv6 in certain locations is unavailable or sold out. Agreed that sometimes it is controlled by the upstream provider, yet you are taking steps on that front.
It's quite OT though - just that I see that providers will need to make changes to their businesses to get though the next 12-24 months. Same goes for upstream providers like CC who seem to have their heads stuck in the sand regarding IPv6.
Obviously it will be a massive cost to some DC providers who will need to invest in not only IP's and the hardware to run them, but the costs involved in setting up their systems for the changes too. Websites, accounting, there's plenty of cost in making these changes. I can see that some of the DC providers will need to increase prices in order to cover these costs to their business.
@Monsta_AU at the end of the day it really doesn't matter, because wobbling prices can hurt a provider's reputation. Better set them higher to begin with and lower them later if you have to than the other way around. This is a saturated market.