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LEB Demand In Asia & Costing
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LEB Demand In Asia & Costing

KenshinKenshin Member
edited March 2012 in General

I've been lurking in LET for a couple of months, registered in Jan 2012 but been reading in daily since Sept 2011 or so. I'm from Singapore and currently looking at offering both budget and mid-tier VPSes, but trying to investigate demand and also whether it makes any business sense at all. Ever seen I've joined, I've been looking at both success stories and deadpools to understand what's going on, to-dos, pitfalls and so on. Have to say, there's really been more downs than ups over the past 6 months I've been here.

I know I'll probably get some flak from some of the members that I'm doing market research at LET's expense, not doing my own homework, blah blah blah. However on my part, I'm looking for a feel of the global market on demand for VPS in the asian region as I believe at this point of time there are basically only ExpertVM on LEB who operates in Singapore. The public information I can rely on is pretty much hitting a wall, so I figured if I could get some feedback from the community it would help both myself, and also the community by me providing some information on costings in Asia.

Some background information on my company (w/o names at this point), we've been in business for over 10 years in Singapore's hosting industry. We run our own network setup, purchase transit from multiple providers and colocate in multiple datacentres in Singapore with inter-datacentre connectivity. There probably only 5 providers in Singapore that match my description, but basically just to show that we aren't some fly-by-night company and we know what we're doing.

Singapore probably enjoys one of the highest broadband penetration rates in the asia region, adsl/cable uses to be available to 80% of the homes, now fiber is slowly picking up to that level. Consumer broadband costs starts from 30USD for a 10mbps adsl/cable onwards, and we're generally pulling more data from outside Singapore than pushing. Problem starts here, 10mbps within Singapore. International bandwidth? We'd be lucky to see 10% of broadband speeds on good days. Our government used to try to promote local content like 10 years ago, they gave up pretty quickly and dumped the project.

On the flip side, the lowest I've seen for transit in Singapore is 60USD per mbps with at least a 100mbps commit and I'm talking about transit from Tier-1, not local-international bandwidth mix by Tier-2 providers, that can go for about 30-40USD per mbps. I've been seeing $1-3/mbps in WHT as the norm, but in our case even peering locally costs more than that. A 100mbps VPLS between 2 datacentres would cost easily 2000USD onwards. Colocation space and power wise we're paying higher prices than US, but from my understanding, ratio isn't as bad as the local loop/bandwidth costs I mentioned. 20-60x for transit costs, not to mention I'm running multi-homed for redundancy so my costs easily double. While some of you may say these prices are crazy, I've seen quotes of 1mbps of international transit in Indonesia going for 200USD and onwards.

Thus when I look at providers offering 1.5-2USD/month for VPS, I start scratching my head and pull out a calculator. Hardware costs generally recover over time and with hardware costs being at it's lowest now it isn't too difficult to recover back. Bandwidth costs in US/EU, assuming 1mbps = 300GB = $1/month of course offering 500GB bandwidth isn't a problem. With some overselling, support costs can be covered by quantity and the servers are unmanaged which reduces support a good bit. Math shows me it's possible to be in the black, but in a business sense the profit isn't really high unless you're not just reputable (volume of customers), but customers are willing to upgrade to the higher packages where the profit margin is higher. Based on what I've seen of the successful LEB providers, building the reputation over time and delivering what they promise generally gets you there. Deadpool? Too many to count. The recent thread about how one can simply start providing VPS off a cheap dedicated server with lots of IPs really shows how low the barrier of entry is. End of result is basically customers being burnt, and being in the business for over 10 years, I don't like being a dissatisfied customer, so I try my best to make sure my customers aren't either.

Based on LEB's requirements on pricing, at 7USD and trying to create a Singapore VPS product that would work isn't easy, thus I'd salute ExpertVM for that. I'm not trying to ask for some leeway from Chief here, I'm still working out the numbers on my end to see if a low cost offering is something we can do, but based on my 20-60x bandwidth costs (compared to USA), we'll be looking at similar packages to what ExpertVM offers (256MB RAM/20GB HDD/30GB BW) for 7USD/month purely to cover minimum costs (assuming no overselling and bandwidth is fully used). Would there be a market for this, I can't tell enough from the comments in ExpertVM's LEB post and I can't just walk up to ExpertVM and say "hey how many LEB did you sell". Thus I'm appealing to the LET community to share with me what they think, and if there's anything I can share with the community as well if they need information on Asian networks/etc. I know there's a demand, but what kind of demand (VZ/Xen/KVM?), for what purpose (VPN/proxy/hosting?) and is the price reasonable?

If you're wondering why I would bother researching into a budget-mid tier market when my company has been mainly concentrating on the mid tier-premium markets for so many years, the honest truth is that I've been looking at our network and we simply have great internet connectivity everywhere, be it US/EU/China/Australia, Singapore being right smack in the southeast asian region really works out for this. I was looking to expand to international markets which would be able to make the best use of our bandwidth/connectivity at timezone differences. LEB looked to me 6 months ago as a possible market, and I've been here researching ever since.

I hope I'm not breaking any rules with this thread as I'm not offering anything at this point and this is purely for discussion. I appreciate any honest feedback, from fellow providers as well. Apologies for this wall of text but I tend to write a lot when it comes to forum posting so please forgive me if this is too much to digest.

tl;dr
Is there any demand for a Singapore based VPS at 7USD/month, possibly 256MB RAM/20GB HDD/30GB BW (Similiar to ExpertVM). What kind of use would there be (VPN/proxy/hosting)? What platform would be in demand (VZ/Xen/KVM)? Any other feedback?

Thanked by 11q1

Comments

  • An advice for the future: If you make a post this long, include a tl;dr

    Thanked by 1Asim
  • @gsrdgrdghd
    Done, thanks. Been a while since I've been writing publicly.

    Thanked by 2gsrdgrdghd Taylor
  • I read it all, but here's the tl;dr snippet

    @Kenshin said: Thus I'm appealing to the LET community to share with me what they think, and if there's anything I can share with the community as well if they need information on Asian networks/etc. I know there's a demand, but what kind of demand (VZ/Xen/KVM?), for what purpose (VPN/proxy/hosting?) and is the price reasonable?

    The purpose varies between different clients, I'd personally like one for a lil' web hosting in a different location, maybe offer some shared hosting in Asia.
    That being said, I'd presume there'd be a huge amount of Chinese folk wishing to avoid the great firewall of China.

    Your best bet would to, like you said, ask other LED providers as they'd be able to give you a better idea on resource utilisation.

    @Kenshin said: we simply have great internet connectivity everywhere, be it US/EU/China/Australia

    Throw me an IP? (:

  • @Kenshin said: Done, thanks. Been a while since I've been writing publicly.

    Thanks :)

    While i personally don't need an asian VPS, people with a lot of asian customers might be interested in it. For example it would be great to create an own CDN for asian visitors

  • Update, Kenshin sent an IP:

    From my Ramhost TinyKVM in London, 9 hops, 260ms.
    Agreed, the network seems to be awesome.

  • vps6netvps6net Member
    edited March 2012

    I think you'd be very successful with a Singapore-based LEB product, though LowEndTalk may be a few steps away from the best place to gauge interest (as a forum with readership based primarily in Europe and North America).

    We receive the second most visits to vps6.net from China, with other countries in the Asia/Pacific region like Indonesia and Vietnam following closely after. There are over 500 million Internet users in China alone, which is, of course, more than the entire population of the United States. I see a huge demand for localized hosting services catering to those markets.

    As you mentioned, the cost of operating in places like Singapore or Hong Kong is significantly higher than elsewhere in the world, but I think you could be successful with a quality product, good placement, and wise investing. I don't see Xen or KVM LEBs making a profit, but OpenVZ would certainly be feasible, perhaps with Xen/KVM VPS as premium options.

    Thanked by 1Asim
  • @gsrdgrdghd said: While i personally don't need an asian VPS, people with a lot of asian customers might be interested in it. For example it would be great to create an own CDN for asian visitors

    There's a quirk with having a CDN in asia which I think most providers don't notice. Considering the amount of data asian countries pull from US/EU servers, if you put up a node in asia, you're moving possibly 20-40% of your traffic from US/EU to asia. When bandwidth costs are 20-60x in asia, it doesn't make financial sense. Peering is the solution used in US/EU, but in most asian countries, it's hard/impossible to get main ISPs to peer with you when they are the monopoly. You're forced to buy transit and there's no peering tricks that can be used since there are only a few ISPs around. Not to mention if the main ISP owns the monopoly for local loop as well. ouch

    Most asian ISPs pay to connect to US/EU via submarine lines, so the costs is borne by the asian cable operators/ISPs. For hosting purposes it'll be cheaper to let the receiving asia ISP bear the costs of downloading, than for the hosting provider to bear the transit costs within asia.

    @ElliotJ said: Agreed, the network seems to be awesome.

    Thanks. :)

  • KenshinKenshin Member
    edited March 2012

    @vps6net said: I think you'd be very successful with a Singapore-based LEB product, though LowEndTalk may be a few steps away from the best place to gauge interest (as a forum with readership based primarily in Europe and North America).

    10+ years in the market tells me, Singapore isn't ready for unmanaged services, probably is never going to be. Everyone else who is capable of managing servers, is probably already runs their own hosting company or employed in some large company and well paid. There just isn't enough Linux exposure to create market demand for unmanaged linux VPS, no cpanel no go. Even for Windows servers, I've seen so many customers who have supposely MS trained engineers, but when their unmanaged server fails due to exploit/hack/software crash, 90% of the time the fault is shot back to the hosting provider for not doing enough.

    Collecting payment from China customers is a problem generally, but I'm looking at solutions at this point of time. Noted on the OpenVZ part, appreciated.

  • @Kenshin Please consider customer from Indonesia. Having BUDGET VPS in Singapore would be great, since the connectivity to Indonesia, SEA, and Europe must be good.
    I don't mind to switch from my BVM to Singapore based VPS, IF the price is good, say US$20-30 yearly :P

    Thanked by 1Andri
  • The demand might be there, due to there being SEA users(myself included), and quite a large portion of the LEB users originate from China as well. I've been trying to get my LEB Service in Singapore up, but IP Cost is definitely a huge issue here. Equinix and Ascenix would not easily give up an IP space of, say, /25 or /26.

  • fanfan Veteran

    Actually I have no problem to get a pretty good VPS (256mb ram, 3mbps unmetered) for about 10 USD/month, in China mainland, but the only thing that stops me from doing that is the annoying license procedures, which is mainly for censorship.

    Singapore may be great for SEA users but per my experience, that's not for people in Northeast Asia, though a few routes to Singapore from my location are good. Japan should be my choice for a NEA location since the international connectivity of China (including Hong Kong) and South Korea is quite crowded/limited/expensive.

    @Kenshin said: Collecting payment from China customers is a problem generally,

    Paypal should be enough, or you can try out Alipay.

  • @Kenshin said: Collecting payment from China customers is a problem generally

    As @fan said, Alipay is an option, and PayDollar (paydollar.com.sg) is one of the official partners I think.

    In regards to LEB in Singapore, I guess the demand is there but volume wise it might not be that great. As far as I know bandwidth cost is always a problem, and this "problem" itself creates many related problems.

    My 2 cents.

  • @NanoG6 said: I don't mind to switch from my BVM to Singapore based VPS, IF the price is good, say US$20-30 yearly :P

    LoL, I think this is hardly possible in Asia..

  • Maybe if they'd stop wasting their bandwidth attempting to break into our WHM installation...

  • rm_rm_ IPv6 Advocate, Veteran

    @Kenshin
    did you try contacting he.net for an IP Transit quote? They advertise $1/Mbps on the front page. While that's probably only in somewhere like Fremont and the price will be higher in Singapore, it might still be lower than what you can get from other providers.

  • It'd be interesting to see what HE says... I know that the $1/mbps offer is for bandwidth in HE-connected buildings in America at least. I wonder if that applies to the Asia end...

  • gianggiang Veteran

    VPSNINE just added Singapore VPS for $10/month (but you could find a coupon for $2 or $3 off lifetime) with 256MB (384MB Burstable) RAM, 10GB HDD, 300GB BW on 10Mpbs port :D

  • http://techievps.com/ has OpenVZ VPSs in Japan for $5.95/month

    Thanked by 1rm_
  • AsimAsim Member

    @gsrdgrdghd said: An advice for the future: If you make a post this long, include a tl;dr

    +1

  • rm_rm_ IPv6 Advocate, Veteran

    @dmmcintyre3 this is extremely interesting
    $5.95 for 600MB/1200MB, 1TB transfer, and in Japan.
    Only I can't help but suspect this might be not sustainable, especially the transfer thing.
    Is this a very new company, how did you find them? Any reviews? Why are they not yet on LEB? :)

  • @Damian said: Maybe if they'd stop wasting their bandwidth attempting to break into our WHM installation...

    And trying to sell me viagra.

  • fanfan Veteran

    Is this a very new company, how did you find them? Any reviews? Why are they not yet on LEB? :)

    Used their Xen HVM service which was something you won't renew or even want to get refund if possible.

    The performance was sometimes okay, but mostly laggy. Support response time was pretty quick but helpless, complained about poor performance many times and they (or just Rus) will reply checking or problem fixed, but I saw either no improvement or a improvement just for a short period.

    For their OpenVZ, I was told they do OpenVZ on Xen from VPS.net, and the performance was very limited, anyway I don't think it's wise for me to spend anything on that company anymore.

  • @rm_

    techievps = vps.net (http://www.lowendtalk.com/discussion/comment/25299). And I think they build OpenVZ VPS on the vps.net cloud.

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