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Ask HN: Why is European/German Dedicated Hosting So Much Cheaper Than US?

23 points by tworats ↗ HN
From another Ask HN thread about where people were hosting their sites I found the Hetzner Root Hosting packages:

http://www.hetzner.de/en/hosting/produktmatrix/rootserver-produktmatrix-eq/

You can get a quad core i7-920 with 8G ram and dual 750GB disks for 49EUR per month, which works out to about $65/month.

By comparison, RackSpace's "Basic Series" dedicated server solution with a dual core Opteron, 3.G ram and 2x250GB disks goes for $419/month.

http://www.rackspace.com/managed_hosting/configurations.php

Am I comparing apples to oranges or is there really that much of a price difference between dedicated hosting in Germany and the US? What's the story?

15 comments

[ 5.9 ms ] story [ 38.5 ms ] thread
noonespecial
Rackspace is kind of pricey in general. Look over at http://interserver.net/ for some more reasonable US rates on a decent backbone.
tworats
That looks better, but it's still $150/month for a quad core with only 1GB of memory. In fact even their $270/month offering only has 1GB of ram. The specs vs. price is not close between the German and US offering.
sandGorgon
That's because the hetzner systems are built using desktop components, not server

Opterons, Xeons, etc. are server class components, which need more expensive motherboards (typically those that can accomodate upto 64-GB RAM, 5X HDD, hardware RAID, iSCSI cards, etc.)

Secondly, it's the routers/network equipment that they use - they are much more prone to downtime.

webhostingtalk has a couple of interesting discussions about this.

What I suggest is you take a look at the deals/offers sections of such websites and figure it out. I currently have a 2 X quad-core Nehalem with 12GB RAM, 5TB B/W and 4X500GB HDD in Raid 1+0 for $399

lsc
the price differential between server and desktop systems isn't that great, especially if you use AMD systems. were I to go head to head with hetzner, I'd be getting killed on power costs. Does Germany have cheaper power than I have? (and is that right? 8GiB ram with mirrored disk for $65/month? because that is /really cheap/ - even with free power they have less margin than I do) Hm. It's possible that the core i7 stuff is way cheaper than I thought it was... but last time I looked, the core i7 stuff burnt a lot of power. Yup, the i7-920 is approx $230, and has a 130w tdp. Yeah. just the power for that goddamn thing would eat something like thirty bucks a month if it were in my co-lo. Unless I am badly misunderstanding something, they are paying vastly less for power than I am.

so if the cpu is $230, and say $200 for the ram, and, say, $300 for the chassis/motherboard, and say $100 for the two drives... $830 capital expense for the server... uh, they charge you around a $200 setup fee. so uh, at $65/month, if power is free, it'd take them more than nine and a half months to pay off their server... this on a server that only lasts three years. And power isn't free, so yeah, damn, those are some small margins.

Also, network equipment is a pretty tiny portion of your hosting costs, even if you pay for nice switches. you can get a really nice 48 port gigabit switch for two grand, and you can get something that is used but serviceable for 1/4 that. Ooh, they use 100M network, which is cheaper. even good 100M switches these days are essentially free. but even so, the switching infrastructure is not a huge portion of your costs.

Now that said, as far as I can tell, my margins are lower than most American hosting companies, and I plan to pay for my hardware in four months, which seems like silly high margins to me. It's possible that they are just willing to accept margins that are much lower.

I wonder if there is some foreign exchange weirdness making them cheaper? the euro was stronger when they bought the hardware, and now it's weaker?

also, how much bandwidth is that? I couldn't see from the website. San Jose (my location) has poor prices for power, but rather good prices for bandwidth.

trin_
>>Does Germany have cheaper power than I have?

i highly doubt that. they proud themselves that they only use power from hydro [1] .. so lets see. if i were to buy this kind of electricity for my home i would pay 0,2049 €/kwh without taxes. thats the ceiling for what they possibly pay.

[1] http://www.hetzner.de/en/hosting/unternehmen/umweltschutz/

lsc
around here, the more power you use, the more you pay per kwh, if you are a residential customer, while businesses have different rules. As far as I can tell, it's all largely disconnected from the cost of creating the power, and if you are on the lowest residential tier, it's /very/ cheap.

Anyhow, if we roughly estimate the server to use the CPU TDP of power (now, CPUs don't normally use the full TDP... that's the design maximum. Like sears horsepower, if the cpu itself hits that number, smoke is coming out of the thing. but the rest of the server uses power, too- the chipset, the ram, the network, the disk, etc... so the TDP often is fairly close to what the whole server draws.)

that puts us at 94KwH for the server. Multiply that by three to account for cooling, (in most data centers, you are looking at two watts plus in cooling for every one watt used by the servers. This depends on how efficient the data center cooling system is.) and multiply that by your power number and that'd be around 58 euros a month. 19 euros if the place used zero power for cooling (but that's just unrealistic for something you can't turn off on hot days)

I would say there is something fishy here, but I've seen hetzner talked about here for a while, and people seem satisfied... so maybe I'm just missing something?

trin_
well its what a common household would pay for that kind of electricity. i think starting from 5k kwh per year the local power company will start offering "power user" quotes (even for normal households). hetzner is one of the biggest server providers in germany so i imagine that they have huge datacenters and thus huge power consumption. its not entirely impossible that they can get below 0,1 €/kwh if they guarantee to take several 100k kwh. additionaly they can cut deals to bring the price even lower if they take the same amount around the clock (electricity is a lot cheaper at night).
tworats
thanks for the detailed response lsc, very helpful. Either there's something different about the cost structure there or the competition is forcing them into offering below cost? I don't know.

I remember a couple of years back when 1&1 offered three years free hosting, which I signed up for. I've used their service since and payed plenty for it, so maybe the 3 year horizon is fine by them...

lsc
well, considering that a server should last three to five years, /if/ power cost is low, they could still be turning a profit... it's just that even with free power, they are making less profit than I (or any other American dedicated server provider) would expect.
forkqueue
Also they're using non-ECC RAM (the processors they use don't even support ECC), which is much cheaper and also a very bad idea for anything you care about. Data corruption isn't fun, especially when it's subtle and has existed long enough for even your 90 day old backups to have it.
tworats
I wonder what the real-world failure/corruption rates are on ECC vs. non-ECC RAM. Does anyone know of any studies? I'd like to know if the differences are practical or theoretical.
lsc
you say European... are there other providers in Europe that are priced competitively with hetzner.de?
tworats
European was a generalization, maybe it's only Germany. I'm not sure.