A new Web Hosting Business Model – Part I
So many companies have already promoted "The Future of Web Hosting". Searching for the future of web hosting on Google returns only 109,000,000 results. That is a pretty large result for the future. Well, here is a future for web hosting that will eventually open opportunity for new web hosting businesses to find an extremely profitable niche market.
Currently VPS (Virtual Private Servers) are a hot commodity, but I think they will become obsolete soon. Why settle for a part of a server in a software capsule if you can get a full dedicated server for pocket money? How does this work? What is the trend that not many web hosts have picked up yet?
Keyword "Virtualization". This summer VMware released the next version of their ESX server product – called VMware Infrastructure (or version 3.0 of ESX if you want to call it that way). The product runs as a very small Linux server OS and allows to provide virtual machines of all different kind of operating systems. The beauty of this product are the ease of administration, high availability, dedicated resources for each client, automation, and quite a few things more.
But why is VMware a great option for web hosting?
The beauty of using VMware for web hosting is the same as in overselling shared web hosting. 90% of the time servers will not use all the resources they have been assigned. Virtual Servers share the host hardware in regards to memory, CPU, and network. They get – however – dedicated disk space assigned. In a production environment it looks like that under normal circumstances a moderately powered server can be a host server for 10-20 virtual machines. For a web host who has to pay for power, hardware, cooling, and for rack space that can mean significant savings. Imagine that 2U physical server holding 10 virtual servers for customers. Even if you use only 1U per server you would have to use 10U of rack space to get those 10 servers online. A new 2U server from Dell or HP can provide enough memory, CPU, and disk space to provide resources for 10 dedicated virtual servers.
Calculation (high level):
Physical Server cost: $12,000.00
Cost per month (36 months): $333.33
2U Rack space w. Bandwidth/Power per month: $700.00
Total Cost: $1,033.33 per month
Sales Price Virtual Server (moderately equipped):
$200.00 per month x 10 VMs = $2,000.00 / month
That makes for a very nice margin that leaves room for some extra expenses, system administration, etc.! Considering that you do not have to worry about 10 physical servers to experience hardware problems, you would only have to worry about 1 (one) server. For clients leasing a server the difference between leasing physical dedicated server or a virtual dedicated server is pretty much invisible. They get the same resources and the same environment.
Of course this calculation leaves out quite a few things, but it is only very high level to give you an idea of how web hosting can look like using VMware ESX server / VMware infrastructure as your server platform. Using VMware for web hosting on a single server is very shortsighted and expensive as the benefits really start kicking in when used in a (small) farm setup with several physical hosts and NAS or SAN storage.
Continue reading here.