Rather than cut prices (I think $5 is low enough), I would prefer if they would beef up their specs. For $5, DO gives you only 512MB vs 1GB from Linode.
I would, however, love that price point. It would be nice if I could run a few light-weight services on a VPS for $2.50 a month and then put my websites and other projects on a beefier VM.
I currently use Linode, but if DigitalOcean offered something at that pricepoint they would be getting $2.50 more from me a month than they currently do.
It's more about support costs if I were to guess. How many support tickets does it take for their profit on $25 a year to disappear? (if $2.50 a month is discounted to $25 a year).
ARIN charges for IPv4 address allocation (https://www.arin.net/fees/fee_schedule.html) and I read that below $5 a month it becomes unprofitable for hosting companies just because of the cost of leasing IP addresses. If your services can run on shared hosting there are a bunch of hosts for less than $1 a month around.
I use one of my DO instances as staging for file transfers. 2 days a month, I can barely get more than 30K/s from their sf data center to comcast. Other days, I get 5M/s. Their network is shitty.
And I don't think I'm being rate-limited; it's 1-2G transfer per day.
Keep in mind that bandwidth bottlenecks can happen on both sides - depending on the peering that is chosen between Comcast and DigitalOcean, there might be a significant oversubscription between two peering providers that's causing this.
DigitalOcean might happily be able to push 10g to their next hop, but beyond that things are significantly more outside of their control. This is mistaken as 'throttling' a lot, but is actually just ISPs not investing in peering to handle their peak demand. Similar to the Netflix and Cogent issue that happened a couple of years back.
At times, I can get better speeds by tunneling or proxying using a DigitalOcean Droplet and downloading something from overseas than I can doing it directly. The path taken from my home internet to the DO Droplet uses different peering than my path to Europe, and the speeds are faster overall even though it creates more hops.
I don't get the whole VPS thing anyway. 5$ for playing around is great but anything that costs more is just not worth it.
60$/month for 16GB, 1CPU, 20GB disk for VPS... in comparison a root server with real remote console access, 16GB, 4 core AMD, 4TB disks, unlimited traffic costs me 30EUR/month (30$/month).
Or for 60EUR/month (60$) I could get a root server with 64GB Ram, 2x500GB SSD, i7-6700, 30TB traffic.
I've pointed this out to people on numerous occasions, and the push-back I always get is concerns about timely provisioning if they ever need more capacity and/or new servers in case of catastrophe.
OVH et al can get you servers quickly if they have them "in stock", but supply fluctuates wildly, especially on the cheaper end.
Just being able to programmatically provision a server at a moment's notice—even in normal day-to-day (i.e. non-catastrophic) situations—is a critical tool in my toolbelt.
You can take a snapshot of a VM, you can move it to a different host, you can spin up a new instance to test a major upgrade, you can clone a cluster for a few hours of testing, you can scale up and down...
Depending on how the host configures things, VMs can be much more reliable. If I know my data is striped onto a 16-disc array, and can be live-migrated onto a different storage box in case the RAID controller goes funny without me having to care or even notice, that's more than I can reasonably set up with a $60/month server. Couple that to live migration of the VM process itself if the hardware it's running on goes wonky, and you've got a recipe for as much uptime as you want.
All this does depend on the VM host actually implementing these things properly, but they are out there.
What is your definition of a "root server" and where do you rent them? Do you mean a dedicated server? I've checked a few providers and none of them come close the costs/benefits you're listing. OVH's EG-16 (4c/8t, 16G, 2x4T) is $79/mo. 1-and-1's L4i (4c/4t, 12G, 2x1T) is $80/mo.
I realize that I am doing that thing where you try to rationalize your preconceived notions, but here are some high-level observations:
* Looks like there are normally setup fees associated with provisioning new servers, although they are suspended at the moment.
* Support seems next to non-existant, which I suppose is not surprising considering they're a low-cost provider.
* SSD-based servers appear to be frequently out-of-stock.
* If you need a KVM attached to your server, it is $30 for 24 hours or $200+ for a week.
* 250Mbps bandwidth (presumably in and out) cf. Linode which is 40G in and 1-10G out.
All that being said, my interest is piqued. I could see this being a good fit if 1. you have a more-or-less dedicated sysadmin, 2. need a lot of storage and/or memory and have solid sizing requirements ahead of time, and 3. cloud (VPS or otherwise) isn't an option due to cost or other facts. It could be great for running your own VM or container cluster. Thanks again for sharing!
You pay for the scalability. Your 4 core AMD is always a 4 core AMD unless you migrate to a new server. Your 1 core Linode can become a 20 core Linode in a few minutes, for just a few hours while you need the capacity, and then go back to being a cheap 1 core Linode.
And one server will only ever be one server. For many deployments it makes more sense to have several smaller nodes distributed between different geographical areas than one big node in one datacenter. And/or multiple nodes in a a single datacenter so you can perform rolling upgrades.
I don't have the real numbers in front of me, but some back-of-the-phone math says we'd save something like $640 a month for equivalent RAM, which is our big limiter.
DO is slicker, but it's not 8k/year slicker. I can do better things with that money.