Comment by lsc | Hacker News Reader

Comment by lsc | Hacker News Reader

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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.

>>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/

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?

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).

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...

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.

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