combatcal

Hi there, I am one of the managing directors from a new Lincolnshire based IT company. We will be starting operations in August 2009. Currently we have two Dell servers (both tower form) and require many hosting products. First off we will be selling domains and webhosting (with FTP access) to our customers. Secondly we will be selling game servers from many different games. We also hope to sell on dedicated servers in the future. I have been drwing up some solutions to these problems and so far have come up with:

Lincolnshire based ADSL hosting (this sucks)
Lincolnshire based SDSL hosting (this is very expensive)
Renting dedicated machines in London/Manchester and virtualising sections for customers.
Taking out a fasthosts reseller plan (but this only inc webhosting and domains not games)
Co-location in London or somewhere with fast internet link which isn't extremely expensive. - Probably one server to start - Dell poweredge sc440 with one hdd and 2gb ram. Low bandwith - 10GB/Month.

Can anyone offer me any advice or products - if my idea totally sucks and I am going to loose money just say!

Thanks

Callum Hives

AdamC

Sadly, you're idea does suck and you probably will loose money. Come up with something original, we don't need any more web hosting or game server companies. The industry is already massively over saturated.

I certainly wouldn't start with one server for both gaming & web hosting. Unless you have the money to this properly, it's just not worth it for you or your customers.

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freethought

were based in Lincolnshire and we host all of our servers at Node4's state of the art DC-2 facility in Derby. This has the beneift of a high speed fibre to both London and Manchester for redundant Internet access. You also get N+1 air conditioning, UPS and generators not to mention fire supression.
If you want to do this at home/in the office then you are so vulnerble to loss of power or connectivity

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burble

Without knowing your business plan we can't say for sure, but unless you have a very clever idea that will allow you to build a significant customer base who are happy to pay significantly more than they would with a value host such as fasthosts, you're probably going to lose money. There are already a million and one people doing what you're talking about, on insanely tight margins, so you need to be very very good - not only from the business side, but from the technical too. And to be honest, the fact that you've suggested running your services from your home/office over an ADSL/SDSL line suggests that is not the case.

I'm guessing you're saying August 2009 because that's when you finish school/college/university; as someone who did exactly that, if that is your plan, I'd strongly suggest getting a job in hosting for a year or so, or at least some work experience for a few months - get some experience working with people who know what they're doing, see some of the problems you'll run into and how to solve them, and pick up some real-world skills that will help you run your business. And that way, if your business does fail, at least your CV will show that you've got experience working with people, which will help you find a job afterwards.

If you really want to get into this now, I'd start off with a few reseller plans from reputable organisations; I'd probably go with one who specialises in web+ftp, and a separate one who specialise in gaming. Then you can try to build your customer base without significant up-front investment, and if you outgrow your provider, that's when you can look at managing your own servers.

othellotech

You need to get those sold on ebay as quickly as possible, before they depreciate completely ...

There are many, many reasons why hosting-at-home is a bad idea ...

Possibly, but why introcude virtualisation into the equation ?

As a starting/short-term plan this might work. There are much better providers of reseller plans than 1und1/FH/SLine/etc, dont fall for the marketing-lies of "unlimited" ...

Yes, you're going to lose money, like the 871,219 other people doing exactly the same thing.

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BoostDrinker

If you're going to start with a reseller account make sure its a commercial control panel like cPanel for example. It will make things alot easier in the future if/when you do upgrade to your own dedicated or colo servers.

Louise

Callum Hives

ive seen that name some where before :P

administrator

Yesh i refer people here who want dedis / colo etc from ukgame, so despite people here being worried about ukgame, it could well acctually send more potential customers

TerryFroy

I am not trying to put a dampener on your parade here but think very carefully about starting a new business during the current economic climate; the profit margins are usually very tight and you do have to invest a significant amount of money up-front to 'do this properly' - very sure that some of us here started off with networks made from bits of string.

It is not economical to co-locate non-rackmount servers - they take up far too much space in a rack and it would be cheaper to sell them at a loss, buy rackmount equivalents and pay to co-locate those.

Margins on domains can be as little as 0% - some providers sell domains at cost and make the cost back on selling webspace.

Be wary of tech-savvy customers who will register domains with you at cost but delegate them elsewhere; you won't make any profit out of them.

You need very very low latency to be able to confidently offer games servers; we don't do games servers but we do provide some rudimentary VoIP services which are just as stringent - you are not going to be offering these kinds of services on ADSL/SDSL or from a virtualized platform - depending on the virtualization technology used, a games server can also be very picky about I/O and if you stick heavy I/O bound VMs on a server along with a games server VM, you are going to have a lot of unhappy customers.

I suggest you start small and prove that you can handle and manage a small number of webservers/mailservers before doing anything else - if you try to take on some of the more established companies who have been doing this for years, you are either going to look incredibly cheap or your customers are going to pound you mercilessly when things go wrong.

No sane person would try and host from an ADSL line which makes me think that this is a company formed by two mates down the pub who thought they would try and make some money from this Internet malarkey.

This is what you pay for an near-uncontended equivalent to a leased line.

... and you have to provide value for money over and above what those companies who are renting you the servers are providing - unless the middle-man offers something a little extra that the customer cannot do without, there is no real incentive for your customers to stay with you once they figure out how to do a WHOIS and sign up with your own provider.

A reseller plan isn't a bad way to start but you do need to consider that you will then be one of many thousands of resellers who you will be competing with; again, it comes down to offering something that the other resellers cannot - such as local telephone support, face-to-face help with more complex issues, etc, etc.

Bandwidth in London isn't particularly expensive but the actual co-location will cost you a little more than other locations.

How can you expect your customers to take you seriously when you are entrusting the entirety of your hosting operation to the well-being of a single HDD ?

For heavens' sake, search Wikipedia for RAID and then consider that even with a multiple disk RAID setup, it cannot protect you against things such as a duff disk controller.

I don't think you have really thought through all the potential pitfalls you are likely to encounter with your business plan or how you are going to break even let alone make profit - esp. given that everyone is now tightening their belts and trying to save money.

I have highlighted a few of them above and I'm sure some of the more seasoned regulars here will highlight those which I may have missed.

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M8INTERNET

Very true, however if you don't take a gamble then you may not reap the rewards
Equally, would you rather have a person being self-employed or drawing state benefits

It depends on where you source your Domain Names from, and what type you want to sell
I agree margins on .uk Domain Names are low, but mine are about 20%
However, .com .net are about 50% as I am not sourcing them from the UK
Equally, some people are happy with generic Domain Names so the margin them is nearer 99%

Sounds like some "home hosting" to me
I really do wish the ISPs would react a bit faster, however the usual solution have to this is the poor upload speed
Put a few websites on a home computer and they will soon be really slow!
Thankfully Virgin Media (NTL/TeleWest) have been more proactive recently and just simply terminate service, although they still allow people to do this on the NTL Business package

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TerryFroy

Absolutely.

There is nothing wrong with running your own personal hosting from your own equipment and your own connection; I merely felt that it is wrong for someone to start a hosting business with absolutely no idea as to what is involved as that is disadvantageous to the end-users involved.

Sadly, it is far too easy to set up a Linux box running Apache/MySQL/PHP and sell webspace from it - except most of these admins don't bother to segregate their users from each other properly.

Agreed.

I don't think there is anything wrong with someone hosting servers on their own Internet connection (one of my own ADSL users does exactly that) but if you are going to sell services from those servers, that is another thing entirely.

Personally, the only thing I would host on an ADSL connection is a secondary or tertiary MX and even then I would have to be desperate.

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Spilsby Internet Solutions

PeteK

Yeah and have understanding customers if it ever gets used at the speed their mail decants. However I take your point, something is better than nothing.. Or you can just pay someone who offers Backup MX services a couple of buttons a month to provide it for you!

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burble

I'd imagine a secondary mx would merely hold until it can relay to the primary, so customers shouldn't see the delay unless the service fails - but that's not the point. As you say, if you need a secondary mx, pay someone for a decent service.

To the OP, I think the point we're all making is that there's a lot more to running a hosting company than sticking a server on the end of an ADSL line. It requires significant investment in terms of both time and money, and unless you are willing and able to commit enough of both, your service will suffer and ultimately fail.

M8INTERNET

Home hosting is fine if you only have one website and not many visitors
However, with many websites and many connections, the other people also on that BT exchange (intended for residential use) may also suffer
Add to that, in most ADSL residential contracts it clearly states that website hosting is not permitted
This is why they would rather give you at least some basic website hosting as part of the ADSL package (typically up to 50MB of webspace)

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TerryFroy

I respectfully disagree.

As we all know, ADSL is biased more towards downstream speeds rather than upstream speeds and BT connect each exchange using dedicated connectivity which is symmetrical in nature.

Therefore, there is a lot of upstream capacity which is unused and this does not affect the other users who are predominantly downloading rather than uploading.

True.

Our own AUP doesn't make such a restriction but we don't sell 'unlimited' ADSL services; therefore, whether a customer chooses to eat up their bandwidth using P2P or by hosting a website, we don't particularly care.

The aforementioned customer in my last post runs their own Windows server with IIS/.NET, etc, etc - we provide free webspace on Linux w/ suPHP but they preferred Windows.

Looking at their upstream usage, I don't think they get a lot of traffic ;-)

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