Non-competitive local web hosting services

This is probably a once-off comment and i will not track the response unless i’m somehow notified via email about it. I saw this page while Googling something about routers and somehow i got here.

I’d just like to express some views on the topic about Singapore Hosting Providers. If the defamation law is skewed slightly away from how it is being defined now, then i believe many hosting companies will start to chase after you for lowering the reputation of local hosting providers. But that’s besides the point.

I own a IT solutions company in Singapore, and web hosting business is part of our service scope as well. Since i’m not here for any advertising, i shall not be disclosing the name here. I have been in the industry for the 7th year now, and been having a close watch on it even before the dot.com bubble.

My point is that, if your ultimate conclusion ends here that Singapore hosting is simply not the way to go, then i’d like to comment that this is all too shallow and you simply do not understand the industry enough to make such a comment. This is highly unjustified, skewed and without merit. Somehow, i thought that while freedom of speech is a right of everyone, there is also an obligation of responsibility over the speech that you have made, especially so in the virtual world when information dissemination is fast, long-lived and often cause unaware users to start believing in it. In this particular post of yours, i reckon that this is being irresponsible for you to cast an absolute statement, irregardless whether you are making them in your personal capacity or making them with shadows of your background as masters student, teaching assistant, and many other of your glamourous accolades.

The hosting industry itself is competitive, sometimes more competitive than the US depending on what denominators you are basing your comparison with. I refer to your comment that your new US hosting provider’s pricing is ridiculously cheap. For the same reason, i believe you have understood on the fact that the pricing itself is unbelievable and never to be thought as possible.

I’d just like to share some comparisons. International bandwidth at wholesale rate is at approximately S$250.00/month per Mbps, which equates to around 300GB of data transfer every month. To provide you with 3000GB of data transfer every month to you, the provider has to potentially spend S$2500.00/mo on bandwidth, assuming the fact that you spend them all on international transit. Local bandwidth (Singapore) is at approximately half the price, so if we work on a 50-50 mix of usage, we are still talking about more than S$1800.00/mo of real dollars if you were to finish everything.

Storage is pretty cheap now, but it wasn’t so a year ago. Since i’m making this entry, i’ll take the typical price as per last year. For the largest storage capacity of 1TB (1000GB), it costs approximately S$600.00. In order to provide you with 3000GB of storage space, the provider has to spend an approximate costs of S$1800.00. And this amount of storage is probably almost the maximum that the technology of a delivery server can hold. As such, in order to fully serve an account like yours, the provider has to dedicate an entire server to you which can cost up to S$3000.00, inclusive of other hardware equipments. In our industry, we normally depreciate equipments on a 12-month basis, therefore we are expecting around S$250.00 per month depreciation rate.

Putting everything together, in order to fully serve an account like yours, the provider has to standby S$2050.00/mo worth of solutions. All these at US$5.95, or less than S$10.00? Now you’re a Masters student, i’m sure your math don’t fail below mine. How will this meet your bottomline?

Let me use another example. You’ve said that the US host can host up to 100,000 domain names on your account. This is no different from unlimited, but is this technically possible? I’d like to place a veto on this that it is a very shallow view if you think that all this is just too good. You must not have known the technical side of industry, let me elaborate a little. Even though a hard disk may have a capacity of certain GB, perhaps 100GB. Under an operating system environment, it may not be able to hold the entire 100GB, if there are too many files. Perhaps when you are free one of these days, try transferring 1 x 100GB file and 100,000,000 x 1KB files between 2 different hard disks, and see for yourself which is faster. Firstly, the more number of files (not just the file size) there are, the higher system resources is required to process them. Secondly, the more number of files there are, and if they are at such a high volume, your hard disk may not be able to hold them all in the first place. Therefore, i’d like to submit that the 100,000 domain names is simply a gimmick and may not be hold water until it is all so tested. There is no problem about hosting 100,000 domains on an account, but if all these 100,000 are hosting websites, you will face data loss in no time. Believe me, because i start to face problems the moment i load my server with more than 1,000 domains. As such, we work with multiple servers and do a close-out for each server when we have more than 500 accounts on it, or when the system starts to face resources management problem.

The gist of the above is that, all these competition vs. uncompetitiveness that you are seeing, is nothing but just marketing gimmick. I have showed you that it is technically impossible to provide so much of resources at such a low price. The logic behind the success of such business model is based on an overselling strategy. This means that the company actually expects every/most of the customers to not completely use up all the allocated resources. Assuming there’s 1TB of storage on a server, it is safe to estimate that perhaps each customer uses a maximum of 5GB of data storage, then they will be capable of selling up to 200 accounts. With that, 200 x S$10.00, and they are getting a decent amount of S$2000.00 income per month. Imagine that they oversell this capacity by more times, with more storage capacity on the server, and start more servers to do these, they can easily turn out to be one of the bigger hosting companies around.

In Singapore, we have a fairly small community to make this sustainable. If you have been watching this small little industry close enough, you would have realized that several similar business models have failed because they are unable to get enough customers to break-even, or to make it worthwhile for them to manage the problems which is a by-product of the overselling technology (i.e. overloaded servers, therefore the need to constantly move accounts around several servers to ensure continuous availability). The market here is simply too small, and the talks has always been about the US. Almost every global citizen knows about US, but how many knows about Singapore? I just have another Poland customer asking me if Singapore is an island of Philipines, another Nigeria customer saying that Singapore is part of Malaysia, another Czech customer thought that Singapore is within China, and some US customers who simply don’t know where Singapore is from the map – maybe in some other planets.

As a Singaporean, you must have heard about the street phrase that Singaporeans are generally “kiasu, kiasi, kiabor”. I believe i don’t have to translate these for a Masters student. If there must be a justification for all these, i’d put it these way. Singapore hosting providers are keen to try to oversell in order to improve their business revenue, but they are only willing to bear a risk by a small margin, unlike many of the US hosting providers. Perhaps this is due to the typical mindset of Singaporeans, generally low-risk takers and they believe that in this place, the moment you fall, it is very difficult to get up again. Between being a disciplined attitude and ambitious attitude, Singapore hosting providers have chosen the former as it appeared safer.

I do not want to stereotype your accolades, as i believe you must have spent a lot of effort into achieving them. But try asking some of your younger mates, ask them why they are going to JC instead of Polytechnic after ‘O’ levels enough though there has been enough grapevine feedbacks that Poly-Uni route is appearing to be more attractive to prospective employers than the traditional JC-Uni route (this applies to many many employers), a fact supported by people from many walks of life. My quick guess that one of the most common answer you’ll get is, “well, this is the tried and tested route”. Now, this conservative and low risk-taking mindset is everywhere in the society, how is it not going to be applicable in the hosting industry?

Coming back to the topic here. What had Singapore based web hosting providers done wrong to deserve your condemnation? Just because someone else can offer you better deals, so you’ll put down the worse off offerors? I think it is too shallow again. I must say, not that we are not good, it’s just that someone else is better – in doing something that is high-risk, and somewhat regarded as unethical when it’s discovered by some groups of customers that they may not be getting the real value.

To the contrary, the fact that many local hosting providers are still surviving the competition albeit the high intensity within the industry is not because our customers are not well informed enough about the cheap deals across the oceans. These days, there’s no such thing as sole domination on information or knowledge, because information is everywhere. For my company in example, customers sought our services despite knowing the fact that we are though not the cheapest, neither the most expensive. The main attraction to our services is a local contact person, recognition (business registration/company incorporation) from local government, better and dedicated service, one-stop solutions provision, ease of local payment, ease of local timezone for communication, reliability and proven track records, and many other plus points which makes me so very not humble if i list them all down. These are not fictitious, they can be found in the testimonials and appraisals that we receive.

These comment may be long, but they do not cover the entire in-depth view of the industry and topic as a whole. I shall not go on future, but i hope that my little effort here counts towards shaping your trace of thoughts to become a better critical thinker, fairer and more responsible. Hope that you’ll be able to accept my comments. Thanks for reading.