I have some unfortunate news to share with some of our valued clients. By now, if you are affected, you should have received an email from us about the shutdown of our European VPS services on May 1, 2023. Since I believe in full transparency, I wanted to go into more depth about this announcement and what lead us here. I also want to provide some reassurance for our other clients about our stability and assurance for our other hosting services.
Battling increasing costs
I will be brutally honest with you. Unlike other CEOs, I won’t lie to you and blame this on “inflation”. Instead, I’m going to put the blame right where it belongs: corporate greed. Our European service provider, OVH, has been increasing the fees on our hardware unless we renew services for ridiculously long contract terms. This is not right. Server hardware depreciates in value, it does not appreciate! Additionally, the costs of legacy IP addresses (IPv4) is being passed down to us as IPv4 space is becoming such a commodity with high demand, IPv4 address costs are skyrocketing. Normally, we build these costs into the service but for our European services, they are on legacy prices from the time when OVH charged a one-time fee for IPv4. We’ve tried numerous methods to try to combat this. First, we borrowed a page out of the playbook from one of our European competitors by reducing the costs of the VPS but adding on an “IPv4 surcharge” and making IPv6 the default. It turns out, we grossly underestimated the deployment of IPv6 networks, especially in Europe. This lead to frustrated clients, frustrated techs, and the perception was not good. So soon after, we changed the model: include IPv4 in the price, but provide a discount for anyone willing to go IPv6-only. This worked great, but then it created service fragmentation. Our European VPS services were higher-cost than our United States VPS services. Needless to say, it was a lose-lose situation. I was not happy, I still am not happy. Our bills literally doubled in cost and what money we were making was immediately lost. I tried to float the cost by expanding NodeSpace into other services, but the revenue gained was promptly lost by, you guessed it, more cost increases.
I absolutely have lost sleep over this decision to shut down this service line because I’ve worked with many of the clients who use this service. They are good people running incredible businesses and projects. In 12 years of business, I have never had to shut down a service in this manner before. It hurts me personally. But the reality of it is, this one service line was starting to drag down the rest of the company. We had to place expansion projects for profitable services on the back burner so we could try to save our European VPS services. You don’t need an MBA to realize that this is absolutely a stupid move.
Where we go from here
I want to reiterate that this is was strictly a business decision. I know that not everyone is going to be happy about this, but this service line had costs increasing so rapidly, it was beginning to affect our profitable services. It just did not make any sense to keep the service going. It’s not a good feeling to receive the dreaded email that your service is being discontinued, but that’s why we wanted to at least provide as much notice as possible. We do not have a large enough presence in Europe to be a good fit and grow that side of the business. Instead, we are going to be focusing on our dedicated servers, Proxmox hosting, and revamping our VPS servers in our US data centers.
European VPS shutdown plan
I also want to outline our plan again and put it out in the public. Here’s what is going to happen:
- April 1: Shutdown announcement. Clients will have 30 days to find a new VPS provider.
- We will assist with any migrations and offloading of data to another provider.
- Billing will be shut off after April invoices are paid.
- April 30: Last day to download & save data.
- May 1: ALL VPS servers will be shut down and data will be permanently destroyed.
- May 1 – May 14: We will be refunding customers who paid annually, semi-annually, or quarterly for any unused time. Refunds will be made to the payment method we have on file. If you do not have a stored payment method, contact billing for a refund.
Once again, I apologize and I’m sorry about any inconvenience caused.