Price Wars in Dedicated Hosting

Leading dedicated hosting providers are getting aggressive with pricing promotions, a trend with the potential to pressure industry profit margins as competition intensifies.

Rich Miller

April 7, 2009

1 Min Read
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The economic crisis has everyone watching their costs. That includes businesses shopping for hosting services, and is leading many providers to offer pricing promotions, a trend with the potential to pressure profit margins as competition intensifies.

An example: This week The Planet unveiled what it says is "the most aggressive offer in its history." That might seem like idle marketing chatter, but keep in mind that The Planet traces its lineage to EV1Servers, a pioneer in the discount dedicated hosting market that became known for disruptive pricing. The Planet said this week that it will beat the price on any competitor invoice for dedicated or fully managed hosting. The Houston-based host will throw in one month of free hosting, free migration assistance, and a free month of monitoring.

“Few companies are in a position to offer a deal of this magnitude,” said Urvish Vashi, general manager of The Planet’s Dedicated Servers line of business. “Backed by our financial stability and the broadest range of name-brand servers in the business, there’s no better value and no better path to lowering IT costs, particularly in today’s difficult economic environment.”

The dedicated hosting sector is seen as particularly vulnerable to competition from cloud computing, which allows users to only pay for the space and bandwidth they use, rather than having to provision and pay for additional "just in case" capacity for traffic spikes.  But The Planet's promotion is limited to "equivalent configurations," suggesting it is concerned about competition from other dedicated hosting providers.      

It's worth noting that Global Net Access recently expanded into the Dallas market, where The Planet operates multiple data centers. GNAX promised to focus on cost-effective dedicated hosting.

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