When it comes to cloud computing, most people think about hosted applications running somewhere in a big data center. Only time can tell if this kind of cloud computing will gain acceptance. It seems to me that things develop very slowly here. But what about renting a complete server in the cloud? Meanwhile, most big web hosts also offer dedicated servers. Prices go down almost every month, and the servers they have are becoming more powerful. Since we are about to buy a few new servers, I compared the prices and considered the consequence of moving some of our servers to a third-party data center.

My experiences

I have been working with rented dedicated and virtual servers on my private projects for a couple of years. My overall experience is quite positive. Administering a server in the cloud is not much different from managing a server in our server room. For most tasks, it doesn’t really matter where the server is located. It could be in the room next door or on the other side of the planet.

In fact, some things are even easier with rented servers. The whole process of buying a new server, unpacking it, installing it in the rack, and installing the operating system is relatively time consuming compared to renting a server. Usually, it only takes a few minutes to rent a new server. After you give them your credit card details, you get an email with the IP address, and the administrator account.

Most server hosts allow you to choose the operating system using a web interface. Just in case you messed up your server, you can reinstall the OS image within a couple of minutes. And if your server hangs, you can use the web interface to perform hard reset. Many providers offer a remote console which enables you to access the server before the operating system has started. This way you can monitor the boot process. It is also possible to access the disks contents of the server while it is offline. And if there is a hardware defect, you just have to inform the provider and they will take care of it.

Cost comparison

It might appear likely that all this extra service would make such offers expensive. This was true in the past. But since there is more competition now and providers have also optimized their infrastructure, prices for rented servers dropped significantly in the last two years.

I just compared the prices of renting a server at 1and1 and buying a server at Dell and came to the conclusion that the costs are more or less the same. For example, a server with two 2.6 Ghz CPUs, 2GB RAM and 2×250 GB hard disks costs $219 per month. You can lease a similar server for about $80 at Dell. However, you will have the pay the lease for four years. Of course, server prices will drop in time. Next year, it will be possible to get a server twice as powerful for the same money. The minimum contract term at 1and1 is two years, but some providers offer shorter terms. GoGrid even offers servers on an hourly basis.

Other things also have to be considered such as costs of power, bandwidth, racks, uninterruptible power supplies, network switches, KVM switches, and occupying space in your organization. Then, you have to add the payroll costs for installing servers in racks, repair time, and getting rid of them when you don’t need them anymore. All these costs are difficult to calculate, but my gut tells me that $200 for a server in the cloud is a fair price. However, there are also downsides.

Downsides of rented servers

The biggest problem is how to integrate them in your infrastructure. Organizations with many branches have a similar problem. If the entire communication traffic to your organization is through the Internet, you will need a VPN solution. You can run backups remotely, but you have to make sure you don’t exceed your monthly transfer volume, and the connection to your provider has to be fast enough. You could also run a disk-based backup system in the cloud or use the service of an online backup provider.

Security is another issue. You can’t run a gateway firewall because those cheap service providers like 1and1 only allow you to rent servers, not virtual LANs. Thus, you have to configure the firewall for each server independently. Storing confidential data on a server is problematic when you don’t know the people who have physical access to it. Of course, you could encrypt everything, but this means extra costs.

Perhaps the major downside is that your rented servers usually offer less flexibility. You can’t simply add another hard disk or an external storage system if you need more disk space. If your server requires more RAM, you have to move everything to another server because most providers won’t upgrade a server for you.

Because of this lack of flexibility, we will buy our new servers the traditional way. I think renting a server is an interesting option for small organizations. For mid-sized companies, it might make sense to move some special machines such as web servers to a third-party data center. In particular, if you need a new server quickly for a project, it is very enticing to just click on “launch server now”. The GoGrid offer is perfectly suited for this. I assume the costs for servers in the cloud will drop significantly in the near future. Their flexibility will probably improve, too. Therefore, I do believe that in a few years, more organizations will move their servers to the cloud.