Open letter to the CEO of OVH: Please sell

Recently OVH, one of the most respected quality budget providers of hosting services including dedicated server hosting rental, has stopped selling all dedicated server rental. The move comes after its new line of servers was released with quite competitive prices and excellent value. The problem is that many of their existing clients opted to upgrade their servers to the new lines leaving OVH with excess inventory of older hardware. This has always happened with OVH as they explained but in this specific refresh of hardware the turnover was excessive.

This does not come as a surprise, as the usage of virtualization increases, so does the ease of moving your web site or web sites from one server to the other and thus the ability to move to newer hardware as it becomes available becomes very easy. But the other reason that OVH was hit hard, is because unlike other providers, OVH keeps their price points even when they introduce new hardware. Most other providers, will introduce an increase in list price for newer and better generations of hardware and reserve reducing prices on a case by case basis to clients that request discounts. This solution does not scale because it required a higher overhead in selling. Other providers charge a setup fee to slow down client turnover. OVH’s policy is more direct and aggressive, they try to offer the best they can today openly, without haggling and this seems to have backfired on them.

The solution is hard and personally I do not know what it is, but the fact of the matter is stopping sales is bad for business and good for competitors. I want to suggest to the CEO of OVH a temporary solution until they work out the final one, and that is do not stop selling. Dear OVH CEO, you have an excess of old server inventory, why not sell that instead of not selling. Yes even at your prices for today’s hardware you can sell yesterday’s hardware, since your prices are better than the industry average. Yes sales will be slower but still slower sales is better than no sales at all! And guess what, if you do that, your excess inventory of old hardware will be sold, and when it is, you can open sales of new hardware, and yes you will get turnover, and when you do, get enough turnover you can again stop selling the new hardware and only sell the old hardware.

At any rate, there is no hard at all in offering the customers your old hardware that was abandoned by the very problem you are trying to solve. I for one would gladly buy older hardware from you at the price you sold it initially which is still competitive in comparison to the rest of the market.