Back in 2013, a startup known as Cloud at Cost attempted to run a hosting service where users paid a one-time cost for Virtual Machines (VMs). For a one-time fee, you could get a server for life. I had purchased one of these VMs, intending to use it as a status page. However, their service has been so unreliable that it’s a shot in the dark as to whether a purchased VM will be available from week to week. Recent changes to their service policy are attempting to recoup their losses through a $9 per year service fee. It’s a poor attempt to salvage a bad business model from a terrible hosting provider.
It seemed like a novel concept at the time. Instead of charging people a recurring charge for hosted services, charge them one fee for life. However, there’s a reason hosting providers charge by the month. Providing reliable data centers, servers and customer service is an expensive endeavor. In my original review of Cloud at Cost, I mentioned how slow their early support/ticket system was and how I had to fix several of my own issues with the VMs.
Over the years I’ve occasionally attempted to use my Cloud at Cost VM for various tasks. In April of 2014 I couldn’t access my server, and it turned out it was shut down. Cloud at Cost had changed many of their servers to automatically power off by default, most likely in an attempt to free resources from people who weren’t actively using their servers. People who were using these VMs for hosting would have had their servers shutdown without notice, forcing them to either open tickets or use the confusing control panel to attempt to restart it and disable the auto-shutdown.
In January of 2017 I attempted to login to my VM again, only to find it once again shut down. Logging into the control panel produced errors every time I tried to restart it. It took half a month to get an answer to my support ticket, at which time I was told the VM couldn’t be recovered and I’d have to rebuild it.
Finally in the summer of 2017, I started getting e-mails about a suspension warning. A $9 per year fee had been added to Cloud at Cost accounts, thereby breaking their one-time fee for life model.
My VM was no longer responding. When I logged into the control panel, I suddenly got a new terms of service agreement.
It’s important to note this particular part of the agreement:
THESE TERMS AND CONDITIONS MAY BE UPDATED AND CHANGED WITHOUT NOTICE TO THE CUSTOMER.1
I suspect a similar clause was in the original agreement. If not, Cloud at Cost could face legal trouble from their customers. However, I find it highly doubtful anyone put enough trust in Cloud at Cost to host significant infrastructure with them, which would make such legal action not financially worthwhile.
For new customers, this $9/year cost is not even presented anywhere in the checkout process. It is buried down in section nine, in a link to their terms of service:
9.18 Customers with a onetime payment service is subject to an annual maintenance fee of $9 which will be invoiced 12 months after using our service1.
I shouldn’t be surprised Cloud at Cost is still in business. A few weeks ago I did some work for someone who was using a terrible web hosting provider I gave up on years ago. With these types of low-cost hosting services, the cliché “You get what you pay for” often holds true.
In my original review, I noted that it’d take approximately three years for the one-time cost to equal that of the monthly hosting fees. I made the argument that people would essentially be betting the company would be around that long. However, with Cloud at Cost randomly shutting down servers, randomly deleting servers, taking forever to answer tickets and a host of other problems, I highly doubt any of their customers have gotten anywhere near three years of use out of their products. Searching for reviews on Cloud at Costs produces nothing but posts by angry customers and tweets claiming the service is a scam.
The recent barrage of e-mails claiming 24 hour server suspension seems to be a last ditch effort to raise capital. They are realizing the one-time fee model for cloud computing simply doesn’t work, or if it does, their particular implementation is terrible and unsustainable. Every infrastructure problem they’ve had over the past few years feels as if it’s an attempt to free resources by shutting down unused services, or con customers into providing them additional revenue.
Cloud at Cost was an interesting concept when it came out, and many people flocked to their low cost plans just to have a spare box to run things on. I doubt we will ever see a postmortem on their company when it does eventually fail. I suspect there were many over-generous cost estimates early on in the company’s life. Their control panel, web interface and ticketing system is terrible, and hasn’t improved significantly in the life of their company. They may simply lack the caliber of developers and system engineers to work on improvements, or only generate enough revenue to keep what currently exists running. I’m also curious if the founders and managers in the company honestly thought they’d be able to provide these services indefinitely with the one-time fee model, or if they knew and planned for shutting down unused instances and other shady tactics that have earned them their current reputation.
Is it possible to offer a one-time fee based service system that is truly sustainable? To do so, a company would have to plan for infinite growth, either current customers continually adding to their purchases or a continual flow of new customers. There are unavoidable reoccurring costs when it comes to electricity, personnel and hardware. Old hardware often has to be upgraded or replaced after several years, and existing custom software needs to be continually improved upon in order to attract a fresh customer base. It may be possible to create a business based on one-time fee cloud computing, but it would require high initial fees, very careful planning and a top of the line VM provisioning system; things Cloud at Cost has never had, and most likely never will.