Hosting biz Hetzner, one of Europe's largest datacenter operators, is warning customers that prices are scheduled to jump by as much as 50 percent from April 1.
The increases will apply to both existing customers and new orders at its datacenters in Germany, Finland, the US and Singapore. Hetzner provides low-cost Infrastructure as a Service (IaaS) for developers and many corporate customers.
In a statement, Hetzner said: "There have been drastic price increases in various areas in the IT sector recently. That is why, unfortunately, we must also increase the prices of our products."
"The costs to operate our infrastructure and to buy new hardware have both increased dramatically," it added. "We have genuinely tried hard to optimize our costs and to prevent increasing our prices for as long as possible. But we can no longer compensate for the strain that it has placed on our operations."
A list of the price changes shows that many of the service charges will increase dramatically, many by over 30 percent and some by as high as 50 percent, which could have a serious impact on some of its smaller customers.
Hetzner counts organizations such as the MariaDB Foundation, Bitdefender, and the Yocto Project among its clients.
The AI industry has pushed the infrastructure market in unexpected directions amid demands for more high-performance compute power. Hyperscalers can't buy enough high bandwidth memory (HBM), flash storage, or AI silicon, especially Nvidia's GPU products, and with chipmakers favoring high-margin component production, shortages have emerged in multiple areas.
As The Register has already covered, prices for DRAM and NAND flash memory are expected to double this quarter, while some server CPUs are in short supply, and hard drive makers say they have already sold all the units they expect to produce this year.
The price hikes are steep, yet according to some market onlookers they may be justified given the dramatic turn of events in component supply.
"Hetzner is essentially a cloud infrastructure provider - they buy the hardware, manage it, and rent out the capacity. I am not surprised by this price hike," said Omdia Senior research director for enterprise infrastructure, Vlad Galabov.
"The 50 percent increase, while steep for users, reflects the brutal reality of the current hardware supply chain," he told The Register.
Customers can expect to see more price rises coming from other providers, and it is the second-tier operators under most pressure to jack up prices, rather than the hyperscalers, according to Omdia.
"As for whether the rest of the market will follow suit, we are looking at a two-tiered system. The massive hyperscalers (AWS, Microsoft, Google) negotiate long-term, direct-to-vendor agreements that insulate them from these immediate price shocks. However, smaller and mid-sized providers who lack that immense buying leverage - like Hetzner and OVHcloud, which already announced a price hike - have no choice but to pass these costs directly to their users," Galabov said.
"Unfortunately, for companies relying on budget-friendly cloud hosting, infrastructure costs are absolutely going to jump this year. The market needs companies like Hetzner to continue to operate and be profitable. I hope that the price increase does not result in significant client loss."
Reaction online has been mixed. On the Reddit Hetzner forum, user neptrio stated: "36 percent is a significant increase. That's quite a bit more in costs for all my servers. On top of that, I haven't been able to scale my servers for a long time due to a lack of capacity. For me it's time to look into possible alternatives."
ProfessionalJackals said the updated price of object storage at Hetzner pricing was now more expensive than rivals Backblaze and Wasabi and an inferior service. "Why even use Hetzner at this point (for object storage)? Their only advantage is cheaper egress, and that is it."
However, user Gasp0de pointed out that: "Given that RAM prices have increased between 80 percent - 400 percent I think it's quite okay. What would you have done, not offer any new servers?"
Another user JacqueMorrison wrote: "While being no reason to cheer, I think Hetzner still offers the best price/performance ratio on the services they offer. (Compared to competition)." ®
Source: The register