It really is an absolute massive jump. Have no clue what's going on in the back to warrant a 3x increase... 25-50%, sure.. but 3x is wild.
Another possibility: They were growing too fast and need to slow down. At some point additional growth might become too risky, or even exponentially more expensive. It might require fundamental organizational changes.
They look at the numbers and see the risk of making less profit than before, if they expand. Especially if demand decreases at some point, instead of growing further. So they decide to just raise the prices, lower demand and make even more money without additional risk.
That's what the post you're responding to was asking.
They might contract to AI companies to supply servers for their AI, but the total capacity of Hetzner is less than a single AI DC so it doesn't seem very useful.
For bigger orgs the bottlenecks are a bit more vague, but they still exist.
It is wrong to believe that a product's "correct" price is simply its cost plus a reasonable markup.
There's other factors that might limit how much a business can charge their customers. But an ideal business acts more like a monopoly and charges far far more than is 'fair'.
In theory competition keeps prices in check: in practice competition doesn't work as advertised.
That's very imprecise.
There are multiple optima on the price/demand elasticity curve.
At the two ends: Few expensive items and many inexpensive items, Hetzner has consistently operated at low margins and massive volume.
Which means they charge customers as little as they can to get as many customers as possible.
You'll see that evident on any price comparison chart prior to these adjustments.
They're probably still cheaper than everyone else in spite of 3x'ing the price of some products.
And well actually, "price/demand elasticity curve" appears to be ambiguous word-salad (although a human mistake;)
I do appreciate your response: it makes me think about what I should have written. You are correct that my comment was rather unclear. Most of us misunderstand how businesses maximize profits. I find economics hard.
Thanks for squinting and finding sense in how I said it. It's been 12 years since I took an econ course.
Hetzner and OVH and other bare metal but low cost providers use commodity hardware. When that commodity hardware increases there is simply no other option. The secret to the success of these providers is using common off-the-shelf hardware instead of specialized server hardware, which is now being cannibalized.
Yes? How else do you think it works? At scale, hardware breaks all the time and must therefore be replaced all the time.
This is true even at Hetzner's scale.
How long do you want to run something that uses 3x the electricity for the same level of performance when you're buying power by the megawatt? How about the even older ones that use 10x as much?
But at some point hardware does break and if you're going to keep the datacenter open for business you'll need to address turnover of inventory on an ongoing basis, and if you haven't locked in long-term deals for hardware then you'll have to bear current market prices when you do that.
Exceptions naturally if you for some reason had an abnormally high failure rate, e.g. capacitor plague.
Hetzner keeps running the old machines as long as they can find customers for them, which means they have entire buildings of 10+ year old machines still running.
> The price adjustment applies to new orders and cloud instance rescales starting from 15 June 2026; 8 AM CEST.
> For orders placed before 15 June 2026, but delivered after 15 June 2026, the previous prices will apply.
I am surely/definitely happy that the price doesn't increase for me. If it increased for everyone, I'd expect a much smaller jump. Also I'm not sure how much flexibility they have to increase the price for everyone without notice, given that they are in EU.
So that's over 7.5x what it was when I (sadly) did not buy it. Totally not kicking myself for dragging my heels on that purchase...
Cheapest 2x48GB kit I can find here now is $1500, yay. That's 5200MHz CL48 stuff.
There is an engineered scarcity, billion dollar companies can't ramp up production?
Murica is stuck depending on the good will of Korea and China for thinking rocks? le fucking mao
The person you're replying to explained why they're not ramping up, and you replied "They are not ramping up", which seems awfully silly.
So for every ~4GB of memory that you can produce in normal DDR5, you can only make 1GB of HBM. But you make multiple times the revenue.
The demand for HBM memory is not going to go away. LLMs are memory bandwidth hungry, and we are going to see production going to AI. But also to "lower end" like B200's.
That means, they are producing multiple times less memory (if we look for the normal market demand), but still need to produce more for the memory bandwidth hungry market.
We are seeing more products entering the "prosumer/business" market that are also memory bandwidth hungry. This demand will not go away. It will actually increase as companies move to more localized workloads. There is is a issue with data privacy that a lot of companies legally deal with.
The lacking ramp up is not a sign of them being scared of over production, its a realization that 3 companies hold the market in a strangle hold, and "slow" scale. If everybody plays friendly, they can milk this for years.
China is a solution but China does not have the HBM production levels, and will take years to scale and put a dent in the market. And China is ... allocating a lot to domestic production of AI > HBM ...
The reality is, that unless competition ( as in China ) does not start scaling beyond the expected levels, the big 3 have no reason to scale too fast.
And money is not the issue ... have you seen their revenue (and net profit!! ) numbers. A few billions is peanuts for them at this point. They simply do not want to scale too fast because that means less milking ... Memory demand is not going to away. When people talk about the AI bubble popping, its more in terms of the stock market. The product is here and not going away.
you're a semiconductor manufacturer who wants to take advantage of the current boom. your options are:
A) invest a hundred cubic meters of money into doubling your manufacturing capacity
B) raise prices by 100%
I can't really blame them for going with B. the blame lies entirely with America's ability to invest billions of its infinite money into companies that make no profit now and have no plausible path to profitability in the future.
It seems they have shifted by reducing the setup fees, and increasing the monthly costs. As this generates more revenue. And its easy to prove this...
AX42 ... Its 8700GE that has gone from 65 Euro to 225 Euro. With the setup fee now being 112 Euro instead of 225 Euro. It has 64GB memory, and 1TB storage. The storage even in todays market is 100 Euro. The memory is 644 Euro.
Do the math ... Hetzner servers had a hardware payback periode of between 9 to 11 month if you took the market value. This calculation has always been very stable over the 20 years i used Hetzner.
This new price, reduced the hardware payback periode to ~4 month. It seems to be that Hetzer is trying to use the memory price issues, as a excuse. The revenue of those same servers now increased to a insane level. More revenue with less hardware.
The real issue is that a lot of companies are moving from US hosting to EU hosting because of the problems with the US. Hetzner sees this as the perfect time to cash in on Enterprise customers.
They have been trying to replace the "cheap" normal consumers with enterprise. This trend has been going on for a while already.
Every customer that now leaves, is a server they can rent out to business customers.
If you want to see the same thing, look up what happened to Microsoft/Github Copilot where they turn around has been sudden and very strong, with a clear goal of moving everything to enterprise.
Monthly costs have gone up as well. Payroll has seen significant increases in Germany, construction has exploded far beyond inflation and, most importantly, electricity prices are still ridiculous due to merit-order and the refusal of splitting up Germany into multiple power pricing regions.
Guess what? I am paying as a consumer about the same price as before 2022. Did Hetzner change their price down? Remember, the industrial price also dropped (and they also build out a large solar plant). No ...
Ok, inflation? But those price increases already covered part of that... Just saying, its not been the first price increase that happened. There have been multiple ones that Hetzner did over the years. Some flew under people radars.
> Payroll has seen significant increases in Germany,
Yea, we have seen nothing of that increase... O, wait, they reduce our income because the social security increase their costs. Yay ..
Very sure that those new prices has put them out of the whole price/performance/quality bracket.
* Past: consumer level hardware for basic support, and low prices.
* Now: consumer level hardware for basic support, and extreme high prices.
So the entire peg for their hardware choice vs pricing, has collapsed.
What sucks is that it might just be that hyperscalers have long term hw contracts and completely starve any competition.