Comments on: RackSpace’s customers ‘won’t pay a premium’ for Green products? http://greenmonk.net/rackspaces-customers-wont-pay-a-premium-for-green-products/ Green from the roots up, Sustainable from the top down Fri, 19 Mar 2010 11:59:07 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Glen http://greenmonk.net/rackspaces-customers-wont-pay-a-premium-for-green-products/comment-page-1/#comment-3524 Glen Tue, 01 Jul 2008 15:57:03 +0000 http://greenmonk.net/?p=197#comment-3524 Saying; "What they should be doing is increasing prices to their customers across the board to reflect their own increased energy bill - except for those customers who chose to be hosted on energy efficient servers." does not take into account the potential for losing customers, the cost of replacing existing equipment with more energy efficient units, etc. You can't just "throw the switch". In a real commercial venture, the bottom line dictates action. As you correctly point out, if IT departments had to address their power usage, they would take that into consideration as they replaced old equipment. So, the rise in rates would be driven by (1) the cost of electricity and (2) any additional cost in hardware. Assuming hardware get replaced anyway, then the only reason for a different rate for "green" customers vs "non-green_ customers would be an significant premium for green hardware. Now you move the attention from the hosting provider to the hardware provider. If you apply label a hardware vendor with energy efficient products as "green" and those with energy sucking hardware as "non-green", then the pressure is on their bottom line and what premium they place on green technology. Odds are good, most vendors will not create both a "green" line of hardware and a "non-green" line. Rather, they will incrementally improve their "green" message and technology with each generation. Take light bulbs as an example. As long as the premium price for CF lights was high, people still bought incandescent. As the premium gap was reduced, then people bought CF. The same will happen with LED and other technologies. the supplier of incandescent lights is not going to sell them for more than CF because he wants to be "green" - he would be cutting off his customer base. Rather, the CF supplier keeps lowering his prices as his costs go down, thereby attracting more customers. Saying; “What they should be doing is increasing prices to their customers across the board to reflect their own increased energy bill – except for those customers who chose to be hosted on energy efficient servers.” does not take into account the potential for losing customers, the cost of replacing existing equipment with more energy efficient units, etc. You can’t just “throw the switch”. In a real commercial venture, the bottom line dictates action. As you correctly point out, if IT departments had to address their power usage, they would take that into consideration as they replaced old equipment. So, the rise in rates would be driven by (1) the cost of electricity and (2) any additional cost in hardware. Assuming hardware get replaced anyway, then the only reason for a different rate for “green” customers vs “non-green_ customers would be an significant premium for green hardware. Now you move the attention from the hosting provider to the hardware provider. If you apply label a hardware vendor with energy efficient products as “green” and those with energy sucking hardware as “non-green”, then the pressure is on their bottom line and what premium they place on green technology. Odds are good, most vendors will not create both a “green” line of hardware and a “non-green” line. Rather, they will incrementally improve their “green” message and technology with each generation.

Take light bulbs as an example. As long as the premium price for CF lights was high, people still bought incandescent. As the premium gap was reduced, then people bought CF. The same will happen with LED and other technologies. the supplier of incandescent lights is not going to sell them for more than CF because he wants to be “green” – he would be cutting off his customer base. Rather, the CF supplier keeps lowering his prices as his costs go down, thereby attracting more customers.

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