It's nice to see all this competition ($5 Linode, now $2.5 Vultr) but don't they risk overallocaton?
Let's say they have physical machines with 96 GB mem that hold 200 1 GB VMs each, in the hope that no one uses more than half their ram. Same for CPU or disk I/O or whatever resource.
Now that the entry level prices are dropping but the offered resources remains the same, people will spin up more VMs. Doesn't it become dog slow for everyone?
KVM has KSM, so there is definitely the possibility of having say, 150x 1GB VMs on a 128GB physical RAM server; possibly much more than that depending how much KVM/KSM has improved since I last looked at it.
I don't think this is true for DigitalOcean. I believe you have to destroy your VM ("droplet") in order to stop being charged. If it's just powered off, you're still billed for it. You can take a snapshot, destroy the droplet, and restore the snapshot later, but there is a small monthly charge for storing snapshot images as well.
"Am I charged while my Droplet is in a powered-off state?
Yes. Your diskspace, CPU, RAM, and IP address are all reserved while your Droplet is powered off. If you want to save a Droplet for future use take a snapshot of it and then destroy it. You'll be able to create a new Droplet from the snapshot image anytime to bring it back online."
Well, they should've planned for it. In my experience their VMs were quite good, I never felt much contention. But it's VPS, of course, you can never be sure.
Let's say they have physical machines with 96 GB mem that hold 200 1 GB VMs each, in the hope that no one uses more than half their ram. Same for CPU or disk I/O or whatever resource.
Now that the entry level prices are dropping but the offered resources remains the same, people will spin up more VMs. Doesn't it become dog slow for everyone?