Linode might be a bit behind the curve in terms of passing on savings through dropping costs, but DigitalOcean is selling services at "scam warning bell" pricepoints. It's impossible to sell and deliver unmetered gigabit connections for $5 and not take huge losses. Either performance must be degraded (best-effort type scenario) or the price must be raised.

It's not clear what exactly they're promising. They say "All servers come with 1Gb/sec. network interface." Does that mean every cloud server, or every physical host? If it's every cloud server, how do they fit that many gigabit interfaces into a single physical host? If it's every physical host, then how do they make any kind of guarantee about performance?

They're selling these things as SSD-based. I've never seen SSD pricing, individually or in bulk, go much below $0.50 per gigabyte (and enterprise-grade is often much higher), so at $5/mth, it would take them two months just to cover the cost of storage, let alone the cost of bandwidth or the servers themselves...

Their benchmarks from what I've seen are already very low-end, and bandwidth performance is already rather lackluster. I'd much rather be on a platform like Linode that promises me a reliable amount of performance in a fixed quantity (like my 200GB of bandwidth) rather than a platform like DigitalOcean that says "free bandwidth" but doesn't really say if I'll get 1 megabit or 1000 megabits per second.

I had a server up there for a couple of weeks running as an online backup clone of one that I have at Linode, they suspended my account and deleted the server saying it had been compromised.

I have not tested their system because, bottom-line, I don't like the smell of it.

They really do need to tighten their sales copy but I'm pretty sure they mean a gigabit interface per physical server. You seem to know quite a bit about what things cost in this industry, would you be able to roughly estimate their cost for a single 512/20GB, assuming they are leasing their hardware in bulk at a good price? I have no idea what sort of markup is typical in this industry but given the competition I would guess it's very low which is what really sets off my warning bells. Anyway, I got $20 free voucher with the code ""SSDBEAR20" which was published on hackernews and I'm setting up a bunch of TOR exit nodes to see how they cope.

What makes Linode so much better that they are worth 4x the amount?

There is no private network. This is still being beta-tested. For anyone with multiple instances that communicate with each other, this is a no-no. I have no idea if the private network will be secure like that at Linode or just another open LAN.

To be fair, the only purpose of a private network is to avoid getting charged for internal bandwidth; if there is no bandwidth charges, a private network is pointless. You shouldn't be trusting a private network to be secure anyhow, you should be using a VPN.

FYI, Linode's private network is just another open LAN; you'll get broadcast packets from other peoples' linodes.

That's not my understanding of the matter. See the post by Caker in this thread: http://forum.linode.com/viewtopic.php?p=39528. I also confirmed this with Linode Support. I'll be very disappointed to learn it is not the case.

Guspaz was talking about broadcast traffic, while I'm pretty sure Caker's comments in that thread are in regards to unicast traffic.

Think of the private network as a big LAN switch. While your Linode's private interface will only receive unicast traffic directed at it, everyone sees broadcast traffic. There are ingress controls so no-one can spoof your private address (but I'd expect that on the public interface too), but anyone who generates unicast traffic at your Linode can reach it. I'm not sure what other sort of configuration you'd expect to make sense. Unless you're expecting Linode to define and maintain individual VLANs at layer 2 for all customers, but I'd expect that to be unreasonable (and unnecessary) in terms of scale and maintenance.

In terms of security, treat it just like the public interface, and filter to just those private addresses that you know belong to your Linodes. No differently than your public interface, or IPv6 traffic (which has no "private" network).

-- David