Are Customers Balking at Green Premium? update from July 2008

Are businesses less willing to pay more for "green" solutions than they were a year ago? Or are managed hosting customers less motivated to save energy than colocation customers?

Those are among the questions raised by new customer research released yesterday by Rackspace. The survey showed strong interest in operating in a more eco-friendly manner, but also found that just 41 percent of respondents are willing to pay more for green products and services, down significantly from 52 percent in 2007. The Rackspace survey (available online as a PDF) also found that just 28 percent of customers are willing to trade a 5 to 10 percent decrease in server performance for lower carbon emissions, which was down from 51 percent in 2007.

"It's interesting to see that customers still think green is very important, but today they may be less willing to pay more or trade performance for lower carbon emissions," said John Engates, CTO, Rackspace Hosting. "Rackspace understands these concerns, and the economic pressure points, and is working diligently to leverage the available technology in ways that don't impose additional costs on the customer."

But do the survey results reflect broader views about green IT spending, or are they specific to a managed hosting environment? That's the question raised by Tom Raftery at GreenMonk, who challenges the conclusions.

"First off you have to realize that Rackspace don't do co-lo," Raftery writes. "Rackspace only do managed hosting. So, if I am an IT manager I can't put my equipment, no matter how energy-efficient, in a RackSpace Data Center. I have to use their equipment."

There's no doubt that the potential benefits of energy efficient equipment would be much clearer in a scenario like the usage-based power pricing recently introduced by CRG West for colocation customers in seven of its data centers.

But the Rackspace findings are worth our attention because of the year-to-year decline in green commitment found among the company's customers, which are well outside the margin of error for these type of surveys. My hunch is that these changes are related to a bad case of green overload, which is making customers more discerning about the benefits of green products.

Engates notes that Rackspace has launched several energy efficiency initiatives, including "Green Server" configurations with Dell's PowerEdge 2970 servers and AMD's Quad-Core Opteron processor, as well as a dedicated virtualization offering built on VMWare.