I was interested to see the recent announcement by StorONE Inc of a new feature called TRUprice that provides customers with the ability to build a storage configuration online, including the end-user price. At first glance, this appears to be just another vendor trying to make some noise in the market. However, this time I think it could be a lot more.
Update: StorONE have responded to points raised here. Find out more on this blog: https://www.storone.com/friendly-honest-storage-pricing/
Enterprise storage sales is a bit of a black art. Vendors have margin assigned to their quotas over the next quarter or financial year and can use it against customer deals. This mechanism allows sales teams to offer promotional discounts to new customers, reward big customers with better pricing or close a quarter-end deal that pushes past quota to increase commission. At the end of the quarter/year, the target is reset, and the whole process goes around again.
Salespeople know that even if an individual customer buys more one quarter than usual, the capacity typically gets absorbed by the business and the storage team will be back to purchase again pretty soon.
It may seem that selling to the enterprise is like being in the land of milk and honey. However, enterprise storage is a competitive business. In the larger enterprises I worked in, we’d expect a declining price from quarter to quarter, typically around 5%. We would run dual or triple vendor strategies and align technology configurations enabling simple purchasing from any party. This process included knowing how vendor configurations delivered their performance. With a constant decline, the days of $1/GB are long gone.
As a result, from the vendor perspective, actual prices are like the first and second rules of Fight Club, you don’t talk about them. Obfuscation allows vendors to be flexible and efficient in a competitive market.
Now this sales process all sounds great if you’re a large enterprise, but it’s not so good if you’re a smaller customer. You’re unlikely to get the big discount and even if you do, it may be that next quarter the price is much higher, as you simply helped the vendor complete their previous target.
In my opinion, most customers just want a friendly, honest price. Probably most importantly, one that is predictable. This is where two factors are changing the landscape – Public Cloud and Software-Defined Storage.
Public Cloud Service Providers (CSPs) are the model of transparency. Their prices are online and easy to find, albeit with the simplicity sometimes of a mobile phone contract. But they are there, and in the initial stages of Public Cloud, vendors were at pains to highlight when costs reduced for the customer. Of course, big enterprises will still be able to negotiate some deal with CSPs, but for most of us, the price quoted is what we pay.
- Is AWS passing on the benefits of storage media price reductions?
- IaaS Series: Cloud Storage Pricing – How Low Can They Go?
- The Psychology of Pricing
Making comparisons between on-premises and cloud storage can be tricky. Buying from the cloud eliminates operational tasks such as capacity & problem management, scaling and design. So, some work is needed to establish the competitiveness of a cloud versus infrastructure quote.
Software-defined storage has had a somewhat chequered history. First-generation solutions provided the capability to separate software from hardware and theoretically reduce costs. This approach was great if your solution was based on commodity hardware. Over time, vendors have replaced bespoke components with much more reliable commodity solutions.
New products were specifically developed to be hardware-agnostic (generation two). The third generation has focused on abstracting policy and performance into service-based metrics. Arguably, generation 3.5 is bringing hardware back into the discussion, with packaged solutions that are pre-tested and validated. You can hear more on this evolution in a recent webinar I recorded with Commvault (registration required).
SDS democratises storage pricing. Now the customer can interchange their hardware and just pay for the storage software licence. Remember, at this point, the game changes slightly, and we’re looking at which vendor can fully exploit the purchased hardware. We’ll put that topic aside for now.
Where does this leave us in the discussion on TRUprice? StorONE is showing storage costs like the CSPs – transparently and based on capacity. My first thought on seeing transparent pricing was to understand how the hardware had been sized. Am I purchasing too much? What if I want to expand? These are legitimate questions that customers will ask.
I also noted that the configurator only shows capacity purchasing and not expected performance. This data can be calculated from other product descriptions; however, a target IOPS/throughput value would be nice to see. Of course, this is a version 1.0 tool that’s likely to improve with feedback.
I have a third leg of the stool to add that will keep my argument more evenly balanced and that’s the move by traditional vendors to service & consumption-based models. Every major infrastructure vendor now offers a consumption-based or evergreen purchasing model.
- NetApp Keystone and Hybrid Cloud
- NetApp Introduces Keystone Purchasing Model
- On-premises infrastructure – as a service
These are in place to directly compete with the Public Cloud. Where those solutions touch the Public Cloud (like NetApp’s file offerings, or Pure’s Cloud Block Store), prices are online for everyone to see.
The Architect’s View
Public Cloud continues to introduce transparency in pricing. It can only be a matter of time before existing infrastructure vendors start to show some pricing data, if not to offset the discussion about Public Cloud prices. StorONE hasn’t started this transition but joins in at a stage where we could be close to seeing much more transparent pricing in the enterprise.
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