Are you paying too much for storage?


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How much is a terabyte of enterprise storage worth?

$800,000? $250,000? $100,000? Currently, there are vendors who will sell you a terabyte of storage for $12,000, $10,000 or even $7,000, and prices are expected to drop further.

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Nobody pays retail today

A survey of 152 storage professionals from large companies done earlier this year reveals that deep discounting on disk subsystems and network switches is rampant.

"We sell [disk] storage at 7 cents/MB, and we're profitable," says Diamond Lauffin, senior executive vice president, Nexsan Technologies Inc., Woodland Hills, CA. That works out to be $7/GB or $7,000/TB and the company will have products that threaten to break the $1,000/TB barrier.

"And our cost includes no charge for support for three years," he adds. At that price, you can just toss it out after three years and buy new storage, which will likely cost even less.

Granted, this may not fit your definition of highly reliable, highly available, high-performance storage, but those numbers throw into sharp relief the volatile nature of storage costs today. You might keep a terabyte or two in reserve, ready to be switched on in the event of an emergency or lavishly throw an extra several hundred gigabytes of cheap capacity at a database application to boost performance.

Has a terabyte of enterprise storage become a standard commodity? Not really, if you want a full package of high performance, availability, reliability, support and, most importantly--manageability--along with raw capacity. You also want to be assured that it will work with their various servers and switches and networking infrastructures. And if there's a problem, you want skilled service technicians on the case fast. For this, most enterprise storage managers are willing to pay a premium.

But you can get a lot of those enterprise elements for a lot less in today's market, and not just because vendors are cutting deals. Just as the PC annihilated mainframe and minicomputer price models, the relentless march of electronic miniaturization has yielded standardized storage components that allow subsystem manufacturers to package a lot of power for shockingly low costs. And if you define your requirements carefully, you can be the beneficiary.

Survival of the cheapest
If you're willing to pay a premium over the cost of the cheapest storage, you should ask: "How much?" and "For what?"

The perceived cost of a terabyte of enterprise storage is about 1.5 to 2.5 cents/MB ($150,000 to $250,000/TB). Depending on the specifics and various bells and whistles, the cost could shoot up to $800,000/TB, but even that price is significantly below the $1 million-plus cost of just a few years ago. Add to that the price pressures of a down market and "we're seeing deals come in at $60,000 per terabyte," says Dan McCormick, vice president, Xiotech Corp., Eden Prairie, MN.

Vendor fear may be the biggest factor driving storage pricing today, but that hasn't been the case until recently. "The biggest factor in storage pricing in the past has been human greed, but now we're seeing the law of supply and demand catch up," says James Porter, the founder of Disk/Trend, Mountain View, CA. "IBM and Hitachi have improved their high-end products, which has forced EMC to reduce its margins," says Porter, who has tracked storage disk pricing for decades.

Four approaches to cheap storage
As storage costs drop and more options emerge, companies willing to forgo the comfort of conventional storage solutions can acquire large amounts of storage cheaply, but they will have to make trade-offs.
Modular ATA
7 cents/MB
  • Strings of low cost RAID cabinets stuffed with ATA drives
  • Third-party, off-the-shelf software for management features, virtualization
  • Redundant unit for reliability
  • Lack of compatibility and interoperability
  • Limited consolidation
  • Piecemeal reliability, availability
2 cents/MB
  • Modular RAID arrays
  • Built-in, integrated software provides management, availability and performance capabilities
  • Pre-configured connectivity, NAS, SAN or both
  • Limited consolidation
  • Lack of interoperability and compatibility
  • Proprietary components
Commodity PC
2 cents/MB (plus cost of PC)
  • Racks or commodity PCs, each containing four inexpensive hard drives
  • Rack mounted
  • Reliability is achieved by using some of the drives for redundancy
  • The PC itself provides the management intelligence
  • Slow spinning drives are preferred for better reliability and low cost
  • Slow performance
  • Hard to manage
  • Hard to service
  • Can't assemble into SANs
Roll your own
2 cents/MB plus cost of cabinet, controllers, other hardware elements, software
  • Third party integrator assembles cabinet, disk drives, controllers, various third-party software and network connections to your specification
  • Difficult to maintain and service
  • Hard to manage
  • Hard to scale

This was first published in December 2002

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