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Cloudian HyperStore gains on-demand pricing, new funding

IT Investment firm Digital Alpha ponies up $125 million to Cloudian. Most of the new money will fund expanded inventory to support consumption pricing of local HyperStore arrays.

Object storage provider Cloudian plans to use $100 million in financing to give enterprises a new cloudlike buying option to deploy its on-premises HyperStore arrays.

Cloudian last week introduced consumption pricing that enables organizations to scale Cloudian HyperStore storage hardware on demand, similar to the way they buy cloud storage. An enterprise can buy a set amount of object storage, for example, and Cloudian will automatically deliver and install additional hardware in a customer's rack as consumption starts to bump up against the capacity limit.

Cloudian isn't the first storage vendor to adopt pay-as-you-go pricing. Hyper-convergence vendors and others who want to provide cloudlike features with their storage are also going down that path. Cloudian already offered pay-as-you-go pricing for its software through Amazon Web Services Marketplace, but now is extending that to on-premises hardware deployments.

The Cloudian HyperStore hardware subscription was rolled out with news that Cloudian had received $125 million from Digital Alpha, an equity fund launched by former Cisco executive Rick Shrotri. Digital Alpha is providing a $100 million credit facility to help Cloudian purchase expanded hardware inventory.

Digital Alpha additionally invested $25 million directly in Cloudian to fuel expansion of engineering, sales and support teams.

Cloudian and object storage: A crowded market

Cloudian chief marketing officer Jon Toor said consumption pricing helps companies convert what would be a capital cost into an operational expense.

"We have some customers that will benefit from having a more flexible procurement model. This lets you pay by the drink, instead of buying the whole bottle," Toor said.

Cloudian HyperStore object storage software is bundled on clustered 4U scale-out nodes. The product supports data replication between physical data centers and the public cloud. 

HyperStore object storage software is sold on integrated Cloudian-branded appliances and industry-standard Cisco and Lenovo servers. Cisco also recently qualified Cloudian HyperStore to run on its Unified Compute Server S3260 storage server.

HyperStore uses the Amazon Simple Storage Service (S3) API to apply data management and data protection services across integrated pools of file and object data. In January, Cloudian added the ability to port data between Amazon S3, Microsoft Azure Blob and Google Cloud Platform.

Until now, only the HyperStore software license has been available as a subscription. Customers can also still purchase Cloudian HyperStore arrays through the traditional pricing model.

Toor said leading use cases for Cloudian include health care, media and entertainment, and more broadly as a data protection target.

Greg Schulz, senior advisory analyst at Server and Storage IO, said selling Cloudian HyperStore hardware as a scalable local service should alleviate management headaches.

"Object storage has been Cloudian's historical message, but they also have hybrid, converged file-based access, as well as cloud tiering," Schulz said. "It makes sense to offer storage as a service on premises. Watch for other vendors to take a similar approach, which makes it comparable to how customers subscribe and pay for public cloud resources."

Product offerings similar to the Cloudian HyperStore offering include the Avere Cloud-Core NAS -- now owned by Microsoft -- and the the Zadara Storage Cloud, both of which support unified block, file and object storage.

Cloudian CEO Michael TsoMichael Tso

Cloudian CEO Michael Tso brushed aside concerns that object storage is a saturated market. Tso said Cloudian doubled its customer base to include about 200 organizations in 2017, most of which he said are large global enterprises.

About half of Cloudian's customers are in the U.S., with 35% in Europe, the Middle East and Africa and 15% in other regions.

"We don't think the market is getting too crowded. We believe the bulk of the market [growth] will be from scale-out work workloads. We can scale across data centers, but we aren't [built] to be as fast as an Isilon or Qumulo. How we differentiate is by having a product that can run any S3-compatible application," Tso said.

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How appealing is Cloudian's offer to consume HyperCore arrays in your data center on demand?
Well, it is a good idea to have a private storage cloud subscription model that includes the software and the hardware. Yes, there are a couple of similar offerings but not from a pure play object-based storage software vendor like Cloudian. People are already familiar with this model if they use public cloud data storage providers. It does require financing to do this, which is why Cloudian has partnered with Digital Alpha Advisors for a $100M line of credit and a $25M funding round for other purposes. Now, $100M may be just for openers if this private storage cloud software and hardware subscription model catches on with customers, and I think it will. What seemed curious about this announcement is the absence of Lenovo which already offers a DX8200C storage server with Cloudian HyperStore pre-installed. Mr. Shrotri has a seat on Cloudian's BOD and a prior employment history with Cisco. This $100M line of credit is likely the reason Cisco recently qualified their UCS S3260 storage server with Cloudian HyperStore. This is a large 4U, 2-node storage server similar to what Cloudian already OEMs from QCT. Cloudian also has a 1U storage server they OEM from QCT. So where does this leave Lenovo with its DX8200C 2U storage server with Cloudian HyperStore pre-installed, which would be more attractive to SMB customers who want to start small and grow their private cloud storage?  
Hi cloudguy:
Cloudian was sparse on details. It may be they have not yet finalized how and/or which servers are in the mix. You raise a great point re: the Lenovo boxes. Bears watching.
Well, the details of Cloudian's new subscription model are hard to come by right now. But the start small and grow your private cloud storage is a message Cloudian has been delivering to SMB customers for years. The SMB market and not the enterprise market is where Cloudian should focus their new software and hardware, pay-as-you-grow subscription model.  Large corporations have plenty of financing options for their storage. It is the SMB market that needs what Cloudian is offering, and I hope they realize this before they roll out this program. Even though Cloudian doubled the number of customers from 100 to 200 in the past year the increase is still too small. Cloudian could gain 1000+ new SMB customers using this new subscription model. Now is the time for Cloudian to bust a move and pull away from their competitors.