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Nimbus, StorOne try to disrupt enterprise storage pricing

Enterprise storage pricing is often shrouded in mystery, but Nimbus Data and StorOne are attempting to shake up the status quo with new tools that give buyers discounted prices on the spot.

Nimbus Data and StorOne are trying to shake up the status quo of notoriously mysterious and marked-up enterprise storage pricing with new tools that can give IT organizations their best discounts in seconds.

Nimbus Data sells ExaFlash all-flash arrays and ExaDrive solid-state drives (SSDs). Customers can find prices posted on the company's website and get quotes after logging into the Skyline Portal. They just need to answer questions about the type of network connectivity they prefer, the capacity they need and the duration of support.

StorOne's new TRUprice configuration page lets potential buyers price out its hardware-independent enterprise storage software in four clicks. Customers can buy software only or purchase a complete system with select third-party hardware. Options include servers from Dell, Hewlett Packard Enterprise (HPE) and Supermicro, SSDs from Seagate and hard disk drives from Western Digital.

Their transparent pricing options will represent significant change for enterprise storage buyers accustomed to negotiating or haggling over prices the way a shopper might at a local car dealership. Stories of prices plummeting by double-digit percentages are common in enterprise storage, especially when customers present serious competitive offers on a big purchase.

"A list price was rarely publicly available and only came up late in the sale process," said Simon Kepp, a former infrastructure architect at a major Danish financial institution. "In my experience, our negotiated price was usually around 50% to 80% discounted, and I suspect the list price was usually invented on the fly to make their offer look better to us."

Nimbus Data pricing
Nimbus Data recently unveiled a new transparent pricing model that can give customers quotes in seconds.

Lengthy negotiation

Kepp said his company would typically spend three to six months on the purchase of a full storage system, between drafting a document to describe the requirements, sending it to two or three reputable vendors and negotiating a deal. He said the workload was significant on the technical and sourcing staffs.

"My first step would be to write a business case to present to management, outlining the costs, benefits and ROI," Kepp said, recalling his last $1 million storage purchase. "This is difficult when you don't know the price of a storage system until six months into the project."

Lower-priced purchases also bring frustration to storage buyers. Nick Smith, director of remote IT and broadcast engineering at WWE, a media and entertainment company noted for its wrestling events, said he has spent more than a week going back and forth on quotes from sale representatives who require approval for each one. He said he saw "an easy $10,000 price fluctuation" on the same storage system in the $200,000 range.

"You don't want to play this game," Smith said.

WWE, based in Stamford, Conn., is a Nimbus Data customer. Smith said cost was not his main consideration when buying his flash array, but he likes the idea of getting instant pricing for storage configurations he wants to consider. He also likes the option to buy drives from any qualified drive vendors, not simply Nimbus.

"With most other manufacturers, if you're not buying their drives, they're not going to support them," Smith said.

Quick calculations

While Nimbus and StorOne reps say their pricing model is aimed squarely at on-premises enterprise array vendors, public clouds have become a popular storage option for organizations. Unlike most on-premises storage vendors, cloud providers post their per-GB pricing online for capacity. AWS, Microsoft Azure and Google give customers a menu of block, file and object storage options and prices on their websites. But the bill a customer gets from the cloud vendor includes fees for data retrieval and egress, making straightforward comparisons to on-premises storage tricky.

"Cloud pricing is a monthly utility and consumption-based model, so it's quite different from ours," Nimbus CEO Tom Isakovich said. "Candidly, we feel all storage pricing should be transparent. The other enterprise storage vendors should step up, do the same and be transparent."

The Nimbus tools also could help customers estimate total cost of ownership by factoring in variables such as power consumption, rack space, and deduplication and compression ratios, Isakovich said.

Shoppers don't need to register or fill out forms to calculate the cost of the StorOne system. They can flip back and forth to see the difference in price if they use, say, Dell versus HPE servers. When they're ready, they click a button and fill out a form to get formal quote via email.

George Crump, a former storage analyst who is now chief marketing officer at StorOne, said the posted prices for the S1 Enterprise Storage Platform are about 60% lower than other vendors' street prices, based on what he has heard on customer calls.

Similarly, Isakovich said he is convinced that Nimbus' published prices are 60% to 70% less than what customers now pay for enterprise flash arrays. He claimed enterprise storage vendors have been price gouging for years, largely based on what they charge for the flash drives.

'Tail that wags the IT budget'

Marc Staimer, president of Dragon Slayer Consulting, often refers to storage as "the tail that wags the IT budget." Staimer said his storage research shows that customer discounts average in the range of 75% for enterprise arrays and 60% for mid-tier storage systems. He said drives factor heavily into the price.

Staimer said a drive in an enterprise storage system could carry a list price that is 10 times the cost of the same drive sold in a server. He said, after discounts, the storage drive generally runs about three times the cost of the same drive in a server.

"I have yet to have anybody -- end users or vendors -- push back on that and say, 'You're wrong,' " Staimer said.

Although Nimbus and StorOne are trying to influence storage pricing, they will be hard-pressed to exert a significant impact on the industry. Staimer said major players such as Dell, HPE, IBM, NetApp and Pure Storage would simply ignore them unless they start causing them pain and taking away substantial business.

Staimer cited Veeam as the rare exception of a small vendor that was able to disrupt the storage industry. Veeam, a backup specialist in virtual environments, introduced socket-based licensing that became so popular it caused other backup providers to change their capacity- and agent-based pricing, Staimer said.

"Veeam had a lot of money behind it. When you have a lot of money, you can get the word out. Nimbus and StorOne don't have a lot of money behind them, so it's going to be harder for them to do that," Staimer said.

It would certainly be helpful and fairer on all for published prices to be much closer to best prices.
Steve HindmarshHead of scientific computing, Francis Crick Institute

Eric Burgener, a research vice president in IDC's infrastructure practice, said Nimbus is too small to make waves on pricing against the larger players. Burgener said he could, however, envision enterprises that become aware of the new pricing model to use it to try to get better discounts.

Nimbus and StorOne claim they have posted their best prices on their websites and factored in volume discounts. But they, too, could face pushback from customers who have spent years negotiating down the prices of their storage systems.

"I'm all in favor of greater transparency of enterprise storage pricing," said Steve Hindmarsh, head of scientific computing at the London-based Francis Crick Institute. "It would certainly be helpful and fairer on all for published prices to be much closer to best prices."

But Hindmarsh was quick to add, "I will always reserve the right to negotiate the best possible deal using those prices as a starting point."

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