Car makers around the world are looking with increasing interest at car services with on-demand journey booking or shared tenure schemes in the face of falling ownership among the Uber generation. The fact is that many younger people see little point in buying a car outright when they only need one for a fraction of any day. The same is true of music: faced with falling music sales, record companies are increasingly looking to streaming services that supply albums (or individual songs) on demand.
As it turns out, it’s the same story for vendors of enterprise SSD storage systems too. Faced with changing usage patterns as customers increasingly look to the cloud for low-cost storage that they only need to pay for when they use, some are considering alternative ways to monetize their products.
An obvious path is to offer storage that’s available on demand and charged for when used. And in fact, this approach is one that’s not entirely new. As long ago as 2003, EMC (now part of Dell Technologies) introduced a remote metering device called the OpenScale automated billing appliance that reported on its biggest customers’ data storage use, allowing them to pay only for what they actually used, with no fees charged for standby capacity that was installed but not needed.
Other vendors such as IBM and Sun (now part of Oracle) also had on-demand capacity systems. Sun, for example, offered storage at about $0.02 per MB on its Storedge 9980 system, with no up-front hardware or software costs. The systems remained the property of Sun, and users had to commit to a three-year contract to store 30TB of data.
Enterprise SSD Challenges
Fast-forward fifteen years to today, and the storage challenges that many companies face are very different. Enterprise SSDs offer huge performance gains over traditional spinning disks, and the cost of enterprise SSD storage is falling rapidly. But it is still more costly than hard drive-based storage. Choosing when to invest in an enterprise SSD-based all-flash array, what capacity to purchase and which applications to run on it make buying decisions difficult.
That’s one of the reasons why all-flash array start-ups like Violin Memory, Pure Storage, Kaminario and Nimble Storage offer pay-as-you-grow or pay-as-you-go models for accessing enterprise SSD storage.
What’s the difference? Pay-as-you-grow is a kind of financing option, where you acquire a pre-provisioned enterprise SSD-based storage system, making additional payments to purchase additional licenses to unlock new tranches of the pre-provisioned enterprise SSD storage – usually with no downtime. By contrast, pay-as-you-go is more of a storage-as-a-service deal: You don’t buy the hardware at all. You simply pay a monthly fee for the enterprise SSD storage that you use, and that amount can go down as well as up.
These on-demand models have well and truly hit the mainstream with the announcement at the end of November that Hewlett Packard Enterprise (HPE) is joining the fray with its HPE 3PAR Flash Now initiative.
Essentially, HPE is offering its all-flash 3PAR StoreServ enterprise SSD storage platform using three distinct consumption models: pay now, pay-as-you-grow, and pay-as-you-go. Pay now is the standard capital expenditure (CAPEX) option, while pay-as-you-grow offers a combination of CAPEX and operational expenditure (OPEX). But arguably the pay-as-you go offering is the most interesting, offering zero up-front costs and enterprise SSD storage capacity starting at $0.03 per GB per month.
Enterprise SSD in the Cloud?
HPE’s offer is interesting because it sounds very much like a cloud storage deal. You pay for what you use, you can scale up or down (providing storage agility), and there’s no CAPEX involved. It sounds so similar to cloud storage that it’s worth considering at this point why you might want to make use of the pay-as-you-go model – which, don’t forget, still involves you supplying space in your data center and paying for power and cooling and so on. You could do away with all these obligations by using true cloud storage.
There are a number of drawbacks to using enterprise SSD-class storage in the cloud. A key reason to use enterprise SSD storage is to reduce latency and so improve application performance, but using enterprise SSD storage in the cloud necessarily adds latency as data is moved to and from the cloud. (Even if you use cloud compute as well as enterprise SSD resources, there’s still likely more latency involved than if you access your enterprise application locally in your own data center.)
There may also be additional costs due to increased WAN usage as you access your data in the cloud. In theory, that should be more than compensated for by low monthly storage charges, because cloud providers operate at vast scale and can therefore offer very low monthly per-GB rates, but $0.03 per GB compares very favorably with current cloud-based enterprise SSD storage.
In addition, there are also a number of practical reasons why you may not want to store any of your data in the cloud, ranging from worries about security and accessibility to problems with compliance.
Enterprise SSD CAPEX
All these problems with cloud storage start to make buying an enterprise SSD-based array sound attractive, but apart from the space, power and cooling costs, there are several other disadvantages to this approach. There’s the hefty CAPEX that’s required every three to five years as the storage system reaches the end of its useful life, and you don’t get that elusive storage agility that the cloud offers. Instead you need to work out how much storage you need and how those needs are likely to change over the next few years — and then purchase sufficient enterprise SSD capacity upfront. That almost certainly means your storage system will be under-utilized — initially, at least — and you are committed to that enterprise SSD storage strategy for the next few years.
That’s why on-demand enterprise SSD storage on-premises appears to be a particularly attractive option. It offers the agility of the cloud without the latency, and your data stays in your data center without the CAPEX and underutilization.
Aggressive Enterprise SSD Pricing
Large vendors like HPE have a huge advantage over smaller players when it comes to offering on-demand storage for two key reasons, according to Mark Peters, a senior analyst at Enterprise Strategy Group. First, a company like HPE can offer low per-gigabyte pricing because of their sheer size. “HPE is an enormous consumer and seller of storage products, so it can be aggressive with the pricing it offers,” he says.
Second, it is far harder for smaller startups to offer pay-as-you-go or pay-as-you-grow storage service because they have to finance the systems upfront and then wait much longer to get their money back.
HPE is in a good position to benefit from demand for on-demand enterprise SSD storage because if the model becomes more popular, as Peters believes it will, it will be hard for other large vendors to enter the on-demand market in the short term. That’s because storage vendors move slowly at the best of times, and especially slowly when it comes to offering on-demand type deals. “As a vendor, any time you want to introduce something new that delays revenue coming in your initiative will be tied up by other departments for months,” he says.
Sticky enterprise SSDs
But Peters warns that an on-demand enterprise SSD system is by no means the perfect storage solution. That’s because while on-demand storage may hold out the promise of making your enterprise SSD storage more agile, it may end up making it less agile. That may seem contradictory, but Peters explains that an on-demand deal such as the one HPE is offering is likely to make customers stick with them. “No change in IT is ever easy, but a rental deal is actually likely to be stickier than a purchase because it is easy and flexible,” he says.
It’s also likely to be stickier because an on-demand enterprise SSD deal makes the storage professional responsible for getting it to look good, he adds. Basically, this is a cloud-variant of the old adage that no one ever got fired for choosing IBM. “There is clearly the attraction that those responsible for choosing it can tell their hierarchical chain that they are consuming IT in a cloud-like fashion,” says Peters.
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