The Impact of Disruptive Technologies on the Professional Storage Market
by Johan De Gelas on August 5, 2013 9:00 AM EST- Posted in
- IT Computing
- SSDs
- Enterprise
- Enterprise SSDs
Introduction: Enterprise Storage 101
Since the introduction of x86 based servers at the end of the 20th century, the cost of server hardware has declined rapidly while the performance per watt and performance per dollar has increased rapidly. This pushed the server market to evolve from closed, proprietary, and most importantly extremely expensive mainframe and proprietary RISC servers into today's highly competitive x86 server market. However, the professional storage market is still ruled by the proprietary, legacy systems.
Today, you can get a very powerful server that can cope with most server workloads for something like $5000. Even better, you can run tens of workloads in parallel by virtualizing them. But go to the storage market with four or even five times the budget and you will likely return with a low end SAN.
Worse yet is that there is good chance this expensive device will choke regularly due to the use of a storage intensive application. We quote a market survey conducted in march 2013:
Forty-four percent of respondents said disproportionate storage-related costs were an obstacle preventing them from virtualizing more of their workloads. Forty-two percent said the same about performance degradation or the inability to meet performance expectations.
Note that the study does not mention the percentage of customers stuck in denial :-). The performance per dollar of the average SAN array is mediocre at best, and the storage capacity per dollar is simply awful.
You might think that the hardware inside a SAN is vastly superior to what can be found in your average server, but that is not the case. EMC (the market leader) and others have disclosed more than once that “the goal has always to been to use as much standard, commercial, off-the-shelf hardware as we can”. So your SAN array is probably nothing more than a typical Xeon server built by Quanta with a shiny bezel. A decent professional 1TB drive costs a few hundred dollars. Place that same drive inside a SAN appliance and suddenly the price per terabyte is multiplied by at least three, sometimes even 10! When it comes to pricing and vendor lock-in you can say that storage systems are still stuck in the “mainframe era” despite the use of cheap off-the-shelf hardware.
So why do EMC, NetApp, and the other giants in the storage market charge so much for what is essentially a Xeon based server, an admittedly well designed and reliable storage backplane, and some unreliable and slow performing hard drives? The reason is not some complex market situation that can only be explained by financial experts. No, the key is simply the basic component of a storage system: the unreliable and slow magnetic disk.
As we all know, the magnetic disk is the component that fails most in the data center, and it is by far the slowest core component in modern computers. Building a reliable and somewhat performant storage system based upon such a mediocre storage component can only be done with complex software. And complex software is yet another prime reason why IT services fail. So only a few companies that were able to build a solid reputation gained enough trust to succeed in the storage market.
This is why EMC, NetApp, IBM, and HP rule the storage market today even though they are charging an arm and a leg for a few terabytes of capacity. Professional buyers trust the devices these vendors make and are willing to pay a huge premium just to be sure that they get good reliability and decent but hardly compelling performance and capacity.
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pjkenned - Tuesday, August 6, 2013 - link
Hi Johan, one thing to be clear about is that the dollars you are quoting in this article are off by a huge margin. Enterprise storage is one of the most highly discounted areas of technology. Happy to chat more on this subject. Patrick @STHname99 - Tuesday, August 6, 2013 - link
Ahh, the never-ending whine of the Enterprise sale man, who desperately wants to have it both ways --- to be able to charge a fortune and simultaneously to claim that he's not charging a fortune. Good luck with that --- there is, after all, a sucker born every minute.But let's get one thing straight here. If your organization refuses to publish the actual prices at which it sells, then you STFU when people report the prices that ARE published, not the magic secret prices that you claim exist but neither you nor anyone else are ever allowed to actually mention them. You don't get to have it both ways.
AnandTech and similar blogs are not in the business of sustaining your obsolete business model and its never-ending lies about price...
enealDC - Tuesday, August 6, 2013 - link
Thank you!!! lolJohanAnandtech - Tuesday, August 6, 2013 - link
You can not blame a company to do whatever they can to protect their business model, but your comment is on target. The list versus street price models reminds of techniques of salesman on the street in touristic areas: they charge 3 times too much, and you end up with a 50% discount. The end result is that you are still ripped off unless you have intimate knowledge.nafhan - Tuesday, August 6, 2013 - link
My experience with stuff like this is that the low prices are geared towards locking you into their products and getting themselves in the door. As soon as these companies feel certain that changing to a different storage tech would be prohibitively expensive for you, the contract renewal price will go through the roof.In other words, that initial price may actually be very good and very competitive. Just don't expect to get the same deal when things come up for contract renewal.
equals42 - Saturday, August 17, 2013 - link
You shouldn't be making enterprise purchasing decisions unless you have intimate knowledge and have done the necessary research.pjkenned - Tuesday, August 6, 2013 - link
So three perspectives:First - I have been advocating open storage projects for years. I do think we are moving to 90%+ of the market being 4TB drives and SSDs and SDS is a clear step in this direction. I don't sell storage but have been using open platforms for years precisely because of the value I can extract through the effort of sizing the underlying hardware.
Second - Most of the big vendors are public companies. It isn't hard to look at gross margin and figure out ballpark what average discounts are. Most organizations purchasing this type of storage have other needs. The market could push for lower margins so my sense is that the companies buying this class of storage are not just paying for raw storage.
Third - vendors are moving the direction of lower discounts at the low end. Published list prices there are much closer to actual as the discounting trend in the industry is towards lower list prices.
Not to say that pricing is just or logical, but then again, it is a large industry that is poised for a disruptive change. One key thing here is that I believe you can get pricing if you just get a quote. This is the same as other enterprise segments such as the ERP market.
equals42 - Saturday, August 17, 2013 - link
I'll not ask you to STFU as you eloquently abbreviated it. Though in general I believe people ultimately charge what they believe the market will pay.Yes, list prices are generously overpriced in the IT industry. But to ask EMC or IBM to tell you how much they really charge for things is stupid. That's a negotiated rate between them and their customer. BofA or WalMart isn't going to disclose how much they pay for services. Their low negotiated price helps drive efficiencies to better compete with rivals. Heck, ask Kelloggs how much Target pays per box for cereal vs WalMart. No way in hell they're going to tell you. You think a SMB is going to get the same price as Savvis or Bank of America? They can ask for it but good luck. I sense some naiveté in your response.
In essence you're complaining about how inflated the list is vs what the average customer pays. That's a game played out based on supply and demand, market expectations and the blended costs of delivering products.
prime2515103 - Tuesday, August 6, 2013 - link
"Note that the study does not mention the percentage customer stuck in denial :-)."I don't mean to be a jerk or anything, but I can't believe I just read that on Anandtech. It's not the grammar either. A smiley? Good grief...
JohanAnandtech - Tuesday, August 6, 2013 - link
I fixed the sentence, but left the smiley in there. My prerogative ;-)