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Forget emerging tech, consumption-based pricing booms in 2020

 

On-premises Opex futures

Consumption-based pricing or as-a-service storage is not new. Some large vendors have offered Opex pricing for parts of their portfolios. Backup vendors have also adopted as-a-service models, and hyper-converged infrastructure pioneer Nutanix moved to a software-based subscription model in 2018.

But there is a new emphasis on making on-premises storage an Opex buy. HPE CEO Antonio Neri said all the vendor’s products will be available as a service “The answer is we don’t know,” Dell chairman and CEO Michael Dell said when asked how many customers he expects will move to as-a-service pricing. “But we have some indicators.”

He pointed to a spike in deferred revenue in recent quarters. “But as to how many of the customers will adopt it, we’ll let the customers decide that,” Dell said. “I will tell you that some customers don’t want it. For example, in the public sector, customers don’t want subscription services. But we’re building all of our solutions so that they can be bought on a consumption and as-as-service basis.”

If Nutanix CEO Dheeraj Pandey is correct, there may be more customers willing to buy storage subscriptions than Dell expects.

“Subscription pricing is becoming the foundation of all things multi-cloud,” Pandey said. “We have a Global 10 customer buying subscription software from us, which was unthinkable three years ago. There’s a transition to bring subscription pricing everywhere, not just off-prem but on-prem, too.”

Slade Weaver, a PayPal senior manager in charge of its Core Data Platform, is a big NetApp storage customer. He attended NetApp Insight last October and said Keystone looks very interesting. Weaver said subscription pricing or leasing offers IT an enticing option for purchasing infrastructure.

“Whether I own it or whether he owns it, whether it runs in my data center or somebody else’s doesn’t even matter, right?” Weaver said. “You want to be in the data center business, great, knock yourself out. If you don’t, go lease the space or go to the public cloud.”

Michael Kientoff, senior systems administration for data protection at media giant Meredith, said his company bought Rubrik backup systems on a five-year lease. He said that provided flexible payment as well as easier upgrades.

“It’s an Opex purchase,” he said. “It worked out better for our financials. In year three, we’re getting more capacity, they’re bringing in more nodes. If we continue with Rubrik in year five, they swap out gear, bring in the next generation, vacate one node, bring in a new node and go through that process for the entire stack. It’s their problem to come in and move us over to the new gear and get rid of the old gear — not our problem anymore.”

 

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