What do razorblades and storage have in common?

Nov 27, 2012

Nexenta CEO Evan Powell explains how to avoid the dangers of vendor lock-in

Back in 1907, John D. Rockefeller hit on a business model that has been replicated several times since. His company, Standard Oil, introduced kerosene lamps with glass chimneys to the Chinese market, selling two million a year for a few cents each. Then it made a fortune selling Chinese farmers expensive oil they couldn’t buy anywhere else. Such was the success of his strategy that it gave rise to the old saying: “Oil for the lamps of China.”

Some of us might recognise similarities between Rockefeller’s lamps and the razor market where a cheap razor is more than offset by the cost of replacement blades. In the IT industry, the printer market operates on much the same lines with printers being sold for as little as £29.99 but printer manufacturers making a fortune from selling the expensive ink cartridges that go with them.

Very few businesses are probably aware that a similar type of model exists in the storage world today.

On the surface, it looks very different. Hard disks and flash storage are traded globally, like commodities, and the price per GB is transparent to everybody. It’s a little bit more complicated than that, of course, because it’s not just a matter of multiplying the GBs needed by the cost of a GB at any time. Additional hardware is required, as well as a file system, and other features to get the most out of the storage space, which will vary in sophistication depending on the environment and purpose.

But it’s once a decision has been made, and a complete storage package has been acquired from a specific vendor, that things start to take on a distinctly Rockefeller-like tinge. It’s not that long before customers find out it can be very difficult to change vendors from a proprietary system if they want to migrate data to a cheaper package. They literally can be locked-in to a single vendor for their entire storage requirements. And because many of the larger storage vendors have a business model that seeks to lock customers in to their more expensive legacy systems, this gives rise to the belief among customers that because their storage costs are high, all storage costs must be high.

While resellers are under enormous pressure to match the ever-rising demand for storage from businesses, it almost can be impossible to gauge how much they will need and at what price. The only certainty they believe they do have is that it will be expensive.

There are alternatives from some vendors that appear to offer relatively cheaper systems, but they often hit customers with mark-ups in prices for consumables such as if they require more disks to add more capacity or extra disks or SSDs to gain a higher I/O performance. The cost of storage is going through the roof from vendors with established lock-in business models as they are earning billions from expensive consumables that are much higher priced than they should be.

Whatever choice your customers ultimately make, the result is soaring storage costs even though the cost of storage itself, in terms of the price of hard disk drives and solid state disks, has been declining. It doesn’t have to be that way.

One alternative is for resellers to highlight the OpenStorage path. OpenStorage refers to storage systems built with an open architecture using industry standard hardware and open-source file systems. Enabling resellers to recommend industry standard hardware from a wide range of suppliers eradicates the issue of vendor lock-in and gives customers the flexibility to replace legacy systems and add extra hardware at a much reduced cost. It frees them from being held hostage to a specific vendor’s product roadmap or from having to pay the “lock-in” tax associated with using proprietary systems.

This is particularly prevalent when you look at a company’s purchasing roadmap. Many customers are attracted to the initial savings achieved from purchasing industry standard hardware. These savings can be magnified further down the line when customers begin to add extra capacity—a concept totally alien to legacy providers whose prices tend to go up considerably if you add further capacity or licenses.

OpenStorage enables resellers to help customers to implement high-performance and cost-effective data storage solutions at a lower cost, with features such as file and block storage, all flash array and flash as cache architectures, inline deduplication, unlimited snapshots and cloning, unlimited file size, and high availability and scale out capabilities.

Using this model you can calculate your customers cost for storage almost to the nearest cent. The only variable they face is the market price for the hardware itself, a price that fluctuates according to the market but, more often than not, declines.

No matter what some vendors may believe, supplying storage systems to customers should not be like selling oil for the lamps of China. OpenStorage can help illuminate the dangers of vendor lock-in by showing customers a more cost-effective way to meet their storage needs.

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