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Azure Stack appliance choices widen, as pricing questions linger

Azure Stack will have a fourth appliance option when it becomes generally available later this year, but questions about pricing continue to emerge.

The addition of Cisco Unified Computing System, or UCS, to the limited options of the Azure Stack appliance offering...

may please a handful of customers, but everybody really just wants to know how much it will cost.

Customers should get answers very soon about the types of programs and contract terms for Microsoft Azure Stack, the hybrid cloud product that extends the company's public cloud into a user's data center. Those details will likely trickle out in conjunction with an Azure Stack kickoff meeting in March in Seattle.

Microsoft may choose a competitive entry price for Azure Stack, said Mike Dorosh, research director at analyst firm Gartner. "What they will really make their money on is all the services from Azure that customers will use," he said.

That likely won't address many users' concerns about whether they will receive an easy licensing scheme to move to Azure Stack, said Timothy Kinnerup, vice president at QCM Technologies Inc., a systems integrator in Scottsdale, Ariz.

For example, a company with a few Microsoft servers on premises may want to move to Azure, but the company has paid for SQL enterprise licenses -- money that won't be recouped. It is the same for a company that has recently bought Windows Server 2012 licenses, but is considering a move to Azure.

"I've already spent it on-prem, and now I want to move it to Azure -- I've already spent money, so that is my barrier to entry," Kinnerup said.

Azure Stack is expected to become generally available this summer through a handful of OEM partners via an Azure Stack appliance from Dell, Hewlett Packard Enterprise (HPE) and Lenovo. Now, Cisco joins with its Microsoft Azure Stack on Cisco UCS.

Adding Cisco makes sense, since at least one of the four OEM partners is in almost every data center, Dorosh said. Most Azure Stack buyers will stick with an existing vendor they already know and are confident will support them, and has skills and tools built around the platform, he added.

The ice cream flavors of Azure Stack

On the inside, the four OEMs' Azure Stack appliances will be largely the same, with similar servers, storage, RAM and networking equipment -- a reminder that hardware, in general, has become a commodity, Dorosh said. The four partners may have a slightly different architectural philosophy, "but it is chocolate, vanilla or strawberry; the differentiation is on the edge uses, not in the mainstream uses," he said.

All the appliances promise to eliminate the complexity to set up Azure Stack.

"There's no need to iterate through multiple configurations to find the right mix for Azure Stack; that is already done for you," said Liz Centoni, a Cisco senior vice president and general manager, who has worked to put Microsoft Azure Stack on Cisco UCS since last year.

Making Azure Stack available only through an appliance from one of four vendors ensures each node is set up in the prescriptive way that Microsoft wants it, she added.

It is still unknown whether existing Cisco UCS nodes -- or any other hardware, for that matter -- can be added. That is still up for discussion with Microsoft about where it fits on the Azure Stack roadmap, she said.

"The first sets of Azure Stack nodes deployed have to be the ones fully validated by Microsoft," she said.

You are going to see a customer acquisition war here.
Carl Brooksanalyst, 451 Research

Within a few months, Dorosh said he expects Microsoft will let users buy generic capacity to match up with the converged hardware, which will remain as the operational stack.

For customers, the decision between Cisco, Dell, HPE or Lenovo will come down to vendor relationships, support and price, said Carl Brooks, an analyst at 451 Research. Azure Stack sales will likely come from discounts and encouragements for enterprises, he said. Azure Stack can be run on noncertified hardware, but Microsoft will not support it.

"You are going to see a customer acquisition war here," Brooks said.

While there will be rough parity in pricing, Brooks said he expects Dell's Azure Stack appliance to be the least expensive and the HPE appliance to be the most expensive. Cisco would only say its price will depend on the number of server nodes and the Azure services a customer uses each month.

Azure Stack will be overpriced, compared to the cost of running it on cheap commodity hardware and network devices to make a private cloud, but the certified appliances will come with guaranteed support levels and maintenance, and include help with implementation and deployment, Brooks said.

"You will be paying extra, but it may very well be worth it," he said. "The price could be a million bucks, but, like with so many things, they will say you can have it for $600,000 if you buy it now and pay half upfront."

Robert Gates covers data centers, data center strategies, server technologies, converged and hyper-converged infrastructure and open source operating systems for SearchDataCenter. Follow him on Twitter @RBGatesTT or email him at rgates@techtarget.com.

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