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Unoriginal pricing model finds a place in the data center

Flexible hardware pricing?  What took so long?

Perhaps there were a few IT pros that wondered this when they first heard about the Cloud Flex Pay per use pricing that was introduced as a new buying model for hyper-converged infrastructure introduced at Dell EMC’s annual customer event this week.

It is a billing model that they see elsewhere, say, software as a service and infrastructure as a service, where they pay for what they use. But it’s uncommon when it comes to data center hardware, where spending six digits or more on a server is still the norm and is often the only option (even with financing).

Dell EMC executives said this week there’s already as many as 25 storage customers that have started with Cloud Flex’s cousin, Flex on Demand, which is available for all of the company’s storage products. And company executives have already outlined some specifics about two customers, without naming them. A service provider in the mid-Atlantic committed to 60% of its shipped storage systems at a set cost per gigabyte. They take that cost, and then mark it up as other services are included.

When a customer requests more storage, they tap into the unused 40% the same day and know the exact cost. They avoid getting a quote, waiting for it to be shipped and having to configure and provision it. The service provider’s CFO and CEO said the company plans to go all in on Flex on Demand for VMAX, Unity and Data Domain.

Analyst Zeus Kerravala pointed out that most IT pros will buy the gear they need to get the job done, as long as they have the budget to do it. Maybe these new pay as you go price models will make it easier to convince the bean counters that they really have the money available to buy the gear that IT pros need in the data center.

But the cost of HCI is definitely an issue for some users. Many IT pros avoid buying HCI appliances, such as VxRail and Nutanix, because of the cost, said Luis Quiroa, a support engineer at Sisteco S.A. in Bodega, Guatemala.

Some have steered toward VMware vSAN because of the lower cost, Quiroa said. Without a significant upfront cost, the new Cloud Flex billing model could put HCI appliances back into consideration for companies that want to use HCI.

Users have told me that Cloud Flex seems to make sense. And of course it does, it is a model that they have seen for years in other areas of IT but was slow to come to hardware.

It is also a model that will arrive in the data center later this year in Microsoft Azure Stack, which will make use of a similar pricing.

“It will have a consumption-oriented economic model for all of the services, just like Azure public cloud economics,” said Chad Sakac, president of the converged platform and solutions division of Dell EMC. “The economics will mirror the public cloud and be an extension of the public cloud on to your premises.”

In addition to the same pricing model, it will have the same application deployment experience in Azure public cloud and Azure Stack. In many data centers, Azure Stack will be built on HCI. Now we are starting to connect the dots and the picture is emerging.

It will be interesting to see if one of the other large IT vendors without a public cloud – Hewlett Packard Enterprise – introduces something similar sometime soon. We’ll see next month when HPE hosts its own customer event.