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Sun's new pricing model: More bang for a buck?

Sun's latest pricing model is clever, but after all the numbers are worked out, can it stack up against other utility-based offerings from rivals IBM, Oracle and HP? More important, are data center managers ready for this new way of calculating the cost of computing power?

Sun Microsystems' new pricing program is a major shift from the way data centers pay for computing power and storage. But while the pricing may indeed be easier to figure out, data center managers may want to take a good hard look at the numbers.

With some IT service pricing schemes, you'll need a calculator and a working knowledge of Sanskrit to decipher them.
Charles King
principal analystPund-IT Research

The new model, dubbed Sun Grid, is a utility computing program where data centers pay a $1 per hour for each CPU and $1 per month per gigabyte of storage. The program will offer users computing capability and storage from Sun Grid centers in Virginia, Texas, New Jersey, Canada and Scotland. The pricing will have a four-hour minimum usage requirement and will offer both services independently.

This offering is the latest in a series of moves by Sun to simplify pricing. In November, it announced a major shift in how it charges for software. Sun admits software licensing is a business model and said it views it as an opportunity to differentiate itself among rivals.

"It's not computers that are commoditizing, it's computing," said Jonathan Schwartz, Sun's president and chief operating officer in a statement. "What do all commodities have in common? Transparent pricing that can be compared against each other. We encourage all CIOs and CFOs to look into their data centers and ask themselves if they are spending more than $1/CPU-hour, including electricity, HVAC and labor. We're certain Sun can reduce costs by an order of magnitude."

Dollar Days at Sun?

Charles King, a principal analyst at Hayward, Calif.-based Pund-IT Research, is not sure how Sun Grid's total cost of operation will stack up compared to other utility computing suppliers in the market, such as IBM and Hewlett-Packard. But he admits that Sun's pricing is clever.

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"It's easy to remember. With some IT service pricing schemes, you'll need a calculator and a working knowledge of Sanskrit to decipher them," King said.

But data center managers aren't likely to be so easily lured by its simplicity.

"You hear the figure and you say 'Oh, that's not so bad,'" said Dave Thorn, a mainframe capacity planner for SunGard Availability Services, Mt. Laurel, N.J. "But then you think server farm and you think companies that have hundreds of servers -- now you're talking 24 hours times $24 times 100 servers. It kind of goes off into the stratosphere pretty quickly."

Tony Iams, an analyst with D.H. Brown Associates Inc., Port Chester, N.Y., said Sun's offer could be compelling -- a real attention grabber. But warns there are many caveats.

"Grid environment applications run on high performance technical computing -- modeling, simulation, etc.," he said. "It's not something that is going to be used for payroll. For a grid to be effective, you need a number of CPUs running simultaneously. So if you need 1,000 CPUs running, you're paying $1,000 per hour.

While King supports the pricing plan, at least for simplicity's sake, he's not so sure about the terminology of the launch. "The company is positioning the offering as a grid-based service, but I don't know why they're calling it grid. It is more like a hosted service, comparable to IBM's on-demand structure," King said.


Adding it all up

Data center managers aren't likely to be so concerned about what it's called but rather what it does, however. Bottom line: This model puts Sun in the services business, giving data centers remote access to high performance computing (HPC), according to King.

HPC is expensive. In the past, supercomputing had been limited to high intensity projects such as mapping the human genome. Over the past few years, HPC has become more affordable. Companies like HP, IBM and Sun have gone after customers that can use this service on a per project basis, such as automobile crash testing and oil deposit exploration.

"Even with the improving price point, you need to have deep pockets to utilize HPC regularly," King said. But on the upside, [with this new pricing model] small to mid-sized companies wouldn't have to spend hundreds of thousands of dollars to implement HPC infrastructure to solve a problem when they could just buy the computing power.

According to Gordon Haff, a senior analyst at Illuminata Inc., Nashua, N.H., the idea of simplicity is new for Sun.

"Sun was famously anti-services for a long time, but now it's taken a different attitude. They believe in a less-customized service than IBM does. It's going to be fairly standardized.

Let us know what you think about the story; e-mail: Matt Stansberry, News Editor

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