New Pricing Model for IBM XIV High-Performance Storage

By Jane Clabby, Clabby Analytics

While at IBM’s “Premier Cloud Conference” (also known as Pulse 2014) this past week, I attended several briefings on IBM’s major transformation toward becoming a cloud services provider.  IBM will continue to sell its traditional products via direct sales and through partner channels – but the company is now more focused than ever before on providing cloud services through public clouds.

Various speakers covered IBM’s Infrastructure-as-a-Service (IaaS), Platform-as-a-service (PaaS) and Software-as-a-Service SaaS) strategies and offerings – but one particularly innovative  offering really caught my attention: the newly announced IBM Advanced System Placement program.  This program uses a pay-as-you-go model that allows organizations to create their own storage cloud environments – and it enables these organizations to more quickly and cost effectively acquire and deploy storage solutions.

In a private briefing with Sidney Chow, IBM’s Vice-President of High-End Disk, I learned more about IBM’s new storage  offering.  IBM’s Advanced System Placement for XIV program is based on an aggressive pricing model that enable customers to receive a fully-configured IBM XIV storage system for $1.  Each XIV system is delivered with fully authorized capacity and performance with no need for key activation. Let me explain how this program works:

  • For the first XIV system purchased the customer will pay 60% of the total price.
  • When the XIV system reaches its preset capacity threshold (typically 70%) the customer is charged for the remaining 40% of the purchase price and receives a second XIV system for $1.
  • When XIV system 2 reaches its threshold, the customers then pays for System 2 – and receives XIV system 3.  The customer is charged $1 for XIV system 3 and the remaining payment on XIV system 2 (100% system cost minus $1).
  • The cycle continues with each subsequent system

In short, this means that a customer doesn’t have to pay the full storage array cost at the outset – instead paying 60% up front and the remainder when the array reaches its capacity threshold.  On the second array, the customer pays $1 until that array reaches its capacity threshold – and then pays for this second array. And this cycle continues for as many arrays as the customer wishes to deploy.

IBM’s Advanced System Placement program is also complemented by IBM Global Financing options:

  • For the first XIV system, the customer signs a 36 month lease with the first 6 payments at 60% of the remaining 30.
  • When the XIV system 1 reaches its preset capacity threshold (typically 70%), the customer receives XIV system 2.  Payments for XIV system 1 continue and a new 36 month lease is signed for XIV system 2 with no payments for the first 6 months
  • When XIV system 2 reaches its threshold, the customers receives XIV system 3 Payments for XIV systems 1 and 2 continue and a new 36 month lease is signed for subsequent systems under the contract with no payments for the first 6 months

The Advanced System Placement leasing program can be combined with a hardware lease program for additional flexibility. The IBM Global Financing offering is available in North America and Europe today; and other select countries later this year. The purchase option is available worldwide today. IBM also has plans to offer the program on the IBM Storwize DS8870, V7000 and the IBM FlashSystem 840.

It should be noted that this isn’t a capacity-on-demand (CoD) solution but it complements the CoD feature of the IBM XIV Storage System Gen3 for additional financial benefits.

Summary Observations

The cloud enables new business models and allows businesses to start small and scale quickly as demand grows. With the advent of “Big Data”, businesses are collecting larger volumes and a greater range of data types including both structured and unstructured data.  Both established enterprise customers and growing businesses, in particular, want to take advantage of this collected data to drive analytics that provide better customer insights. In order to move quickly and capitalize on business opportunities, growing businesses require the same performance, speed and agility as their enterprise counterparts.  This means that storage demands continue to escalate and storage costs can represent a huge portion of the IT budget.  Storage virtualization and other advanced storage features such as tiering and de-duplication can help make better use of storage already purchased, but as-a-service, pay-as-you-go models are becoming the norm across-the-board with Iaas, Paas and SaaS all gaining in popularity, especially for new businesses with unpredictable demand

The reason that I found this announcement to be so interesting is that IBM Advanced System Placement for XIV enables customers of all sizes to acquire high-performance, high-capacity, feature-rich storage solutions – and to pay for these solutions AFTER reaching capacity thresholds. I’ve not seen any other storage offerings from any other vendor positioned in such a way.  I find this approach to be creative and innovative – it provides IBM customers with storage price flexibility and should help IBM get more storage into the hands of end users as enterprises move more aggressively into Big Data analytics.


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