Cloud Storage Pricing: It's Open Warfare

Feature Story

Cloud Storage Pricing: It's Open Warfare

By Doug Barney, TMCnet Editor at Large  |  February 20, 2014

One thing that has long been true of storage – it gets ever cheaper. Storage has its own version of Moore’s Law. The other thing that’s true is storage demands are ever increasing, often outstripping what IT can buy and install.

And here is the dirty little secret. The fact that storage hardware gets cheaper doesn’t much matter to enterprises. The real cost is in management, which is usually a multiple of the storage itself.

These issues are feeding into some serious growth in cloud storage and backup. Service providers can take advantage of their economies of scale, and their ability to manage cost effectively to do backup cheaper than most enterprises can do themselves. At the same time the cloud removes a big IT management headache and can help insure that backups are properly and successfully done.

All this has every cloud provider and their brother vying for backup business. You know what that means – a good old fashioned price war.

This war is being fought on two fronts. Discounts are now deeper than ever, and at the same time new pricing approaches are coming to market.

Saying Goodbye to GB Pricing

Zenith Infotech was one of the first to dispense with per GB pricing. Instead Zenith has one price that applies to the offsite storage vault, with an ability to expand capacity when needed. Under the plan, service providers pay set monthly fees for their on-premises storage devices. They can then rent Zenith vaults and pay the same fee whether they replicate the on-premises data to one appliance or 25.

Asigra perhaps made the most noise with its recovery-based pricing; an approach it says is really catching on.

In the middle of 2013 Asigra announced its Asigra Recovery License Model (RLM). “The model is enabled by technology and follows what many experts agree is an evolving movement toward performance-based pricing that aligns with the value derived by the customer. With Asigra’s approach, customers who recover less will pay less, and costs are capped so that recovery costs never exceed more than 25 percent of their data. The model provides stable and predictable pricing over time regardless of the amount of data backed up,” the company said. The firm commissioned Winning Research to gauge the reactions of 161 IT pros.

While hardware prices continue to plummet, the growth of data has 90 percent of those surveyed expecting costs to rise over the next five years. And “84 percent of all respondents indicated they would be either “Likely” or “Very Likely” to switch to recovery-based pricing today, if it offered the same technical capabilities as their current software,” the research found.

New Tussle Emerges Over Symantec (News - Alert) Scraps

Symantec has one of the larger footprints in the cloud backup space, but announced last year that it would stop selling the service. Support runs out in January 2015.

This ushered in a mini-pricing skirmish as competitors rushed to lure Symantec partners with deep discounts.

Zetta (News - Alert).net is offer a 20 percent discount on yearly backup contracts. And Asigra is offering partners 60 percent off list price.

A Ready Market

Customers and providers are finding a growing market. According to Forrester Research (News - Alert), from 2010 to 2012, the amount of data backed up by enterprises grew 42 percent. At the same time the amount of file storage only rose 28 percent. Meanwhile the need to backup PCs nearly doubled in those two years. And the Dell’Oro Group says enterprise storage is growing at 50 percent a year. Meanwhile the Enterprise Strategy Group (News - Alert) (ESG) says it is even more, say 60 percent.

According to MarketsandMarkets, the total cloud storage market is expected to reach $46.8 billion by 2018 with a CAGR of 40.2 percent.

In the midst of all this madness, IDC (News - Alert) now says sales of external disks went down 3.5 percent this past quarter on a year over year basis. The worldwide annual market is $5.7 billion for the third quarter.

Edited by Stefania Viscusi
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