Recently, Network Appliance Inc., announced its foray into the
small-to-midsized business (SMB) market with
the introduction of its StoreVault line. The S500 is a
skinnied-down version of its
enterprise-class Filer products, offering a
base sticker price of about $5,000. Sunnyvale expects, based on
extensive "focus group" consultations, to sell a boatload of
them.
In case you haven't noticed, the path to the SMB market is one
that a lot of enterprise iron makers have been treading of late.
The reason is simple: In recent years, large companies have cut
back on IT hardware spending -- of which storage gear is the
largest component. Meanwhile, SMBs (or
SMEs, depending on whose acronym you
prefer) have increased spending at a rate of 47% year over year
for the last few years. In theory, you can make just as much
money selling a lot of lower-priced gear as you can selling a
few overpriced big iron
arrays.
Read what all of our expert bloggers have to say on data
protection, storage networking and more. Click here. EMC's Insignia
line is another example of the big guys courting the SMB… and
another example of what the marketing folks apparently believe
about SMBs: That they are as "storage-stupid" as many of their
larger cousins.
In the larger firm, for a variety of reasons, there is a
tendency to go with the name-brand offerings of larger players in
the market. Sometimes, this is done to get the one-throat-to-choke
maintenance or licensing agreement. Other times, the deal is made
with the expectation that it will alleviate the hassle of
heterogeneous storage management by standardizing on the products
of a particular vendor whether they are best of breed or not. (It
doesn't, by the way.)
Too often, the acquisition of storage gear in larger firms is
out of IT's hands altogether -- the deal having been made in the
front office by senior business managers who know less about a
vendor's gear than his stock performance over a 10-year period.
Microsoft coined the expression "Flashing 12s" to describe the lack
of technical acumen of many business managers who cannot even
program the clocks on the VCRs, which subsequently flash "12:00"
forever.
In the large enterprise market, many of the name brand vendors
have been skirting the IT department for some time, preferring to
pitch the guys in the suits. Sales representatives take training
programs on how to avoid "technospeak" that might confuse the
business guy, how to avoid mentioning any product by name or
function and how to express the case for the company's products
strictly in terms and language that the front office understands:
cost savings, risk reduction and process improvement. I suspect
that these programs have accounted for a lot more sales revenue
than have more reasonable, performance testing-based demonstrations
of product efficacy and application fit. Maybe even more than
"channel stuffing" -- the booking of phony orders for gear just in
time for reporting to Wall Street.
For whatever reason, the big iron guys have saturated the
Fortune 500 and are now looking for "green field opportunities"
among the SMBs. However, they have been confounded by two
obstacles.
First, SMBs are not as impressed by brand name or market
pedigree as their larger peers. For the most part, they will not
buy a "Hummer" when they can buy a "Yukon," which has exactly the
same undercarriage but costs $40K less. The "it's not my money"
attitude in the big company does not exist in the SMB, where
budgets are tight and price is everything. The sales reps I've
talked to who work for brand name vendors complain that, even as
they are in the customer's office making their pitch, the SMB guy
is surfing the Internet and checking prices for the best bargain on
the same amount of storage capacity. Cost probably shouldn't be the
biggest gating factor in storage acquisition, of course, but a dash
of parsimony may be just what the doctor ordered to mitigate the
price gouging we have seen from array builders in recent years.
The second obstacle is reaching the SMB/SME consumer in the
first place. Fielding a large direct sales force to make a
sub-$20,000 sale is an economic nightmare. Indirect sales channels
expose products to significant mark-ups by value-added distributors
and value-added resellers, pricing wares out of the "sweet spot" of
the SMB. NetApp has chosen to sell direct through Tech Data, while
EMC plies its entry-level products through Dell, which may or may
not be the solution to the problem. Only time will tell.
The trick that probably won't work, however, is the
bait-and-switch tactic that seems to be inherent in the pitches
coming out of the EMC/Network Appliance/et al crowd. Looking at a
price sheet from EMC for its Insignia is a headache in the waiting.
There are so many options to select from, in terms of box
configuration and maintenance agreements; it is difficult to
discern bottom line cost without someone holding your hand.
The NetApp StoreVault offering is the same beast. Sure, you can
get a 1 TB unit that does snapshots for under $5K, but looking
closely, you see that adding
RAID and a hot spare to the baseline box
leaves you with something less than 250 GB of capacity. In my
opinion, and that of others, the box has limited capacity,
limited auditability, limited manageability, limited support and
apparently no investment protection. Is this really what
SMB/SME's want?
NetApp guys say that is what their "focus groups" tell them.
They quickly add that no one is going to buy just the baseline
configuration, of course. So, they are baiting the customer with
the low-price sticker, then configuring a much more expensive
product that will actually meet his needs. I call that
"bait-and-switch."
The question is, at the end of the day, are SMB/SME consumers
really so "storage-stupid" that they will buy this stuff? Why not
give them what they need instead: Storage products that capture the
commodity cost of the underlying disk drives? Just a thought.
About the author: Jon William Toigo is a Managing Partner for
Toigo Productions. Jon has over 20 years of experience in IT and
storage.