IBM Offers Storage Capacity on Demand

Yet another creative approach to delivering storage capacity has arrived from Big Blue in the form of the company’s Storage Capacity On Demand program. And according to one analyst, creative storage ideas may be the only way IBM Corp. can catch storage market leader EMC Corp.

Storage Capacity On Demand, announced last month, is the latest creative storage initiative to be launched by the Armonk, N.Y.-based company, which unveiled a similar offering called Managed Storage Services only a few months ago.

In a nutshell, the Storage Capacity On Demand program lets IBM customers purchase either an IBM Shark Enterprise Storage Server or an IBM Magstar Virtual Tape Server Model B18, pay for a base amount of storage capacity, and receive additional – or “step ahead” – capacity that customers pay for only when they begin to use it.

“When I buy a house, I decide to buy a triple garage rather than a double garage, because I know I’ll be buying a boat to park in there later on,” explained Duane Dueker, vice-president of marketing for SANs (storage area networks) and the storage systems group at IBM.

Jim Porter, an analyst with Disk/Trend, a Mountain View, Calif.-based storage think-tank, believes creative approaches such as Storage Capacity On Demand are necessary for IBM to regain a share of the storage market lost to Hopkinton, Mass.-based EMC.

Calling Storage Capacity On Demand, “a relatively new approach” to storage vending, Porter said for IBM “there is this bad guy out there called EMC, and they have taken share from IBM [in the storage market], and IBM needs to use creative techniques to get some of that share back.”

Unlike IBM’s other recent creative storage move, Managed Storage Services – in which customers can activate additional storage capacity on a usage basis at remote IBM storage facilities when the need arises – Storage Capacity On Demand customers get the whole storage package on-site.

Once the choice is made as to how much initial storage capacity will be needed to do business, step-ahead storage capacity is also shipped to the customer site in increments of either 210GB, 420GB, 490GB or 980GB, Dueker said.

“The advantage here is [customers] have purchased their own storage,” Dueker said. “They want to maintain control and have it on their own site, ready to activate.”

Instead of having to guess when to buy additional storage capacity and perhaps hit a capacity ceiling while waiting for additional storage to be shipped and installed, Dueker said Storage Capacity On Demand customers can “have this additional storage capacity waiting to activate on site.”

When the additional storage capacity is activated for use, IBM is alerted via a “phone home” feature, that tells Big Blue account representatives that it’s time to bill the customer for the additional capacity. At that point, Storage Capacity On Demand customers are billed for the entire amount of their step-ahead storage capacity, regardless of how much was really used, Dueker said.

The initial cost for the step-ahead storage, over and above the cost of the base storage capacity, averages out to be about 25 per cent of the cost of buying it outside the Storage Capacity On Demand program.

IBM is able to ship this step-ahead storage capacity at its reduced initial cost because storage itself has become cheaper, Porter said.

“Individual disk drives have gone down so much that the average price per megabyte used to be around US$11, and now it’s about a penny [per megabyte]. So IBM can afford to pack additional storage in there and charge you when it comes on-line,” Porter said.

When asked about security issues surrounding the “phone home” device, Dueker said, “Customers have asked us for this feature and we did address the security issue. We are only monitoring the things that were appropriate for the system, and being aware of security has been part of the development of the product.”