NetApp Launches On-Prem Data Center Storage as a Service

In a major business-model shift, enterprise storage giant NetApp last week announced cloud-like pay-as-you-go pricing for its on-premises storage systems. The company made the announcement at its Insight conference in Las Vegas.

Previously, enterprises had two options if they wanted NetApp equipment: buy the storage hardware and install it in their data centers or subscribe to its storage services through Amazon Web Services, Google Cloud Platform, or Microsoft Azure.

With the new pay-as-you-go on-premises storage service, called Keystone, instead of purchasing the gear, customers can subscribe for the amount of storage hardware they need. NetApp will deliver and manage the hardware, but customers can choose to manage it themselves or have third-party partners do it, NetApp chief transformation officer Biren Fondekar told DCK.

“What we are striving to do is provide a cloud-like experience and cloud-like simplicity for our customers, so they can have a consistent experience across a hybrid cloud environment,” he said.

The move is an acknowledgement by NetApp that its customers are embracing the shift from a CapEx to an OpEx model for IT infrastructure purchasing. Enterprises increasingly want to consume IT services without having to own and manage the equipment.

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Henry Baltazar, research VP at 451 Research, said this was a move NetApp had to make to meet customer demand. Competitors like Dell Technologies, Hewlett Packard Enterprise, and Pure Storage already offer pay-as-you go pricing options.

“Everyone is forced to do this because that’s what customers want,” he said. “Cloud is the future and they need to be OpEx-centric.”

A recent 451 survey found that a slight majority of companies still want to purchase equipment via the CapEx model while increasingly looking at OpEx or a hybrid approach, Baltazar said.

How NetApp Keystone Works

The NetApp Keystone program allows enterprises to mix and match their purchases on-premises or in the cloud.

NetApp offers a one-year subscription for pay-as-you-go on-premises storage. If needs change and a customer needs more capacity, NetApp will deliver more equipment to their data center, Fondekar said.

“Say you buy ‘x’ amount of performance, and the holidays roll around, sales are going through the roof and you expect [storage needs] to go up 20 percent, you can pay for that burst above your service level agreement,” he said.

Customers can still buy NetApp storage hardware the traditional way, through the CapEx model. With Keystone, the company is seeking to simplify that process.

“We have flat, predictable pricing for renewals – a single-page quote instead of the complex multi-page quote that we had in the past,” Fondekar said.

The Keystone program is specifically designed for NetApp’s A400, FAS8300, and FAS8700 storage systems. But if individual customers want the new consumption model for its other products, the company will make it happen, he said. 

Fondekar said NetApp has talked to many of its customers and they are excited about the new pricing strategy.

“What most customers like is the flexibility it provides them,” he said. “Even though most of them won’t consume it that way from the get-go, they feel like they’d rather do business with a vendor that has the option.”